Tuesday May 26, 2026
Tuesday May 26, 2026
Tuesday, 26 May 2026 06:37 - - {{hitsCtrl.values.hits}}
Stocks surged and the U.S. dollar and oil prices slid on Monday as the prospect of a deal to end the Iran war buoyed risk appetite, although a lack of clarity over when the Strait of Hormuz would open kept enthusiasm in check.
The nearly three-month-long conflict in the Middle East has driven energy prices sharply higher and reshaped the global rates outlook, as inflation concerns intensify following Tehran’s effective shutdown of the key strait.
Stock markets brushed off comments from Iran’s foreign ministry spokesperson on Monday saying that while many topics had been agreed, this did not mean Tehran is close to signing a peace deal.
The pan-European STOXX 600 (.STOXX), opens new tab climbed around 1% to 631.1, while Nasdaq futures were 1.4% higher and S&P futures were up 1%. However, liquidity was likely to be thin, with several markets including in Britain and the United States closed for public holidays.
The euro zone government bond market was on a tear, with Germany’s 10-year government bond yields hitting their lowest since April 8, last down almost 10 basis points while Italy’s 10-year yields fell to their lowest since April 17.
In Asia, Japan’s Nikkei (.N225), opens new tab jumped roughly 3% to roar past the 65,000 level for the first time and Taiwan stocks rose (.TWII), opens new tab to 43,644, both closing at record highs.
Global stocks have mostly shrugged off war worries to focus instead on all things AI and a strong earnings season, which has pushed equities to record highs through the year.
The increase in energy prices since the conflict began and the risk that prolonged disruptions will keep them high has prompted traders to bet on rate hikes across both developed and emerging markets.
Markets are now fully pricing in a 25-basis-point hike from the U.S. Federal Reserve in January 2027, a sharp shift from expectations before hostilities erupted in late February, when two rate cuts this year were anticipated.
