This content was published on
May 28, 2026 - 05:42
5 minutes
(Bloomberg) — Stocks and bonds fell while oil climbed after fresh attacks in the Middle East and conflicting signals from the US and Iran on a deal to end the war.The MSCI All Country World Index, the broadest measure of global equities, retreated from a record high and dropped 0.4%. A gauge of Asian shares slumped 1.7%. Futures for the S&P 500 and the Nasdaq 100 retreated, while contracts for European stocks also pointed to a weaker open.US forces carried out airstrikes on an Iranian military site and imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz. Iran targeted the American airbase from which the attack originated, according to a report, which cited the Islamic Revolutionary Guard Corps. Kuwait also said it’s responding to hostile missile and drone threats.Brent crude climbed more than 3% to above $97 a barrel as the latest clashes underscored the elusiveness of any resolution to the war despite recent optimism. US authorities described the airstrikes as defensive.The dollar strengthened for a third consecutive day, while gold fell 1.5% to below $4,400 an ounce. Treasuries dropped as higher oil prices stoked inflation concerns, with the yield on the benchmark 10-year climbing four basis points to about 4.53%. Bonds in Australia and New Zealand also declined. The Bank of Korea held rates but clearly signaled a hawkish policy tilt.While resilient demand for the artificial-intelligence trade has repeatedly pushed global equities to record highs, elevated energy prices and the risk of high inflation have kept bond investors cautious. Attention now turns to Thursday’s release of the personal consumption expenditures index for April — the Fed’s preferred inflation gauge — for clues on interest rates and the next move for markets.“Peace-deal signals are still two-way, so markets are in wait-and-see rather than pricing a clean resolution,” said Billy Leung, an investment strategist at Global X Management. Some profit-taking in semiconductor stocks after a strong run is also weighing on markets, he said.What Bloomberg Strategists Say…“A hawkish hold from the Bank of Korea, firmer oil prices, and natural consolidation after a torrid run for equities have led to a mixed session across Asia. Investors appear increasingly content to lock in some profits ahead of a slew of US economic data, including PCE inflation, and following a massive run-up in asset prices.”— David Savage, Macro Squawk. For full analysis, click here.President Donald Trump said he was “not satisfied” in negotiations with Iran, damping expectations for an imminent breakthrough. Trump asserted that no one nation would control the Strait of Hormuz, highlighting a key sticking point in resolving the conflict as it enters its fourth month.US Secretary of State Marco Rubio said that “we’ll see over the next few hours and days whether progress could be made” on Iran.A US official said American forces had shot down a quartet of one-way Iranian attack drones that were fired at a commercial ship, and also struck another Iranian drone-launching unit in Bandar Abbas, near the vital Strait of Hormuz.Elsewhere, elevated energy prices and inflation risks are complicating the outlook for central banks as traders turn their focus to Thursday’s economic data. The PCE price index rose 3.5% from a year earlier in March and economists anticipate an increase to 3.8% in April. That’s well above the long-run rate of 2% targeted by the Fed.Fed Vice Chair Philip Jefferson said he expects inflation to cool later this year as the effects of tariffs and higher energy costs wear off, though he warned inflationary risks remain tilted to the upside. Earlier, Fed Governor Lisa Cook said inflation is headed in the wrong direction and she would be prepared to raise interest rates if that persists.“I want to be clear about my risk assessment: The risks remain tilted toward higher inflation,” Cook said Wednesday.Corporate Highlights:PDD Holding Inc.’s shares suffered their worst drop in a year after the company’s first-quarter revenue missed expectations in part due to fierce domestic competition and weak consumer sentiment in China. Wilmar International Ltd. fell the most in almost six years after the Indonesian government named the palm oil titan as one of the companies being probed for suspected export abuses. Some of the main moves in markets:StocksS&P 500 futures fell 0.3% as of 12:37 p.m. Tokyo time Japan’s Topix fell 0.8% Australia’s S&P/ASX 200 fell 1.4% Hong Kong’s Hang Seng fell 2.1% The Shanghai Composite fell 0.1% Euro Stoxx 50 futures fell 1.1% CurrenciesThe Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.3% to $1.1596 The Japanese yen was little changed at 159.62 per dollar The offshore yuan was little changed at 6.7841 per dollar CryptocurrenciesBitcoin fell 2.4% to $73,311.99 Ether fell 3.7% to $1,983.58 BondsThe yield on 10-year Treasuries advanced four basis points to 4.53% Australia’s 10-year yield advanced six basis points to 4.91% CommoditiesWest Texas Intermediate crude rose 3.7% to $91.95 a barrel Spot gold fell 1.8% to $4,375.26 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Winnie Hsu.©2026 Bloomberg L.P.
