Emerging market assets faced a downturn as the MSCI emerging-market stock index decreased by 0.3%, halting a two-day rally that had reached a record high. This decline was largely driven by a drop in shares of Taiwan Semiconductor Manufacturing Co., a major player in AI chip production. The market sentiment shifted from optimism surrounding technology earnings to concerns over escalating tensions in the Middle East, particularly following reports of exchanges of fire between the US and Iran. Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings SA, noted that rising tensions could lead to higher oil prices and a stronger dollar, which would exacerbate global inflation and prompt tighter monetary policies. In currency markets, Asian oil importers struggled, with the Indian rupee hitting a new record low against the dollar. The situation remains precarious for India, as high oil prices threaten its balance of payments despite foreign reserves covering about 11 months of imports. In Romania, the currency weakened ahead of a no-confidence vote that could destabilize the government responsible for recent fiscal reforms aimed at addressing the EU's largest budget deficit.