As of 12:00 Germany time (CEST, UTC+2)
Daily Market Wrap – Monday, May 18, 2026
As of 12:00 Germany time
TL;DR: Renewed Gulf attacks, oil above $110 and a deepening global bond selloff drove a broad risk-off tone into Monday’s European session.
In Asian Equity Markets stocks fell on Monday as fresh attacks in the Gulf, rising oil prices and surging bond yields revived inflation fears across the region. Asian markets broadly retreated, with Japan and Hong Kong weaker, while India also came under pressure as higher crude prices and rising global yields pushed the rupee to a fresh record low. The risk-off move came at the start of a week that will test the durability of the AI-led equity rally, with Nvidia earnings due later in the week and investors increasingly questioning whether higher rates can coexist with stretched technology valuations.
In Currency Markets the U.S. dollar was broadly steady to slightly softer, but remained supported by risk aversion, higher U.S. yields and America’s relatively stronger position as an energy producer. The dollar index traded around 99.1, while the euro hovered near $1.1635 and sterling near $1.335. The Indian rupee hit another record low, extending its slide as the combined pressure of oil above $110 and higher global yields weighed heavily on energy-importing economies. FX markets remained closely tied to the inflation shock coming from the Middle East conflict and the associated repricing in sovereign bond markets.
In US Equity Markets stocks sold off on Friday as investor enthusiasm around AI and megacap technology gave way to inflation concerns, rising oil prices and a sharp jump in Treasury yields. The S&P 500 fell 1.24 percent to 7,408.50, the Nasdaq Composite declined 1.54 percent to 26,225.15 and the Dow Jones Industrial Average lost 1.07 percent to 49,526.17. Energy was the main relative bright spot, while growth-sensitive and semiconductor shares came under pressure. Despite Friday’s decline, the S&P 500 still posted a seventh consecutive weekly gain, underscoring how resilient the broader rally had been before the rates shock intensified.
In Commodities Markets oil extended its advance as the Iran war showed no clear path toward resolution and drone attacks in the Gulf deepened concern over prolonged disruption around the Strait of Hormuz. Brent crude climbed to roughly $110.50 per barrel, while U.S. crude traded near $106.70, keeping energy prices firmly at the center of the inflation debate. Gold edged higher from recent lows as geopolitical risk supported safe-haven demand, although sharply higher bond yields continued to cap the upside for precious metals. The broader commodities backdrop remained one of supply shock first, disinflation hopes second.
In European Equity Markets stocks fell by late morning as investors reacted to higher oil, renewed geopolitical escalation and the global bond rout. The pan-European STOXX 600 dropped around 0.5 percent, with France’s CAC 40 down roughly 0.9 percent and Spain’s IBEX 35 lower by about 0.5 percent. Travel and leisure names were among the weakest performers, with airlines hit by the prospect of higher fuel costs, while banking and industrial shares also softened. Publicis and Sonova stood out on the upside after company-specific news, but the broader tone remained defensive.
In Bond Markets the selloff deepened sharply as oil-driven inflation fears pushed investors to price a more restrictive path for central banks. The U.S. 10-year Treasury yield climbed to around 4.63 percent, its highest level since early 2025, while the two-year yield touched roughly 4.10 percent and the 30-year yield rose above 5.15 percent. The pressure was global: Germany’s 10-year Bund yield reached a 15-year high, while Japanese long-dated yields also surged. Markets are increasingly treating persistent energy disruption as a stagflationary shock, one that could keep policy rates higher for longer even as growth risks build.
