# Emerging-Market Stocks Drop as Iran Escalation Adds to AI Risks > Source: > Published: 2026-07-08 09:00:45+00:00 (Bloomberg) -- Emerging-market stocks dropped as an escalation in the Middle East conflict added to the ongoing rotation out of AI beneficiaries. Most Read from Bloomberg - [Greece Offers Bounty to Catch Ravenous Fish Lured by Warming Sea](https://www.bloomberg.com/news/articles/2026-07-05/greece-offers-bounty-to-catch-ravenous-fish-lured-by-warming-sea?utm_campaign=bn&utm_medium=distro&utm_source=yahooUS) - [Chip Stocks Sink After Blistering Run as Oil Jumps: Markets Wrap](https://www.bloomberg.com/news/articles/2026-07-06/stock-market-today-dow-s-p-live-updates?utm_campaign=bn&utm_medium=distro&utm_source=yahooUS) - [Two Millennium Trading Pods Made About $3.7 Billion Last Month](https://www.bloomberg.com/news/articles/2026-07-06/two-millennium-trading-pods-made-about-3-7-billion-last-month?utm_campaign=bn&utm_medium=distro&utm_source=yahooUS) - [China Sentences Official to Death Over $325 Million in Bribes](https://www.bloomberg.com/news/articles/2026-07-06/china-sentences-official-to-death-over-325-million-in-bribes?utm_campaign=bn&utm_medium=distro&utm_source=yahooUS) Risk appetite fell and oil prices jumped after US President Donald Trump said his tentative ceasefire with Iran is over. Asian stocks were already on the back foot with the AI rotation trade gathering pace. MSCI's emerging-market stock benchmark fell 0.6% by 9:48 a.m. in London, extending the week's losses to 2.6%. At the same time, the Hang Seng China Enterprises Index climbed as much as 4.5% as investors shifted into previously underperforming markets. The MSCI gauge for developing-nation currency returns remained 0.2% higher as two index heavyweights, the South Korean won and the Taiwanese dollar, advanced. Currencies of oil-importing countries including India's rupee, South Africa's rand and Hungary's forint, however, fell. Markets have been "optimistically priced" as traders have been betting that the most recent US strikes on Iran did not mark the beginning of a "more sustained increase in attacks," said Derek Halpenny, head of research for global markets EMEA at MUFG Bank Ltd. The volatility due to the Iran war has been driving borrowers into alternative markets, with private debt placements from the Middle East surging. Indonesia's stocks fell after S&P Dow Jones Indices signaled the country could lose its emerging-market status if concerns over its equities market persist. Meanwhile, S&P Dow Jones Indices put Turkey on a watch list for a potential cut to frontier-market status, joining MSCI Inc. in warning of downgrades. In eastern Europe, traders will be watching Polish and Romanian central banks, with policymakers in both capitals expected to keep interest rates unchanged on Wednesday. Most Read from Bloomberg Businessweek - [At 17, She Sued Meta and Google, and Won. Now She's Ready to Tell Her Story](https://www.bloomberg.com/news/features/2026-07-03/google-and-meta-lost-a-landmark-trial-to-kaley-but-kept-her-as-a-user?utm_campaign=bw&utm_medium=distro&utm_source=yahooUS) - ['Southern Squeeze' Grips US Cities Once Known for Affordability](https://www.bloomberg.com/news/features/2026-06-29/high-gas-prices-and-home-prices-make-atlanta-nashville-less-affordable?utm_campaign=bw&utm_medium=distro&utm_source=yahooUS) - [Dan Carlin Believes That American History Rhymes, Not Repeats](https://www.bloomberg.com/news/articles/2026-07-06/dan-carlin-believes-that-american-history-rhymes-not-repeats?utm_campaign=bw&utm_medium=distro&utm_source=yahooUS) ©2026 Bloomberg L.P.