Goldman Sachs EM Weekly Kickstart: EM Equities Rise 4% on US-Iran Deal; Gains Broaden Beyond Tech
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Goldman Sachs reports that emerging market equities surged 4% following the US-Iran agreement, with the MSCI Emerging Markets index rebounding near previous highs despite a hawkish Federal Reserve stance. The brokerage highlights that market breadth is improving, suggesting that the rally is broadening beyond the technology sector and is likely to continue.
The US-Iran deal alleviated geopolitical risk premiums, significantly boosting investor risk appetite. While the Federal Reserve's restrictive posture theoretically pressures emerging market assets, the positive shift in global risk sentiment has largely offset these monetary headwinds. Commodity price fluctuations continue to impact major EM exporters, while AI-related themes maintain strong investor interest across emerging technology landscapes.
Goldman Sachs draws particular attention to the upcoming second round of elections in Colombia this weekend, noting potential short-term market volatility. Historically, financial and energy sectors have demonstrated strong performance during election cycles in the region. Colombian equities have already experienced a strong rally following the first round, with current valuations at approximately 10 times forward earnings. While investor positioning remains relatively light, the firm notes that broader market participation, combined with favorable macroeconomic tailwinds for interest-rate-sensitive nations, could sustain the equity rally beyond concentrated technology gains.
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