Asian emerging market stocks pulled back from record highs on Tuesday, as investors grew cautious ahead of a slate of U.S. tech earnings that could test the artificial intelligence-driven rally, while the Philippine peso slid to a record low.
MSCI EM Asia gauge fell 0.2%, while the MSCI International EM declined 0.1%. The retreat reflects caution ahead of earnings from major U.S. technology firms, including Microsoft, Alphabet, Amazon, Meta Platforms and Apple, this week.
"Strong tech earnings could reinforce the AI-led risk rally and help lift Asian equities back toward recent highs, but any disappointment may trigger a sharper valuation reset given how much optimism is already priced in," said Glenn Yin, director of research at brokerage ACCM.
In East Asia, Taiwanese stocks, a key beneficiary of the AI-led rally over the past year, traded flat on the day after scaling an all-time high in the previous session.
Elsewhere, South Korea's KOSPI surged 1% to a record of 6,712.73 points, led by gains in automakers and steel manufacturers.
Stocks in Jakarta fell as much as 0.9% to their lowest level since April 7, on track for their seventh consecutive session of declines.
Philippine stocks shed nearly 1% to drift to their weakest level since March 31. The index was also set to log its fifth consecutive session of losses.
Geopolitical risks also lingered after a U.S. official said President Donald Trump was unhappy with the latest Iranian proposal, dampening hopes of a swift resolution to the Middle East conflict, which has disrupted energy supplies and stoked global inflation concerns, especially in oil-dependent emerging markets.
Emerging Asian currencies had a gloomy outing on Tuesday, led by the Philippine peso, which hit a record low of 60.993. The currency depreciated by as much as 0.4%, on track for its seventh consecutive session of declines.
Like many of its regional peers, the peso has come under pressure from the conflict in the Middle East and has declined 3.5% in 2026 so far, making it the second-worst performing unit in the region behind the Indian rupee.
"The Peso looks particularly vulnerable because it sits at the intersection of high energy prices, current account pressure, and external financing concerns," added Yin.
The Thai baht and the Indonesian rupiah fell 0.3% each.
Elsewhere in the region, the Taiwan dollar shed 0.3%, while the Malaysian ringgit and the Singapore dollar traded flat.
The Bank of Japan kept policy unchanged, though three of its nine board members favoured a rate hike, highlighting concerns over inflation risks.
Policy decisions from the U.S. Federal Reserve, the Bank of England, the European Central Bank and Thailand’s central bank are due later this week.
A Reuters poll showed Thailand’s central bank is expected to keep rates on hold.
HIGHLIGHTS:
** Suspect in Washington dinner shooting charged with trying to assassinate Trump
** US grants extension to import Russian oil, says Philippines
** Indian bonds seen under pressure as US-Iran peace talks stall - Reuters
