Emerging-market assets plunged Monday as President Donald Trump’s ultimatum to Iran triggered fears of renewed Middle East energy disruptions. The MSCI Emerging Markets Index tumbled 2.5% in early trading, led by a selloff in South Korean chipmakers amid broader risk aversion. Investors scrambled to assess how escalating tensions could impact global supply chains and energy markets.

Developing-nation currencies weakened further, with the Philippine peso poised for a historic low. A broader currency index tracking emerging markets fell 0.3%, reflecting concerns over geopolitical instability spilling into financial markets. Traders noted heightened volatility in oil-dependent economies, where trade ties to the region remain critical.

Trump’s demand for Iran to cease missile tests and nuclear advancements has intensified uncertainty, with markets pricing in potential sanctions or military action. Analysts warn that prolonged instability could derail economic growth in vulnerable regions, particularly those reliant on Middle Eastern energy exports. All eyes remain on Washington’s next move and its ripple effects across global markets.

The selloff underscores emerging markets’ sensitivity to U.S. foreign policy shifts, as investors weigh the economic fallout from a potential confrontation. While short-term volatility is expected, long-term impacts will depend on diplomatic resolutions and energy market adjustments. For now, uncertainty dominates trading floors worldwide.