An MSCI Inc. gauge of developing—nation currencies erased gains and the Vanguard FTSE Emerging Markets ETF turned negative after the United Arab Emirates responded to missile attacks coming from Iran. The Colombian and Chilean pesos led losses in a basket of 22 peers tracked by Bloomberg.

Traders are parsing mixed reports on the Iran conflict. Over the weekend, President Donald Trump said the US would begin guiding neutral ships through the Strait of Hormuz, while South Korea on Monday confirmed an explosion and fire on a vessel in the waterway.

“The US dollar is finding support as the ceasefire appears to be breaking down,” said Juan Perez, senior director of trading at Monex USA. “EMFX will remain at the mercy of shifts toward more optimistic headlines.”

A benchmark stock index, heavily weighted toward Asian technology shares, was up 2.6% as of 12:15 p.m. in New York. The gain highlighted a growing disconnect between equity and oil markets as a rally in tech — including chipmakers from Taiwan and South Korean — defies geopolitical risks.

Some of the largest tech companies in the world delivered strong earnings in the previous week, including Alphabet Inc., Apple Inc. and Amazon Inc.

“Strong earnings, especially from the AI cycle, are outweighing concerns about high energy prices, which are unlikely to last,” said Greg Lesko, a portfolio manager at Deltec Asset Management LLC focused on emerging-market stocks.

Colombia’s peso slumped more than 2% and longer-dated interest-rate swaps underperformed after policymakers held borrowing costs at 11.25% last week, defying all but one estimate in a Bloomberg survey of economists for an increase. The decision raised concerns about central bank independence.

In credit markets, strategists and investors are turning to hedging and relative-value trades as a rally in bonds looks increasingly disconnected from the looming impact of the Middle East conflict.

Reporting by Vinícius Andrade, Peter Laca and Bhaskar Dutta