Emerging market equities advanced sharply at the start of the week as optimism surrounding new artificial intelligence models lifted heavyweight technology stocks and helped offset concerns over higher oil prices and the outlook for US interest rates.

MSCI’s gauge of emerging market equities rose as much as 1.4% on Monday, reaching its highest level since June 26. South Korea’s benchmark Kospi index climbed more than 3%, while an index tracking emerging market currencies gained 0.1%, extending its advance to 12 of the past 13 sessions.

Technology stocks were the strongest-performing segment of the emerging market equity gauge, following gains in US semiconductor stocks on Friday. The technology rally was supported by OpenAI’s announcement of a new generation of its artificial intelligence technology, GPT-6, which the company is positioning as an important milestone in its efforts to develop artificial general intelligence.

The strength in technology stocks helped counter broader pressure from rising crude oil prices. Oil prices moved higher after the US and Iran exchanged attacks involving tankers in the Strait of Hormuz, increasing concerns over potential disruptions to global energy supplies. Strong US employment data also strengthened expectations that the Federal Reserve could raise interest rates in the near term, adding another source of pressure for emerging markets.

Wee Khoon Chong, senior market strategist for Asia Pacific at BNY in Hong Kong, said the strong performance of technology stocks had overshadowed the negative impact of higher crude prices. He noted that the strong technology rally in the previous session improved regional sentiment, particularly across South Korea, Taiwan and Japan.

South Korea remained one of the strongest performers as semiconductor stocks attracted foreign investment. The Korean won strengthened to its highest level in nearly two years, supported by continued foreign inflows into Kospi shares and the strength of the semiconductor sector. Momentum indicators for the won also reached their strongest level since 2013, highlighting the pace of its recent appreciation.

Meanwhile, investors looking to reduce exposure to increasingly crowded artificial intelligence trades in Korea and Japan are turning toward Chinese equity derivatives. Trading desks at major global financial institutions including Barclays and UBS have reported increasing client demand for bullish options and swap contracts linked to China’s CSI indexes in recent weeks.

The divergence across emerging markets also remained visible in currencies. While the won benefited from strong technology stocks and foreign inflows, currencies of oil-importing economies such as Indonesia and the Philippines weakened as higher crude prices increased concerns over their external balances and inflation pressures.