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Stocks climb despite Iran uncertainty, dollar near recent highs, oil up
The European stock market was set to post its biggest weekly gain since early April. Meanwhile, U.S. stocks were on track to make their eighth consecutive weekly advance, despite the lingering uncertainty surrounding U.S. and Iran peace talks. Iran's Foreign Minister met Pakistan's Interior Minister on Friday to discuss plans to end the 'U.S. - Israeli war', Iranian media reported. Tehran and Washington are still at odds about Tehran's uranium stocks and control over the Strait of Hormuz. Investors largely ignored the economic impact of the Middle East conflict, and the energy crisis. The S&P 500 is on track to gain its eighth consecutive weekly. This strength was only partially reflected in the major European and Asian indexes. They gained some ground but lacked behind the U.S. rally. Mark Haefele is the chief investment officer of?UBS Global Wealth Management. He said that "our view is that equity prices will move higher in the medium-term,?based on a mixture of strong earnings and oil prices that remain contained to avoid a wider growth shock. UBS predicts Brent crude to be at $105 by the end of September, and $95 by the year's end. They believe "that the bar is high for a Federal Reserve increase." The main MSCI world stock index increased by 0.21%. Europe's STOXX?600 index was up by 0.43%, and is on track to achieve a weekly increase of 2.8%. Nasdaq Futures rose 0.11%, while S&P futures rose 0.13%. S&P 500 index rose 0.17% to 7,445.72 on Thursday, after reaching 7,517.12 the previous week. MSCI's broadest Asia-Pacific index outside Japan rose by 0.74%. Japan's Nikkei rose 2.8% led by shares related to artificial intelligence. Matt Britzman is a senior equity analyst with Hargreaves Lansdown. He said, "Oil prices are also moving higher as investors weigh the risks that talks will drag on or fall apart." The truth is, nobody knows the outcome of these negotiations. But for the moment, the markets are acting as they do whenever a geopolitical off ramp appears. They are tentatively moving, as if good news was just around the corner. OIL PRICES Slightly Higher, But Still Below Recent Highs Brent crude futures increased 2.5% to $105.28 per barrel, but are expected to drop 3.8% for the entire week. They reached $126.41 at the end of April. Energy disruptions that continue to persist could lead to a global price increase, as traders are compelled to raise rates. According to CME FedWatch, the markets are pricing in more than 50% of a rate increase by the U.S. Federal Reserve before the war began, as opposed to expectations of two rate reductions. This has boosted Treasury yields, and the dollar has also benefitted from "safe-haven" demand. The euro is at $1.1614 and close to its six-week low, which it reached on Thursday. It will drop 1% this month. The dollar was up 0.18% against a basket of currencies at 99.37. The Japanese yen was last trading at 159.11 to the dollar. This is dangerously close to the 160 mark that traders fear will bring Japanese authorities back into the market. Energy prices must be reversed quickly, otherwise the combination of fiscal expenditure and capex boom will lead to a lot of price inflation, particularly in the U.S., said George Saravelos, global director of forex research for Deutsche Bank. Saravelos stated that the incoming Federal Reserve chair Kevin Warsh will have to choose between increasing volatility in front-end interest rates and helping the dollar or hurting the dollar at the back-end. He can't do both. Fed rate increases push up short-dated rates, but no action by the central banks could increase long-dated borrowing costs because markets are pricing in more inflation on the long-term. Since March, the European Central Bank has projected three rate increases by year's end. The dollar held its ground against the yen despite an intervention by Tokyo worth $65 billion to support the currency a few weeks ago. The last 0.1% increase was at 159.125yen.
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Sources say that Northeast Asia is the first region to ship jet fuel into Europe since the Iran War.
Shiptracking data and three trade sources have confirmed that the first cargo of jet fuel from Northeast Asia to Europe has been shipped since the Iran war began at the end of February. Asian supplies are up, but European commercial stock levels remain low. Shiptracking data from Kpler and LSEG, as well as a fourth source, showed that around 745,000 barrels of aviation fuel from Yeosu, South Korea, were loaded onto the Seriana from May 1-6, and then transferred to Yuan Lan Wan, near the Strait of Malacca, on May 18-21. According to LSEG and two trade sources, the volumes are bound for France. The trading house Vitol that chartered the Seriana as well as the Yuan?Lan Wan did not respond immediately to a comment request. Trade Stopped Through the Strait of Hormuz Data from shiptracking showed that Asia had not?shipped any jet fuel along this route since February 28, when the latest phase in the Middle -Eastern Crisis began with U.S. and Israeli airstrikes against Iran. The crisis caused the Strait of Hormuz to be virtually closed, and Asian refiners reduced their refining operations to cater to Asian demand first. Asia is the swing supplier of jet-fuel to Europe, and traders send cargoes along this route when arbitrage is profitable. Kpler shiptracking showed that average monthly exports were 1.5 million barrels in the past year. A volatile arbitrage spread between Asia and Northwest Europe has also been a factor in limiting shipments to the West since the Iran War. The arbitrage situation for European jet supply remains tight. "All Asian?loading?routes are closed to Europe immediately and in a large part for the medium-term," said Sparta Commodities' analyst James Noel Beswick, in a client letter dated May 21, One of three sources said that the cost for shipping from Singapore to northwest Europe was estimated to be $4 million, or less. This equates to about $40 per metric tonne. Two industry sources who could not be identified because they weren't authorised to speak in public, estimated the price differential between the two regions to be around $20-30 per ton during recent trading sessions. This is less than the shipping costs. Therefore, the arbitrage has been closed. (Reporting and editing by Barbara Lewis; reporting by Trixie Yap)
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Document shows that the Indian steel ministry is pushing to eliminate metallurgical coal tariffs
According to a document reviewed by the Indian government, India's Ministry of Steel allegedly asked its Finance Ministry to remove anti-dumping duties on imports of low-ash metallurgical "coke". The ministry cited inadequate domestic supplies as well as higher prices. India, the second largest crude steel producer in the world, imposed an anti-dumping provisional duty on imports for six months of low-ash metalurgical coke, also known as metcoke. India imports met-coke primarily from China, Indonesian, Poland, Japan, and Switzerland. Industry experts claim that import volumes have dropped sharply after the curbs. In a memo dated 18 May, the steel ministry referred to anti-dumping duty with an acronym. Emails seeking comments from the ministries were not responded to. The steel ministry highlighted 'the difficulties faced by the state-run Rashtriya Ispat Nigam Ltd. (RINL),' saying that the company was unable to obtain adequate quantities of metcoke at reasonable rates from the domestic market. This resulted in a 20 percent increase in input costs. Concerns for Small and Medium-Sized Steelmakers The steel ministry's memo stated that RINL has been adversely affected in terms of its competitiveness and operational viability due to the lack of met coke. RINL didn't respond to an email asking for comment. The ministry has also raised concerns about small and medium sized steelmakers who rely heavily on?metcoke merchant suppliers. The domestic market was unable to provide met?coke to the steel industry at rates that were competitive. Since the government implemented?import limits in January of last year, steel mills have had difficulty obtaining met coke. Steelmakers such as JSW Steel, ArcelorMittal, and Nippon Steel India have expressed concern over the impact the curbs will have on the steel production in India. According to BigMint, data on commodities consultancy, the imports of met?coke will fall 21% in 2025 to 3.81 million metric tons, compared to last year. In October, it was reported that India's steelmills only procured about half their metallurgical coal needs from domestic suppliers during the first half 2025.
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Indonesia works to finalize scheme for ambitious Russian Oil Import Plan
An official revealed that Indonesia was working on a special scheme for imports and a regulatory framework in order to fulfill its 'plan' to import 150,000,000 barrels of oil from Russia this year. Data shows only one shipment had reached the country. The announcement last?month of the Russian 'import deal,' which is part of Indonesian attempts to offset shortages caused by the Iran War, came after President Prabowo met with President Vladimir Putin in Moscow. The market views the goal as ambitious even with the framework already in place. To deliver 150 million barrels by the end of January, it would take roughly 700,000 barrels of crude per day. This is close to the amount that Russia sends to buyers like Turkey. Oil traders said that Russia exports about 5 million barrels per day of crude oil, mostly to China and India. To allocate such a large amount to a new customer would require diverting oil away from other buyers, which may prove difficult. The Russian energy ministry didn't respond to a comment request immediately. Laode Sulaeman, a senior official in the?Indonesian Energy Ministry, told reporters that no company had yet been selected to import oil. He did not give a time frame. "Pertamina is bound by global bonds, and must avoid doing anything that could violate their global bonds. Sulaeman, referring to Indonesia's state energy firm, said that they are currently working on a plan. Pertamina's Muhammad Baron, who was asked about the plan to import, said that the process would be done in accordance with the government directives while prioritising principles of good corporate management and applicable regulations. Due to Western sanctions and the distances involved in delivering Russian crude, it is likely that such deliveries will be difficult and expensive. Oil?traders reported that shipping data indicated no direct crude shipments in the near future. Kpler data revealed the only recent shipment of Russian crude to be delivered to Indonesia on April 21, and was Arctic Novy grade. Indonesia imports about 1 million barrels per day and will continue to do so, even if Russian crude is produced, officials said. This will help ensure supply security. Jakarta also pursues crude imports, including from the United States. (Reporting from Fransiska and Bernadette in JAKARTA; reporters in MOSCOW, editing by Alexander Smith.)
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UAE's Gargash warns against a renewed war, despite '50-50' odds for a US-Iran agreement
The advisor to the president of the United Arab Emirates said that there is a 50-50 chance of a U.S. - Iran peace agreement. However, he stressed that any settlement should address the causes of instabilities in the region, if it's to prevent future conflict. Pakistan is mediating a U.S. - Iran ceasefire in order to end a war that has shaken 'the global economy, and disrupted the trade through the Strait of Hormuz. This route is a major one for oil and liquefied gas shipments around the world. "There is a 50% chance that we'll reach an agreement." Anwar Gargash said, "My concern is that the Iranians always over-negotiated," at the Globsec Conference in Prague. This is nothing new. Over the years, they have missed many chances?because of their tendency to overestimate?their cards. Gargash added, "I hope they don't make the same mistake this time." He said the region needed a political solution, and that a second round would complicate things. Gargash, however, stressed that if negotiations were aimed at achieving a ceasefire only and did not resolve the underlying issues they could set the stage for a future conflict. He added that "that is not what we are after." Iran has repeatedly attacked the UAE in the conflict. This includes strikes on civilian infrastructure, and areas near U.S. Military facilities that are hosted by the Gulf state. Emirati officials reported that Iranian drones and missile attacks targeted 'desalination facilities, energy facilities and areas around Dubai and Abu Dhabi. Gargash warned any control of the Strait of Hormuz could set a dangerous precedent by politicising the strategic waterway, and placing it at the Iranians' mercy. He said that any changes to the status quo of the Strait could have grave global repercussions. This would include Europe. He urged European countries to see this issue as being directly related to their energy security and commercial interests. He said that the Strait of Hormuz should return to its status of an international waterway, which ensured free trade, energy and maritime traffic as it did for decades. (Reporting and editing by Sharon Singleton, Jana Choukeir and Maha El Dahan)
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UBS raises S&P500 annual forecast due to robust consumer spending and AI demand
UBS Global Wealth Management raised its 2026 S&P 500 'year-end forecast' to 7,900, up from 7,500. The company cited resilient consumer spending and strong demand for data center infrastructure. Morgan Stanley, for example, forecasted 8,000 dollars by 2026, on the strength of AI-driven investments, and earnings optimism. This was despite the inflation risk associated with higher oil prices due to the Middle East conflict. The current target of the wealth manager implies a 6% increase in the index's closing price, which was 7445.72. The company also announced a target for the June 2027 index of?8,200, but kept its "attractive view" on U.S. It also raised its estimate of?2026 earnings per share to $335, up from $310. In a note published on Thursday, UBS strategists stated that they still believe in the bull market's drivers: a resilient economy and profit growth; a Federal Reserve that is supportive of the AI rollout. They said that the increase in profit estimates was concentrated. About half of it is due to semiconductor demand and memory chip prices, while another quarter comes from higher profits in the energy sector, along with rising data center investments. According to LSEG's data, as of May 15, the first-quarter?S&P500 earnings are on track to rise almost 29% over last year. UBS stated that the recent rises in oil prices and rates of interest could start to undermine these bullish factors. (Reporting by Akriti Shah in Bengaluru; Editing by Pooja Desai)
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One person is killed and several injured in an explosion at MOL’s Tiszaujvaros Petrochemical Plant
A petrochemical explosion in Tiszaujvaros in eastern Hungary has resulted in the death of a person, and serious injuries to several others. In a post on Facebook, Magyar stated that MOL's Zsolt Henadi and Istvan Kapitany, his minister of economy were on their way to the plant. Magyar posted a picture of 'huge black smoke billowing from the plant. An explosion occurred at MOL Petrochemicals in Tiszaujvaros, during the restarting of the Olefin 1, plant. MOL reported that firefighters had contained the fire and are still working to put it out. The company did not provide any further information. Kapitany said in a post on Facebook that, according to the latest information, a compressed exploded during the restart of the Olefin 1 facility and the fire is still being extinguished. The steam cracker is located at the petrochemical facility of MOL in Tiszaujvaros. MOL's Olefin-1 has a production capacity of approximately 370,000 metric tons of Ethylene per year. According to MOL, there are two steam-crackers with a 660 kt/y capacity in Tiszaujvaros. MOL uses the majority of its ethylene to produce polyethylene plastics that are sold to plastics and packaging industry.
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China presses Japan on rare earths, a repeat of the 2010 showdown
China has blocked Japan from obtaining several rare earths, heavy materials, and other minerals for at least four months. This coincides with a dispute over Taiwan between the two nations, indicating that Beijing is using its control of critical minerals to gain diplomatic leverage. Japan is the second largest producer of rare-earth magnets outside of China, but, like the rest of the globe, it is largely dependent on Beijing to import certain heavy rare earths, which are used in magnets, aerospace, and defence as well as gallium. Chinese customs data show that since December, Chinese exports to Japan of rare earth minerals such as dysprosium and terbium oxide, along with speciality metals gallium, have all but stopped, except for a small number of shipments of the yttrium. Major Japanese magnet maker Shin-Etsu ?has stopped accepting new orders for dysprosium-containing magnets, according to a Western customer who spoke on condition of anonymity. The company declined comment. The halt in exports began soon after a diplomatic row erupted over Taiwan in November. It is similar to Beijing's throttling exports of such materials to the U.S., during the current trade conflict. Beijing tightened its export controls in Japan twice, firstly, in January and then again, the month after, targeting conglomerates such as?the shipbuilding division and aero engine division of Mitsubishi Heavy Industries. Ryosei Acazawa is scheduled to attend a meeting on Saturday. He is the highest-ranking Japanese official to have visited China since the dispute began. Tokyo takes measures to release stockpiled supplies when necessary, but does not reveal details. An official from the Japanese Industry Ministry said that the government was aware of the concerns about rising prices and tightening supply. RARE EARTH DÉJA VU David Merriman said that Japanese companies were better protected from the pressure campaign because a similar drop in Chinese rare earth mineral exports?in 2010 led to the building of stocks. The Japanese have also tried to reduce the use of heavy rare Earths in magnets, and looked for alternatives. According to data, China continues to export normal quantities (of the rare earth magnets) used by the automotive and other industrial industries. Components maker TDK said it does not expect any major impacts and has been diversifying its sources of supply. Mitsubishi Motors announced in February that it has secured rare earths until mid-year. Japan has funded alternative producers, such as Lynas rare earths in Australia. Last year it became the first commercial producer outside China of separated terbium-dysprosium. The company has also launched rare-earth projects in Australia, France, and Australia. It will take years for the Chinese to replace their supply of heavy rare earths. Lynas will produce 8 metric tonnes of dysprosium in the first quarter 2026. In 2024, China exported 14 tons of these two minerals per month to Japan.
The AI boom and Brittle bonds face off in the morning bid of AMERICAS
The ROI team's weekend reading, viewing and listening.
Mike Dolan is Editor-at-Large for Markets & Finance
Hello Morning Bid readers!
The week began with a new surge in sovereign bonds yields across the globe as the 'Iran energy shock' kept the pressure up on oil prices and inflation expectations, along with rate-hike betting. The risk-off trend took attention away from the AI frenzy and global equities were volatile. However, major indexes rose later in the week led by chipmakers.
Bonds were under renewed pressure as government borrowing costs reached several milestones. The 30-year U.S. Treasury Yields hit a new high this week. Japan's long term borrowing costs have also reached new records - and Britain's gilt rates are at their highest level since the 1990s, as investors worry about a potential change of Prime Minister. Bond?selling slowed down late in the week as gilts were given a reprieve from UK inflation that was below expectations and Andy Burnham's, the mayor of Manchester, who is the main contender to Keir?Starmer's premiership.
The energy crisis showed no signs of abating, but the Gulf situation remained the main aggravating factor for bond yields. Brent crude prices fluctuated throughout the week. Fresh attacks in the area over the weekend pushed Brent crude over $110 per bar on Monday. After reports that six million barrels of oil had been transported by supertankers through the Strait of Hormuz, prices dropped to $105/bbl.
Meanwhile, Trump has continued to pursue his hardball approach: he floated the idea of a new military strike while simultaneously urging Tehran towards a peaceful settlement, and he talked up the prospects for a breakthrough. The oil prices rose again on Thursday after Tehran seemed to be hardening its stance regarding its nuclear program, underlining the distance between the two sides in their negotiations.
Energy markets are in a race against time. Fatih Birol, the IEA's chief executive officer, warned that a crisis was looming as crude oil inventories in the world could reach critical levels if the Strait of Hormuz remains closed. This could indicate that the global oil market is only a few months away from a crisis.
The summer months may be the most difficult for fuel supply disruptions.
The recent ructions in the markets could be a sign of things to come, now that Kevin Warsh is in charge. Markets can no longer assume that the Federal Reserve would always buy bonds when they are in need.
Warsh takes over at a challenging time. Warsh, who is set to be sworn into office at the White House today, was expected to pursue rate reductions once he assumed his position, as per the president's stated wishes. This may not be possible, given the inflation backdrop.
Strangely, Trump appeared to back down from his demand for immediate rate reductions this week. In comments to the Washington Examiner he said he would "let Warsh do what he wants" to rates.
Does that mean that rates are unable to fall as long as the price pressures continue? Fed policymakers seem to be increasingly in agreement. Minutes of its April policy meeting were released on Wednesday and provided more context to the hawkish remarks in last month's statements.
The accelerating inflation in the U.S. has forced real interest rates to negative territory.
This week, the chip giant Nvidia announced its first-quarter earnings. It was one of the most anticipated events of this year's earnings season. The results were strong, but the reaction of the stock price was not as positive. This is a sign that the share price is already reflected in the optimism and the high bar set for the world's largest company to continue to impress markets.
A planned strike by Samsung employees dragged the tech giant down on Wednesday. However, the South Korean chipmaker, after an 11th hour deal, surged to a new record high on Friday, pulling the KOSPI index with it.
Elon Musk filed for SpaceX's long-awaited IPO on Wednesday. It could be the biggest in history. Sources claim that SpaceX could list its shares on the Nasdaq as soon as June 12. OpenAI is also reportedly planning to file an IPO soon, with a listing date of early September. AI rival Anthropic will also be hitting the Street.
Open Interest. For more data-driven insight on markets and commodities. Open Interest. Open Interest.
Why could AI increase the neutral interest rate? What could happen if the status quo changes in the Gulf region threatens the dominance of U.S. dollars? How is it that Australia's LNG industry is both uninvestable, and also the country's "greatest growth opportunity"? What is the story behind zinc's surprising strength? Which countries are the most susceptible to a diesel price squeeze? Why would China bulls be wise to tread lightly? Three key reasons for the continued equity rally
We're reading this weekend... RON BOUSSO. ROI Energy columnist. In his Substack Noahpinion economics columnist Noah Smith argues militaries that do not use drones in'modern warfare' are outdated. He warns that drones made in a day can destroy a whole year's production of tanks from Rheinmetall. It's scary stuff. GAVIN MAGUIRE is the ROI Global Energy Transformation Columnist. A report by the International Renewable Energy Agency shows that the decarbonization of heavy road transport, which was long viewed as a permanent reliance on diesel due to the cost and weight associated with batteries, has become increasingly viable. Things are changing fast. CLYDE RUSSELL: Columnist for ROI Asia Commodities and Energy, former columnist John Kemp, has created a slide deck that provides a clear and comprehensive look at the global impact of the closure of the Strait Of Hormuz on the oil markets. It includes graphical analysis of flows and prices.
We are listening to... Ron Bouso, a?ROI Energy columnist. This podcast from the Oxford Institute for Energy Studies analyzes how oil prices have responded to the?Hormuz Crisis in a volatile and sometimes unexpected manner.
We're keeping an eye on... JAMIE MCGEEVER. In March, Jeff Currie, Carlyle, and Amrita Sen, Energy Aspects, discussed the energy shock caused by the three-week-old Iran War. They reconvene two months later, and are still bearish, despite the Strait of Hormuz being closed. Currie asks: Why is oil at $100 and not $200 if markets are "la-la land"?
Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed are the authors'. These opinions do not represent the views of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
(source: Reuters)