MARKET WRAPS
Stocks:
European markets opened lower Friday, after gaining in the previous two sessions, and stayed in the red.
Semiconductor companies slid after Trump left China without announcing any major tech deals.
The U.S. delegation including CEOs from Nvidia, Apple and Tesla had given investors hope for updates on Nvidia's sales in China or tech deals, but U.S. Trade Representative Jamieson Greer said in an interview that Nvidia and semiconductors weren't front and center during the summit.
In London mining majors fell with silver and gold prices.
European energy stocks bucked the trend, trading higher as oil climbed on fears of prolonged disruption to energy markets.
Trump's claim that he didn't need the Strait of Hormuz reopened comes as energy inventories continued to tighten and markets were on edge, MUFG said.
Despite the claim, acute shortages of key fuels and soaring prices could emerge within weeks if the Strait remains shut.
The drawdown in private storage and government strategic reserves along with a fall in demand due to the higher prices has bought time and prevented oil prices from exploding, but it has left little margin for error in the months ahead.
"You can only decrease consumption so much, and when inventories run out, they are going to run out," the Atlantic Council's Global Energy Center said.
"At some point the market is going to collide and prices are going to shoot up."
Market Insight
The trajectory of the Middle East conflict is still uncertain, and SEB said its base case was that a renewed escalation could be avoided.
It reckoned that higher bond yields didn't appear to be a major concern for risk assets in the near term , but Federal Reserve rate hikes would likely be a different matter.
Stocks to Watch
Banco de Sabadell could take a bigger hit than its peers from the Middle East conflict, KBW said as it cut its recommendation on the stock to underperform from market perform, and lowered its target price.
The bank could be more sensitive than others to a deterioration in asset quality, and shouldn't benefit as much as others from higher interest rates, it added.
While Deutsche Bank dialed down earnings expectations for the DAX due to the conflict in the Middle East, the consensus still projected an improvement in the second half driven in part by Germany's fiscal stimulus, it said.
DAX companies posted a 5% rise in first-quarter earnings compared with the year-earlier period.
U.S. Markets:
Stocks looked set to fall as investors fretted about soaring Treasury yields and Trump's trip to China concluded without any meaningful breakthroughs.
Forex:
The dollar rose to an 18-day high against a basket of currencies as Iran war tensions persisted and recent higher-than-expected prices data fueled speculation the Fed could pivot toward raising interest rates.
Sterling fell to a five-week low against the dollar and the euro on the prospect of Prime Minister Keir Starmer facing a drawn-out leadership challenge.
Bonds:
Eurozone government bond yields rose , tracking higher U.S. and Japanese bond yields.
Inflationary pressures, high oil prices, the continued closure of the Strait of Hormuz and political turbulence in the U.K. were among the drivers.
Commerzbank didn't expect 10-year yields would exceed 3.1% for too long, although oil prices were a risk it said.
Treasury yields rose with oil prices.
ING said that the 4.5% yield level for 10-year Tresaurys was a buy level .
Jefferies said higher inflation and deficits supported its view that investors should stay away from the longer end of the curve and have a steepening bias , adding that its order of concern remained the U.K., Europe and then the U.S.
SMBC said speculation that Japan's budget could swell had led to a sharp rise in JGB yields, after the 10-year JGB yield rose to its highest level in 29 years.
Energy:
Oil prices gained as the U.S. China meetings ended with few concrete agreements.
Trump told reporters that both he and Xi want the conflict in the Middle East to end and for Iran not to have a nuclear weapon.
However, tensions between Washington and Tehran continued, with little progress toward a lasting peace agreement.
"The Strait of Hormuz remained effectively closed, prolonging disruptions to global energy supplies and keeping markets on edge," MUFG said.
"The prolonged supply shock is also adding to inflation concerns globally as energy inventories continue to tighten."
Metals:
Gold prices dropped, pressured by a stronger dollar and rising Treasury yields as a surge in U.S. inflation fueled fears of higher interest rates.
Gold futures in New York fell 2.2%, while silver plunged 7%.
"The stronger-than-expected rise in consumer and producer prices raised concerns that the Fed may need to increase interest rates in the short term," ANZ said.
EMEA HEADLINES
LVMH to Sell Marc Jacobs Fashion Brand to WHP, G-III Apparel
LVMH Moët Hennessy Louis Vuitton agreed to sell the fashion brand Marc Jacobs to WHP Global and G-III Apparel Group in a $850 million deal.
The two buyers agreed to pay $425 million each to buy the brand and split ownership 50/50, according to a Thursday filing.
Stellantis, Dongfeng Ink $1.17 Billion Deal to Make Peugeot, Jeep EVs in China
Stellantis has struck another deal with a Chinese automaker, this time partnering with Dongfeng Group to produce electric vehicles under the Peugeot and Jeep brands in China.
The $1.17 billion tie-up underscores a broader shift in the global auto industry that is driving deeper collaboration between Western carmakers and their Chinese counterparts.
Syensqo Shares Jump on Better-Than-Expected Adjusted Earnings
Shares in Syensqo jumped Friday after the Belgian chemicals company posted first-quarter adjusted earnings that beat expectations.
In European morning trade, shares rose 6.7% to 62.75 euros.
GLOBAL NEWS
Tightly Choreographed Visit Masks Big Differences Between U.S. and China
BEIJING-President Trump and Chinese leader Xi Jinping headed into the final day of their summit with strikingly divergent stories to tell.
Beneath the pomp and bonhomie there are significant differences in what the two sides wanted to get out of the summit and how they perceive the U.S.-China relationship writ large.
Frenzied IPO Highlights Wall Street's AI Fervor
The market's AI party keeps rolling.
AI chip maker Cerebras Systems priced its initial public offering far above expectations on Thursday, and the shares rose nearly 70% from there on their first day of trading on the Nasdaq. Many investors clamoring to get a piece of the IPO received fewer shares than they wanted or nothing at all, forcing them to buy stock in the open market.
Beijing's 'Industrial Policy of Everything' Leaves Rest of the World in the Dust
In the decades since China joined the world economy, U.S. presidents have traveled to Beijing with a predictable list of demands: stop stealing American intellectual property, don't force technology transfer, open your markets. Donald Trump followed the script on his previous visit in 2017.
Whether he does so again this week, it would be pointless. Those demands reflect a view of Chinese industrial policy (broadly, government support for favored sectors) that is woefully out of date.
Fed's Barr: Shrinking The Balance Sheet Is The Wrong Objective
NEW YORK - Federal Reserve Gov. Michael Barr said shrinking the balance sheet is the wrong objective for the central bank, and many of the proposals to meet that objective would threaten financial stability.
Speaking at an event in Midtown Manhattan, Barr delivered the comments after Kevin Warsh's confirmation as Fed chair. Warsh has argued for shrinking the Fed's balance sheet to reduce the central bank's large presence in financial markets. Barr said some of the proposals to shrink the balance sheet would actually increase the Fed's role in markets.
CIA Director Meets With Cuban Officials in Havana
Central Intelligence Agency Director John Ratcliffe flew to Havana on Thursday for a rare meeting with Cuba's interior minister and the head of the country's intelligence service, as the country grapples with extreme fuel shortages and growing street protests.
Cuba's government said the meeting took place at the request of the U.S. Ratcliffe said Cuba needed to make fundamental changes to work with the U.S. on economic and security issues, a CIA official said. Ratcliffe told Cuban officials they have a limited window to stabilize the island's economy and engage with the Trump administration, the official added.
Senators to Suspend Their Pay During Government Shutdowns
WASHINGTON-Republican and Democratic senators unanimously adopted a resolution to suspend their pay during future government shutdowns, a measure designed to put more pressure on lawmakers to fund federal departments on time after record-setting lapses in the past year.
Sen. John Kennedy (R., La.) introduced the resolution, which passed the Senate on Thursday by a voice vote. The measure only applies to members of the Senate and doesn't need to be passed by the House or signed by President Trump. Lawmakers had drawn criticism in recent shutdowns for continuing to draw salaries while hundreds of thousands of federal employees were furloughed or working without pay.
Crypto Industry Notches Win in Washington After Brawl With Banks
WASHINGTON-A bill that would create a pathway for crypto to further upend the world of traditional finance moved one step closer to law Thursday, the latest testament to the sector's influence in Washington.
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05-15-26 0514ET
