Emerging markets rattled as Middle East fighting fuels oil, bond rout

** Shein shares slip more than 3% on second day of Hong Kong trading ** Thai business group raises 2026 GDP growth forecast to range of 2.1% to 2.5% ** Indian central bank steps up rupee support, soaring NRI deposits bolster firepower In Turkey, equities in Istanbul slipped .XU100 1.8%, while the lira TRYTOM=D4 was little changed. Turkey's monthly inflation rate is forecast to be 1.93% in August, a Reuters poll showed, as higher oil prices pose an upward risk. Annual consumer price inflation was at 31.62% in August, slightly below July's reading. South African assets were also trading lower, with stocks .JTOPI down 0.4%, while the rand ZAR=D3 weakened 0.1%. Senegal's bonds remained in the spotlight after sliding record lows on Tuesday after the government signalled plans to restructure its debt under a provisionally agreed $2.2 billion, three-year IMF program. In Emerging Europe, currencies were mostly trading range bound against the euro, though Hungary's forint EURHUF= slipped 0.7% to its weakest level since April. Local stocks .BUX fell 0.5%. Regional shares were mostly in the red, but Romania's equities .BETI gained 2.4%. Emerging market assets fell broadly on Wednesday as renewed fighting in the Middle East lifted oil prices and intensified a global bond rout, reinforcing inflation fears and weighing on risk appetite. Borrowing costs jumped to multi-decade highs as elevated energy prices stoked inflation worries, paving the way for a tighter interest rate environment. "Investors are now staring directly into the eyes of an inflation monster that threatens to become stronger unless action is taken.. and market expectations for the scale of rate hikes continues to evolve," said Dan Coatsworth, head of markets at AJ Bell. The MSCI emerging-markets equity index .MSCIEF declined 1.7% to a one-week low. Brent crude futures LCOC1 climbed to a five-week high after the U.S. and Iran traded their most significant exchange of fire in weeks, with Washington threatening more devastating strikes. In Asia, the heavyweight South Korean KOSPI .KS11 slipped 4% to a two-week low at close. South Korea's consumer inflation quickened in August due to the low-base effect from the comparable period a year ago, data showed, but was lower than expectations. Higher global bond yields are typically a drag on emerging market assets as they boost the appeal of developed-market debt and reduce the allure of riskier investments. The U.S. dollar index =USD hit a two-week high as investors turned to the currency while mulling the Iran conflict's impact on the global economy. The MSCI emerging market currency gauge .MIEM00000CUS was subdued. The Korean won KRW=KFTC strengthened 0.7% to its strongest since July 2025 against the greenback. In China, the Shanghai Composite .SSEC dropped 1%, while the blue-chip CSI300 .CSI300 declined 1.4%. The yuan CNY=CFXS was traded flat.

Emerging markets rattled as Middle East fighting fuels oil, bond rout

Other emerging markets highlights

Turkey, South Africa and Hungary also weaken

Emerging market assets fall as oil and bond yields rise

Asia leads declines while South Korean won and yuan move differently

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