Public Markets 3 Days

Last updated: May 12, 2026, 2:30 AM ET

Geopolitical Tensions and Commodity Markets

Global markets continued to grapple with the fallout from the Middle East stalemate, as President Donald Trump rejected Iran’s peace plan, stating the ceasefire was on “life support”, which immediately impacted energy prices. Crude oil futures held gains as traders weighed the prospect of a prolonged closure of the Strait of Hormuz, with shipping giant Norden planning for a scenario where the strait remains effectively shut for the entire year. This disruption is causing severe downstream effects, evidenced by the US unleashing another wave of emergency oil to tame domestic prices, while commodity shipping risks have prompted Rolls-Royce to line up a rare euro bond to buffer its operations against Middle East instability. In parallel, hedge funds are betting on biofuels, anticipating soaring demand for corn and soyabeans as alternative fuel sources rise amid the oil shock.

The geopolitical uncertainty is also driving inflation concerns across Asia, with China’s central bank warning of imported inflation due to rising oil costs, which also contributed to a 21.5% drop in China’s April auto sales, largely driven by a plunge in gasoline vehicle deliveries. Meanwhile, copper prices steadied near record highs following Trump’s rejection of a peace deal, contrasting with Saudi Arabia’s plan to deeply plunge crude oil exports to China in June, signaling shifting supply dynamics. Elsewhere in commodities, traders are seeing signs of recovery in Chinese LNG imports as buyers replace shipments disrupted by conflict, even as Iran deploys small submarines to guard the Hormuz Strait.

Fixed Income and Currency Volatility

Fixed income markets reflected cautious sentiment, with Japanese government bonds falling in morning trade, tracking overnight declines in U.S. Treasurys, although a separate sale of Japan’s 10-year bonds saw firm demand due to the underpinning of higher yields. Wall Street banks are beginning to adjust interest rate expectations, as both Goldman Sachs & Co and Bank of America Corp are pushing back their forecasts for rate cuts, citing the resilience of jobs and inflation data. The currency markets saw continued pressure on the pound, as Keir Starmer faced mounting calls from his own Labour Party to resign amidst political turbulence, causing the currency to sink, even as Starmer himself refused to step down. Simultaneously, Japan’s finance minister confirmed ongoing coordination with the U.S. regarding forex policy, though the yen weakened after a meeting with Treasury Secretary Scott Bessent.

Emerging markets showed resilience in equities, with stocks looking set to close at a record high driven by AI trades, allowing investors to brush off stalled peace talks; this optimism extends to China, where investors are hoping the upcoming Xi-Trump summit will extend trade detente. In corporate finance, Taiwan’s securities firms are seeking nearly $1bn in loans to fund expansion amid a booming local stock market, while in the UK, the government is being urged to use the bond markets’ ‘kindness of strangers’ to lower borrowing costs and mitigate the risk of a gilt run.

Corporate Earnings and Dealmaking

Industrial heavyweight Thyssenkrupp AG maintained its 2026 earnings targets but adopted a more cautious stance on sales, trimming its growth forecast range to between minus 3% and 0% due to geopolitical uncertainty. In the energy trading sector, Uniper SE’s trading division returned to profit in the first quarter, benefiting from improved gas division performance unhindered by Middle East supply disruptions. Housing construction saw M&A activity, as Dream Finders Homes submitted a $704 million bid to acquire rival Beazer Homes USA. Conversely, the Gulf’s dealmaking activity has visibly sputtered, with bankers seeing deal fees frozen after February’s onset of war, which also caused Brazil’s Petrobras to miss profit estimates despite the war-driven oil rally by keeping domestic gasoline prices artificially stable.

In Asia, Jollibee Foods Corp’s first-quarter profit sunk 39% due to surging costs, forcing the Philippine fast-food major to review its spending plan, while in India, the rising cost of living, exacerbated by the Middle East conflict, is reportedly causing factory workers to abandon city jobs. Meanwhile, Franklin Templeton is placing a strategic bet on India’s fixed income sector, aiming to fuel growth by capitalizing on rising investor interest. In corporate governance, CSL Ltd cut its full-year outlook and flagged an additional $5 billion in impairments, acknowledging a longer-than-expected turnaround period.

Technology, Regulation, and Political Economy

The political sphere saw continued fallout in the UK, where dozens of Labour leaders demanded Keir Starmer’s resignation, though the Prime Minister publicly denied he would leave. In the US, the FCC chair is continuing to crack down on Chinese tech gear over security concerns, even as the anticipated summit between Presidents Xi Jinping and Donald Trump approaches, where Beijing expects to press the U.S. on arms sales to Taiwan. Chinese technology firms are achieving domestic milestones, with DeepSeek turning to Huawei in its pursuit of self-sufficiency beyond reliance on U.S. components like Nvidia.

In financial regulation, the SEC is reportedly moving to end its ‘gag rule’ policy that allows settlements without admitting wrongdoing, a move criticized by industry figures. Insider trading concerns are rising, exemplified by prosecutors alleging a job-hopping lawyer recruited others at elite firms to tip traders, while former football star Gerard Piqué was fined €200,000 for insider trading. On the M&A front, Byron Allen is acquiring a controlling stake in Buzz Feed for $120 million, with co-founder Jonah Peretti stepping down as CEO to focus on AI. Furthermore, the focus on AI is so intense that even Amazon staff are reportedly using an in-house tool to delegate unnecessary tasks to AI agents to inflate their performance scores.

Sector Specifics and Regulatory Shifts

The low-cost airline sector is deemed "ripe for mergers" by Deutsche Bank analysts, as the oil-price spike squeezes carriers, a concern also leading United Airlines to revive a postponed, junk-rated muni bond sale totaling $256 million. In the defense and industrial spheres, South Africa’s mining sector is reportedly regaining competitiveness due to public-private partnerships, according to billionaire Patrice Motsepe. Meanwhile, investors are showing interest in the "revenge of glocal," balancing global systemic thinking with local implementation. In European retail, France is pressing the EU to crack down on platforms like Shein and Temu, citing warnings from consumer bodies about unsafe products, while the EU is also weighing adding carbon costs to outbound flights.