Public Markets 3 Days

Last updated: May 17, 2026, 5:31 AM ET

Energy & Geopolitics: The Iran War Oil Shock

The Iran war continues to reshape global markets as crude prices surge on fears that the conflict will choke off energy flows through the Strait of Hormuz. Countries are returning to coal as a reliable fallback power source, while the U.S. 30-year Treasury yield closed the week at its highest level since 2007, dragging global bonds into a rout that has begun to challenge Wall Street's risk-on momentum. The economic toll is already materializing: a wartime price spike is causing a $45 billion rupture in the economy, slamming consumers with higher energy bills while lifting the portfolios of oil and commodity investors. Gulf freight rates have jumped as shipping companies turn to trucks to move cargo, with lorries carrying only a fraction of the volume ships can haul, pushing logistics costs into the thousands of dollars per shipment. Meanwhile, a Vietnam-bound supertanker carrying 2 million barrels of Iraqi crude resumed its journey after being halted by the U.S. Navy in the Gulf of Oman, while the number of unsanctioned supertankers traversing Hormuz has crept higher in recent days, offering limited but tangible relief to an oil market that has suffered its largest supply disruption in years. The United Arab Emirates announced it will double its oil export capacity bypassing Hormuz by 2027, a move that signals Gulf producers are building long-term resilience into their supply chains. On the policy front, Malaysia unveiled measures to help airlines weather the financial strain from rising fuel costs, and Singapore Airlines reported annual profit erosion of $846 million from the disruption to its Air India stake. The International Energy Agency's Fatih Birol warned that ending the energy crisis will require more than reserve releases, as the global rush to stockpile manufactured goods intensifies in the shadow of the conflict.

Bonds, Yields & Currency Markets

Rising yields are testing the durability of the stock market's AI-fueled rally. European stocks fell by the most since late March as oil-driven inflation fears sharpened, while the dollar finished its best week in over two months after U.S. data pointed to price pressures that could push the Federal Reserve to hike rates. Japan's record-high government bond yields have triggered bets on capital repatriation, with fund managers expecting domestic investors to sell U.S. Treasuries in favor of JGBs, a shift that would add further upward pressure on American borrowing costs. The bond selloff has caught up with Wall Street's risk rally, with investors acknowledging that the tech and AI stock frenzy faces headwinds from tighter financial conditions. JPMorgan raised its Taiex bull-case target to 50,000 on expectations of an AI buildout in Taiwan, but RBC's Lori Calvasina warned that a 5% Treasury yield would challenge bullish U.S. stock calls by compressing price-to-earnings multiples. Gold settled 0.4% lower at $4,678.10 as risk sentiment wavered, and silver dropped 4.5%, extending its recent weakness. An ECB governing council member suggested a modest rate hike could temper inflation without damaging growth, while UK government bonds performed better than feared despite the global selloff.

China, Trade & Geopolitics

China is moving quickly to counterbalance Western pressure on its economy. The country's market regulator set out 34 priorities for 2026 to support private sector growth, focusing on fair competition, stronger legal protections and more efficient regulation. President Xi Jinping and Vladimir Putin exchanged congratulatory messages marking the opening of the China-Russia Expo in Harbin, emphasizing deepening cooperation as Russian President Putin prepares to visit Beijing days after President Trump's trip. China's Ministry of Commerce said tariffs were discussed at the Trump summit, claiming a preliminary agreement to reduce some tariffs, though analysts noted the lack of concrete outcomes undercut the conciliatory tone. Treasury Secretary Scott Bessent signaled the U.S. and China will begin discussing AI safety, but neither side appears willing to slow development. In a separate move, China's peak may already be here, according to some analysts tracking the country's growth trajectory. Marco Rubio has struck a softer tone on China to align with Trump, reversing his earlier hawkish rhetoric about regime change. Taiwan arms sales are being used as a bargaining chip with Beijing, raising questions about the reliability of U.S. security commitments in the region. Meanwhile, China's top market watchdog is prioritizing private sector support as growth concerns mount.

AI, Tech & Capital Markets

The artificial intelligence trade is reaching new heights, but signs of froth are emerging. A six-week retail fund turned into a record-busting AI trade as small-town investors piled into tech names, while Japanese flash memory maker Kioxia reported surging profits on the AI frenzy and is preparing a U.S. listing. ByteDance and Kuaishou have pulled ahead of U.S. rivals in AI video generation, lifting the quality of AI-generated content across advertising and entertainment. Day One, a Chinese data centre operator, plans a dual IPO in Singapore and the U.S. targeting $5 billion, joining a wave of AI-related listings that has prompted a legal hiring spree in Hong Kong. Shenzhen Adtek filed for a Hong Kong IPO, adding to the surge in AI-themed offerings. However, investors are already factoring in cyclicality in the chip industry and acknowledge they have frequently misjudged the timing of downturns. The retail euphoria has also fueled a boom in tax-loss harvesting as the stock surge propels new strategies, while spurious AI-generated submissions have flooded corporate bug bounty programs, straining cybersecurity reward schemes. Stripe's John Collison described a future of agentic commerce where AI agents do the shopping, and Multiverse raised $70 million boosting its valuation to $2.1 billion as demand for AI workforce training accelerates. JPMorgan raised its target for Taiwan stocks for the second time in a month, calling the market the "most pure-play exposure to the global AI buildout."

Deals, IPOs & Private Markets

Private equity and IPO activity remain robust despite bond market turbulence. Bain Capital closed its largest Asia fund after raising $10.5 billion, exceeding its target by $2.1 billion from external investors. SpaceX is seeking to file for a public IPO as soon as Wednesday, according to people familiar with the matter, marking one of the most anticipated listings in years. Vin Fast plans to sell two Vietnamese factories to shed about $6.9 billion in debt, while Ecobank is exploring yuan-denominated trade links with China to reduce dollar dependence. On the credit side, U.S. federal prosecutors are scrutinizing BlackRock's private credit fund over valuation practices, and the Wall Street Journal warned that private credit bargains may be illusory. GFL Environmental's proposed acquisition of Secure Waste Infrastructure won backing from two major proxy advisory firms despite opposition from Abrams Capital. Meanwhile, QVC filed for bankruptcy protection, a stark reversal for once-household-name retail, and Berkshire Hathaway sold about $8 billion of Chevron shares in the first quarter as the oil giant's stock hit record highs. The yen's rise to record yields is spurring expectations of Japanese capital flowing back home, potentially pressuring U.S. Treasury demand.