Key takeaways
- Global risk sentiment improved sharply after senior US officials signalled that a US-Iran peace agreement may be nearing completion, triggering strong gains in US equity futures and sending the US dollar lower.
- The US economy is showing increasing stagflationary pressures as consumer sentiment collapsed to a record low while inflation expectations continued to rise, placing new Federal Reserve Chair Kevin Warsh under immediate policy pressure.
- Asia Pacific markets rallied on easing geopolitical fears, led by Japan’s Nikkei 225 hitting a fresh all-time high, while Southeast Asia’s accelerating shift toward biofuels is beginning to create broader food supply and inflation risks across the region.
- Chart of the day: WTI crude bearish break below 50-day moving average with key short-term resistance at $100.80/bbl. Potential near-term weakness may expose intermediate supports at $90.50 and $87.60.
Top macro headlines
- US officials signalled an imminent US-Iran peace deal: In contrast to US President Donald Trump, who stated earlier on Sunday that he told his representatives “not to rush” into any deal with Iran, senior US officials highlighted that the US and Iran are closing in on a deal to reopen the Strait of Hormuz. The development triggered an intraday rally in S&P 500 (+0.8%) and Nasdaq 100 (+1.3%) E-mini futures during Monday’s Asia opening session.
- US consumer sentiment plunges to an all-time record low: The University of Michigan consumer sentiment index dropped to 44.8 in May, the lowest level on record, falling below the pandemic and 2008 financial crisis troughs. The collapse is directly tied to soaring gasoline prices approaching $5 a gallon nationwide due to the ongoing Middle East conflict.
- Kevin Warsh sworn in as Fed Chair amid stagflation: Kevin Warsh officially took the helm of the Federal Reserve on Friday. He assumes leadership of a central bank navigating a difficult environment where surging fuel costs are driving up inflation while rapidly eroding consumer demand.
- Gold surges as dollar weakens: Spot gold prices rose 1.2% to $4,564/oz on Monday, supported by a weaker US dollar and lower oil prices due to renewed optimism over an imminent US-Iran peace deal.
- Southeast Asia pivots to biofuels, threatening food supply: Cut off from Middle Eastern energy by the Strait of Hormuz closure, Southeast Asian nations are shifting palm oil and local crops into diesel and gasoline blends. This rapid transition is squeezing regional supplies for cooking oil, animal feed and agricultural exports.
Key macro themes
- Geopolitical whiplash and energy uncertainty: Conflicting messaging between US officials over the US-Iran peace process continues to create volatility. While oil prices initially hit two-week lows on optimism surrounding negotiations, the lack of a finalized agreement means the Strait of Hormuz remains closed, perpetuating the global supply shock.
- Stagflationary pressures worsen: With consumer sentiment at record lows and one-year inflation expectations rising to 4.8%, according to the final May University of Michigan survey, the US economy is flashing classic stagflation warning signs. Rising gasoline prices are disproportionately impacting lower-income consumers and severely complicating the Fed’s policy options.
- Food versus fuel crisis in emerging markets: The prolonged energy shock is forcing structural shifts across emerging markets. Southeast Asia’s increasing use of crops for fuel production highlights how the geopolitical oil crisis is spilling over into global agricultural and food supply chains, compounding inflation risks.
Global market impact (last 48 hours)
Equities: The S&P 500’s eight-week rally is showing signs of potential buyer exhaustion according to several technical indicators. Even if a US-Iran peace deal is finalized, markets may still face a “sell the news” reaction as June approaches, a month historically associated with softer equity performance.
Fixed Income: Incoming Fed Chair Kevin Warsh faces a difficult bond market backdrop. With US long-term five-year inflation expectations surging to 3.9%, the highest level since October 2025 according to May’s University of Michigan survey data, Treasury yields remain highly sensitive to any further energy-driven inflation shocks.
FX: The US dollar weakened over the weekend, offering a modest reprieve to emerging market currencies while making dollar-priced commodities such as gold and silver more affordable for international buyers.
Commodities: Oil prices initially hit two-week lows on optimism surrounding peace negotiations, but markets remain highly reactive to Trump’s subsequent “do not rush” remarks. Spot gold rose 1.2% to $4,564/oz, while spot silver surged 3.1% to $77.85/oz.
Asia Pacific impact
- Stock markets and regional security: Major Asia Pacific equity markets started the week on a bullish footing, tracking gains in US futures. The Nikkei 225 surged 3.1% to a fresh intraday all-time high of 65,330, while China A50 (+0.7%), ASX 200 (+0.6%) and STI (+0.6%) also advanced. Regional security developments will remain in focus this week with the Quad foreign ministers meeting in New Delhi on Tuesday, followed by the Shangri-La Dialogue in Singapore on Friday.
- Commodities and food security: Indonesia and Malaysia’s rapid shift toward higher biodiesel blends to offset lost Middle Eastern oil supply is tightening cooking oil availability. The diversion is expected to push food inflation higher and disrupt regional export balances.
- Diplomatic realignment: Philippine President Ferdinand Marcos Jr. is set to visit Japan to strengthen bilateral ties, reflecting broader regional efforts to secure energy cooperation and maritime security amid ongoing global instability.
Top 2 events to watch today
- US-Iran peace deal news flows – Impact: All asset classes
- Singapore Core Inflation (Apr) – 1:00 SGT (consensus: 1.7% y/y, Mar: 1.7%)
Impact: USD/SGD, SGD crosses, STI
Chart of the day – WTI crude bearish break below 50-day moving average
Fig. 1: West Texas oil CFD minor trend as of 25 May 2026 (Source: TradingView).
The price action of the West Texas oil CFD, a proxy for WTI crude oil futures, staged an intraday bearish breakdown below its 50-day moving average during Monday’s Asian opening session. This marks the first confirmed breakdown after price action previously tested the 50-day moving average on 6 May and 17 April 2026.
Hourly RSI momentum remains in bearish territory, with oversold conditions visible but no bullish divergence signal emerging yet.
Watch the $100.80 short-term pivotal resistance, which is also close to the 50-day moving average. Failure below this level could expose the next intermediate supports at $90.50 and $87.60.
On the other hand, a clearance with an hourly close above $100.80 would negate the bearish scenario and open the door for a squeeze higher toward the next intermediate resistances at $105.75 and $109.35.
