Hot CPI, Iran Oil Crisis Send Equities Lower; NVDA Record Highs Defy Selloff

Asia and Europe closed mixed overnight as the Iran war deepened oil supply constraints and US inflationThe rate at which prices rise across an economy. data reignited stagflation concerns. Oil flows through the Strait of Hormuz collapsed 30% in Q1 2026, marking a 30-year low, while Saudi crude output fell to 1990s levels. The Nikkei 225 and DAX 40 fell on higher energy costs and Fed repricing, though Shanghai equities drew some support from Trump-Xi talks in Beijing. European bourses weakened as 10-year Treasury yields spiked to 5%, the highest since July, on back of hot US wholesale and core inflation data released May 13.

US futures are trading lower ahead of the 09:30 ET open, with S&P 500 e-minis down roughly 0.7%, Nasdaq Composite futures off 1.1%, and Russell 2000 futures weaker. VIXThe 30-day implied volatility of S&P 500 options. The 'fear gauge.' is elevated near 22. The inflationThe rate at which prices rise across an economy. shock has wiped out nascent Fed pivot trades; markets are now repricing near-zero probability of June rate cuts and extending terminal rate expectations higher. Energy stocks are outperforming on higher crude, but megacap tech faces headwinds from durationBond price sensitivity to interest rate changes. pressure and growth derating. NVDA stands as a notable exception, posting fresh all-time highs and crossing $5.5 trillion in market cap after Jensen Huang was invited last-minute to Trump's China summit with Xi Jinping, signaling potential US-China trade thaw on AI chips and infrastructure.

The macro calendar carries no scheduled US releases today, but the Trump-Xi summit in Beijing continues to dominate headlines. Energy traders are watching for any breakthrough on China's tariffs on US oil and gas flows, a dispute that has reshaped global fuel allocation since the Iran conflict began. Oil remains elevated; WTI and Brent crude are steady but well above pre-conflict levels, with storage constraints tightening further. Gold has fallen on rate-hike repricing, while the dollar index strengthens on safer haven demand and higher real yields.

Earnings season is winding; no major premarket or after-hours reports today. But the cross-asset picture is clear: stagflation fears are now front and center. The combination of sticky headline inflationThe rate at which prices rise across an economy., energy shocks, and Fed pivot reversal is driving equity rotation away from growth into defensive and energy names. DurationBond price sensitivity to interest rate changes.-sensitive tech is taking the brunt, though NVIDIA's geopolitical repricing and China tariff hopes provide a tactical countercurrent.

USD/JPY is bid near 156 as rate differentials widen in favor of US assets on higher rates. EUR/USD has sold off to fresh lows as European growth fears mount. Crypto is volatile; Bitcoin and Ethereum are under pressure from higher real rates, but XRP and Solana are rallying on rotation into smaller-cap assets and regulatory optimism around commodity classification for XRP.

The desk is watching three key levels into the open: S&P 500 support at 5,800 (major technical), if breached signals deeper rotation; 10-year yield resistance at 5.10%, breach risks further growth derating; and WTI crude above $95 bbl, which would signal persistent supply-side stagflation risk. Trump-Xi optics on trade and AI chip sales will drive intraday volatile swings, but the macro undertone remains defensive and rate-sensitive. Expect continued pressure on durationBond price sensitivity to interest rate changes. and growth until Fed guidanceCompany-issued forecasts of future financial performance. clarifies or inflationThe rate at which prices rise across an economy. data softens.