Public Markets 3 Days

Last updated: May 13, 2026, 5:30 AM ET

Geopolitical Tensions & Energy Markets

Global markets remained mixed as investors awaited clarity from the impending summit between Presidents Trump & Xi, set against a backdrop of escalating Middle East tensions. The Iran war continues to dominate sentiment, forcing oil traders to pause a three-day rally while awaiting developments in negotiations, even as President Trump repeated military threats against Tehran ahead of his China visit. The energy fallout is severe, with the IEA now projecting a 420,000 bpd contraction in global oil demand this year, a significant downward revision from its previous 80,000 bpd forecast, due to supply shocks. Furthermore, shipping company Hapag-Lloyd warned of rising fuel costs and network disruption, while in Japan, rising conflict-driven LNG prices have caused a climb in coal power generation as the nation seeks energy security.

The disruption to vital shipping lanes is having immediate downstream effects, causing construction projects globally to stall amid soaring material costs derived from oil products as noted by the Financial Times. The International Energy Agency further cautioned that global oil inventories are drawing down at a record pace, suggesting that recovery from the Strait of Hormuz supply shock will take months, even if consumption is temporarily lowered. This geopolitical premium is reshaping investment flows in the Middle East, where investors are now placing a greater premium on resilience over pure economic growth prospects as a draw for capital. Meanwhile, a liquefied petroleum gas tanker carrying Iranian cargoes sailed past the U.S. Navy’s blockade line, suggesting continued evasion of restrictions.

Fixed Income & Monetary Policy

U.S. Treasury yields edged lower but the 10-year neared 4.5% as oil prices slightly eased, though persistent Middle East tensions kept yields elevated following a hot inflation reading earlier in the week. The shift in rate expectations is impacting international bond holdings, with Japanese funds selling the most U.S. sovereign debt since 2022 after surging oil prices abruptly reversed Federal Reserve policy bets. Concurrently, Eurozone government bond yields eased slightly, tracking the movement in Treasurys as oil prices softened. In the UK, political uncertainty surrounding Prime Minister Keir Starmer’s leadership caused turmoil, driving 30-year gilt yields back to their highest levels since 1998 according to Bloomberg, though Sterling later recovered after Starmer reaffirmed he would not step down.

Central bank commentary reflects the difficulty of navigating inflation driven by external shocks. European Central Bank member Olli Rehn warned that current data suggest the beginning of a stagflationary shock resulting from rising energy prices stemming from the Middle East conflict. In a related context, the bond market is grappling with the persistence of these supply-side challenges, which are pushing against expectations for rate cuts as noted in a Bloomberg analysis. In Eastern Europe, the Hungarian central bank unexpectedly lowered the interest rate on FX swaps, causing the forint to weaken immediately after enjoying one of the year’s most significant emerging-market currency rallies.

Corporate Earnings & M&A Activity

European corporate results showed a mixed picture, with industrial giants initiating shareholder returns amidst global uncertainty. Siemens AG announced a $7 billion share buyback program over five years, following reports of climbing orders across its key divisions, while simultaneously launching a separate repurchase plan of up to €6 billion. Insurer Allianz reported a record Q1 profit, boosted by strong property-casualty results and €38 billion in inflows into its asset manager, PIMCO. Conversely, German utility E.ON confirmed guidance after seeing its adjusted net profit rise 7% year-over-year, and later sealed the takeover of UK supplier Ovo, creating an entity serving nearly 10 million customers as reported by the FT.

In the automotive sector, restructuring appears to be taking hold at Nissan Motor, which forecast an operating profit well above consensus, signaling that cost-cutting measures are easing its cash-strapped position after seven straight quarterly losses. Meanwhile, Chinese EV maker BYD is actively negotiating with Stellantis and others to acquire underutilized European manufacturing plants, signaling a major shift in regional production capacity. In the UK, product-testing firm Intertek Group is leaning toward recommending a final, fourth takeover offer from private equity group EQT AB valued at £10.6 billion, a deal that has pitted the top UK rainmakers against each other according to the FT.

Asia Markets & Trade Dynamics

Anticipation surrounding the Trump-Xi summit created volatility, particularly concerning high-tech supply chains, as China prepares for a potential trade confrontation signaling it is ‘locked and loaded’. Shares of Chinese AI developers surged on hopes that Jensen Huang’s presence on the U.S. delegation could unlock H200 chip supply from Nvidia. However, underlying trade tensions remain, evidenced by the FCC continuing to target Chinese technology over security risks despite the ongoing trade thaw. Elsewhere in Asia, South Korean stocks received a boost, with JPMorgan Chase raising its Kospi target to 10,000 based on the semiconductor cycle improvement and corporate governance reforms.

Emerging markets faced pressure from Middle East instability, leading Turkey to deplete foreign reserves at a record pace in March to defend the lira. In contrast, India’s foreign exchange buffers are considered robust enough to defend the rupee, though the RBI Governor warned that retail fuel prices may need hiking if oil remains elevated a concern underscored by truckers facing diesel shortages. To curb non-essential outflows, the Indian government more than doubled tariffs on gold imports, aligning with Prime Minister Modi’s broader belt-tightening push that has raised pessimism among local stock investors according to Bloomberg.

Defense, Tech Valuations, and Capital Markets

Valuations in the defense technology space are climbing, with Peter Thiel-backed Anduril doubling its valuation to over $60 billion after raising $5 billion as the U.S. administration seeks out newer military kit suppliers. This surge contrasts with struggles elsewhere; for instance, BuzzFeed was acquired by Byron Allen in a move that will see co-founder Jonah Peretti shift to leading the company’s AI division. In private markets, defense contractor Bezos’s Blue Origin is weighing its first external fundraising round to support ambitious launch schedules. In London, the market debuted Uzbekistan’s state fund which rose after pricing a $604 million initial public offering, while MUFG is reportedly seeking to offload risk tied to $2 billion of private credit loans as that industry faces strain.

European Business & Regulatory Shifts

European businesses are navigating rising costs and political shifts. UK veterinary group CVS is facing activist pressure from Converium Capital, which argues the stock has failed to recover since regulatory probes concluded. Meanwhile, UK bonds recovered ground following a severe selloff, even as political concerns over PM Starmer’s tenure persisted. Financial services saw activity as FirstRand hired advisers to sell its UK-based Aldermore Group, signaling an exit from the European market. In Germany, President Lee Jae Myung clarified a viral post regarding a 'citizen dividend' from AI profits was intended to spark public debate on tax windfalls, as European AI stocks continue to soar chasing Wall Street’s rally.