26/05/2026

BIZ & FINANCE TUESDAY | MAY 26, 2026

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The crude oil tanker Idemitsu Maru sails through Ise Bay near Chita City in Aichi Prefecture yesterday, after becoming the first crude tanker bound for Japan to transit the Strait of Hormuz since the Iran conflict began. – AFPPIC

Oil falls, stocks climb on hopes of Hormuz deal

HONG KONG: Oil prices fell and Asian stocks climbed yesterday over hopes a deal between the United States and Iran to open the Strait of Hormuz could be brokered. The price of North Sea Brent crude and West Texas Intermediate slipped in Asian trade around five per cent to US$98.47 and US$91.53 a barrel respectively at 0705 GMT (3.05pm in Malaysia). Washington and Tehran appear close to agreeing on ending the Middle East war that has effectively closed the Hormuz strait, driving up energy prices and stoking global inflation. A deal could be announced “today”, US Secretary of State Marco Rubio said yesterday during an official visit to New Delhi. It came after US President Donald Trump said negotiations were being conducted in an “orderly and constructive manner”, cautioning that US negotiators had been advised “not to rush into a deal”. Several sticking points have tempered hopes of a resolution to end the conflict and reopen the Strait of Hormuz, a critical energy corridor. Iran’s Tasnim news agency said that based on its information, key clauses in a possible agreement remained unresolved. One of the main obstacles has been whether Tehran is willing to hand over its stockpile of enriched uranium. The possible release of Iran’s frozen assets held under longstanding US sanctions is

o Japan’s Nikkei jumps past 65,000 mark for first time

entire setup,” said SPI Asset Management analyst Stephen Innes. “Investors will receive another critical read on Thursday with the release of the Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge. “After several hotter-than-expected consumer and producer inflation reports earlier this month, markets are increasingly concerned that elevated oil prices and supply disruptions tied to the Middle East conflict are beginning to seep into the broader inflation pipeline.” The conflict erupted after the US and Israel attacked Iran on Feb 28, and Tehran responded with missile and drone attacks across the region. The US and Iran have observed a ceasefire since April 8 while mediators push for a negotiated settlement, although Tehran has imposed controls on Gulf shipping and Washington has blockaded Iran’s ports. – AFP

Kuala Lumpur and Wellington dipped slightly. In Europe, Frankfurt and Paris jumped around one per cent at the open. London was shut for a public holiday. “The weekend news flow has once again focused on the prospects for a negotiated deal between the US and Iran,” said Chris Weston, head of research at Pepperstone. “According to reports from Donald Trump, a memorandum of understanding has been ‘largely negotiated’, with details to be announced at some stage soon, although there appears to be limited urgency,” Weston said. Investors will also be keeping an eye on how the US Federal Reserve and its new chief Kevin Warsh react to Personal Consumption Expenditures (PCE) data this week, as well as European inflation metrics. “The inflation story remains central to the

another sticking point. And whether Lebanon, repeatedly targeted by Israeli strikes despite a US-brokered ceasefire agreement, is included in the peace deal remains uncertain. Markets across Asia mostly climbed on Monday, with Tokyo closing up 2.9 per cent and topping 65,000 for the first time. Shanghai was up 0.9 per cent at the close, while Hong Kong and Seoul were shut for public holidays. Taipei jumped more than 3.2 per cent, with Manila, Bangkok, Jakarta, Singapore and Sydney also higher.

Treasury rout tests Washington’s tolerance for higher borrowing costs WASHINGTON: President Donald Trump’s resolve on Iran is being tested by a force largely beyond his control: the bond market. As yields rose rapidly over the last week, a White House official said there was significant anxiety among staff over gasoline prices and where the bond market is headed, with fuel prices the biggest source of anxiety right now. to comments from Trump about a resolution to the war. Over recent days and weeks, US Treasury investors have focused on the elusiveness of a deal and long-term consequences of the war, lifting yields well above 4.5% on the benchmark 10-year note. progress on peace is yet to be seen in the market. A sustained rise in borrowing costs could cool housing demand, weigh on consumer spending and, in a worst-case scenario, tip the economy toward recession. That risk could prove especially significant heading into the US midterm elections. Washington, which must maintain investor confidence to finance government debt. When investors lose faith, rising borrowing costs can pressure leaders. Former President Bill Clinton’s adviser James Carville told the Wall Street Journal in the early 1990s that he wanted to be reincarnated as the bond market, because“you can intimidate everybody”. Market participants warned that

Meanwhile, Federal Reserve officials looking to squash inflation have been discussing the possibility of raising interest rates instead of cutting them as Trump has urged. And some Republicans in Congress are growing concerned at some of Trump’s calls for spending ahead of the midterm elections which will decide whether they maintain thin control of the House and Senate. Rising Treasury yields feed directly into borrowing costs across the economy, including mortgages, credit cards and business loans, and can cause financial stability issues. Bond investors said the administration would have to pay attention. US Treasury Secretary Scott Bessent and the White House both suggested that elevated yields would prove temporary. On Wednesday, yields on US Treasuries retraced some of their sharp run-up, after Trump said talks with Iran were in their final stage. Earlier in the week the 10-year yield touched 4.69%, the highest since January 2025. It has surged more than 50 basis points since the Feb 28 start of the US-Israeli war with Iran, and was last at 4.56%. Reaction to the latest

“Affordability is a buzzword in Washington and for good reason because affordability really resonates with a large number of households and interest rates drive a lot of it,” said John Kerschner, global head of securitised products at Janus Henderson in Denver. Still, if a peace deal is ultimately brokered, the effects could be transient. This week, Bessent said elevated yields, especially at the long end of the curve, were being driven by the Iran war energy shock that will prove temporary. The White House also said any disruption was likely to be short-lived. “President Trump has always been clear about temporary market disruptions as a result of Operation Epic Fury, “ White House spokesman Kush Desai said in a statement. He said the administration was still focused on Trump’s “long-term agenda of accelerating economic growth, cutting red tape, and slashing fraud in government spending to restore America’s fiscal health”. The bond market has long been a powerful political force that can shape policy in

Higher yields mean elevated borrowing costs for businesses and consumers while rising oil prices push up inflation expectations. That mixture can cause headaches for the administration as it prepares for midterm elections in November. “The markets are showing him pain, and he has to figure out how to unwind that – and it’s not that easy,“ said Greg Faranello, head of US rates strategy at AmeriVet Securities in New York. “We’re already at levels that ultimately will spill over into mortgage rates and it’s going to spill over into the housing market.” Trump said on Saturday that Washington and Iran have been making progress on a peace deal in the three-month-old war, although on Sunday he emphasised there was no rush for a deal, dampening hopes of an imminent breakthrough. “I do think that if the administration is worried about higher yields, then trying to de-escalate the situation with calmer words is something they can do,“ said Shawn Snyder, economic strategist at Potomac Fund Management in Bethesda, Maryland. He added that market prices are responsive

Washington’s ability and willingness to respond may be limited, even if yields spike to a key pain level they identify as 5%, particularly when rates are driven by strong growth and persistent inflation rather than credit concerns. Intervening too aggressively in that environment risks undermining credibility on inflation and could exacerbate the pressures pushing yields higher. Sam Lynton-Brown, head of global macro strategy at BNP Paribas in London, said the rise was being driven less by fears over government borrowing and more by sticky inflation, strong economic growth, and elevated energy prices tied to geopolitical strains. When yields rise due to economic strength, markets and policymakers are less likely to view them as problematic, he noted. Indeed, equity and credit markets have so far absorbed higher rates without showing signs of stress. “You’ve got high yields, but so far stocks and credit are fine with those high yields,“ Lynton-Brown said. – Reuters