Cautious Mood Prevails as Investors Track Trump-Xi Summit, Iran Risks

Here’s your quick read to start the day: a chatty, no-fuss look at overnight moves, the big story, what’s on the docket, and the tickers you need to watch.

White House

President Trump arrives in Beijing, China to kick off a landmark state visit.

By Richard Fargose

May 14, 2026 at 2:04 AM IST

GLOBAL MOOD: Cautiously Risk-Off
Drivers: Geopolitical Fragmentation, Inflation Risks

Asia-Pacific markets traded mixed on Thursday as investors balanced optimism around the high-stakes meeting between US President Donald Trump and Chinese President Xi Jinping against persistent geopolitical risks in West Asia and Eastern Europe. Sentiment remained cautious, with markets looking for signs of progress on trade and technology restrictions rather than expecting a broader reset in US-China relations.

Japan’s Nikkei edged higher, while South Korea outperformed on continued risk appetite in technology and growth stocks. However, gains across the region remained capped as investors monitored discussions around tariffs, semiconductor export controls and rare earth supply chains. Markets are also watching whether China agrees to increase purchases of US agricultural products, energy and aircraft in a bid to avoid fresh tariff escalation.

Broader risk sentiment remained fragile amid continued conflict involving the US, Israel and Iran, which has kept energy markets volatile and geopolitical uncertainty elevated. Reports of renewed Russian attacks on Kyiv further reinforced concerns over global security risks across multiple regions.

Overall, investors remain positioned cautiously, with hopes for trade stability supporting equities, while unresolved geopolitical tensions continue to limit a stronger risk-on rally.

THE BIG STORY
The ongoing US–Israeli conflict with Iran dominated discussions ahead of Donald Trump’s meeting with Chinese President Xi Jinping in Beijing, as Washington faced growing geopolitical and economic pressure from the prolonged war. Trump was expected to seek China’s cooperation in easing tensions, although analysts remained sceptical that Beijing would align closely with US objectives.

At the same time, the conflict appeared to be accelerating strategic realignments across West Asia. Reports emerged suggesting Israeli Prime Minister Benjamin Netanyahu held secret discussions with UAE leadership earlier in the year, highlighting the deepening but sensitive ties between Israel and Gulf states following the Abraham Accords. The UAE officially denied the reports, reflecting the delicate regional political environment amid ongoing conflict.

Meanwhile, geopolitical tensions broadened beyond West Asia after Russia launched a major attack on Kyiv, underscoring continued global security instability across multiple fronts.

On the monetary policy side, Susan Collins warned that persistent inflation linked to prolonged energy disruptions could force the Federal Reserve to tighten policy further. Collins stressed that years of elevated inflation had reduced policymakers’ willingness to “look through” another supply-driven price shock, reinforcing the market’s growing higher-for-longer interest rate expectations.

Data Spotlight
US producer inflation accelerated sharply in April, reinforcing concerns that higher energy costs linked to the conflict in West Asia were increasingly feeding through into broader parts of the economy. Producer prices rose 1.4% month-on-month, the largest increase since March 2022 and well above expectations, while annual producer inflation climbed to 6%, the highest level since late 2022.

The surge was driven primarily by a sharp jump in gasoline prices, though inflation pressures broadened across transportation, wholesale trade, retail services and industrial inputs. Services inflation also recorded its strongest monthly increase in more than two years, indicating that higher energy costs were no longer limited to fuel markets alone.

Meanwhile, US crude inventories fell by more than 4.3 million barrels, significantly exceeding expectations and highlighting continued tightness in energy markets. Gasoline inventories also dropped sharply, reflecting strong fuel demand and constrained supply conditions amid ongoing Strait of Hormuz disruptions.

Takeaway:
The rising producer inflation and tightening energy inventories strengthened concerns that the West Asia conflict was creating persistent upstream inflationary pressure, reinforcing expectations of a prolonged restrictive Federal Reserve stance.

WHAT HAPPENED OVERNIGHT

US stocks rose as AI rally outweighed inflation and rate concerns
- S&P 500 gained 0.58% and Nasdaq surged 1.2%, both closing at fresh record highs.
- Semiconductor and AI-linked stocks rebounded strongly after the previous session’s weakness.
- Investors largely looked past hotter-than-expected producer inflation data and rising rate expectations.
- Rising oil prices linked to Strait of Hormuz disruptions continued to feed broader inflation concerns.
- Susan Collins warned that further rate hikes remained possible if inflation stayed elevated.
- Senate confirmed Kevin Warsh as the likely successor to Fed Chair Jerome Powell.
- Ford surged 13.2% after positive analyst commentary on its energy strategy and CATL partnership.
- Nebius Group rallied sharply following strong AI cloud revenue growth.

US Treasury yields climbed as inflation pressures strengthened hawkish expectations
- The US 10-year Treasury yield rose to 4.48%, highest level since July 2025.
- Strong producer inflation data reinforced concerns that energy-driven price pressures were broadening.
- US producer prices surged 1.4% month-on-month, strongest increase since 2022.
- Earlier consumer inflation data had also exceeded expectations, lifting concerns over persistent inflation.
- Continued US–Iran tensions supported expectations of prolonged elevated oil prices.
- Markets increasingly expected the Federal Reserve to keep rates unchanged through year-end.
- Probability of a 25-bps rate hike later this year rose above 30%.

US Dollar strengthened as producer inflation reinforced hawkish outlook
- The US dollar index rose 0.2% to 98.53 after touching a two-week high.
- Stronger-than-expected US producer inflation boosted expectations of tighter monetary policy.
- US Producer Price Index surged 1.4% month-on-month in April, the largest increase since March 2022.
- Markets reassessed Federal Reserve rate expectations amid persistent inflation pressures.
- Investors also focused on the high-level Trump–Xi summit in Beijing.
- Euro weakened against the dollar as US economic data supported the greenback.

Oil fell as rate hike fears offset geopolitical concerns
- Brent crude declined 2.0% to settle at $105.63 per barrel, while WTI fell 1.1% to $101.02.
- Markets turned cautious amid growing concerns over potential US interest rate hikes.
- Investors closely monitored developments from the Trump–Xi summit in Beijing.
- Comments from Boston Federal Reserve President Susan Collins reinforced fears that persistent inflation could force tighter monetary policy.
- Higher borrowing cost expectations raised concerns over slower global demand growth.
- Oil prices remained elevated overall due to ongoing uncertainty around West Asia energy flows.

Day’s Ledger*

Economic Data

UK Jan-Mar GDP Data
India April WPI Inflation Data
US April Core Retail Sales Data
US weekly Jobless Claims Data

Corporate Actions

Earnings: Allcargo Logistics, Apollo Tyres, Chambal Fertilizers & Chemicals, Dilip Buildcon, Dwarikesh Sugar Industries, Gayatri Projects, GTL, Gujarat Mineral Development Corporation, Hindustan Aeronautics, Hindustan Construction Company, Housing & Urban Development Corporation, Hubtown, Indian Railway Finance Corporation, JSW Steel, Kirloskar Oil Engines, Muthoot Finance, NIIT, Nilkamal, Siemens Energy India, Tata Motors Passenger Vehicles, The Great Eastern Shipping Company, United Spirits, Voltas, and Welspun Enterprises.

Policy

BoE MPC Member Pill Speaks

Tickers to Watch

BAJEL PROJECTS secures major EPC order from Power Grid for 765kV AIS substation project in Pune.
BHARTI AIRTEL Jan-Mar profit rises 10.5% YoY to ₹73.3 billion on revenue of ₹553.8 billion; board recommends ₹24/share dividend and approves stake hike in Airtel Africa to ~78% via share swap.
CROMPTON GREAVES CONSUMER ELECTRICALS reports 10.8% YoY revenue growth to ₹22.8 billion and 8.2% rise in adjusted profit; posts exceptional loss of ₹7.2 billion linked to Butterfly Gandhimathi impairment, dividend at ₹3/share.
DCM SHRIRAM announces ₹1.0 billion investment to expand formulated resins capacity through subsidiary.
LUPIN receives US FDA approval for Famotidine Injection, generic version of Pepcid, for US hospital market.
MAN INFRACONSTRUCTION reports weak Jan-Mar with revenue down 50.5% YoY and EBITDA declining 82%.
MAX ESTATES launches Gurugram residential project ‘The Terraces’ with GDV of ₹12 billion.
NBCC secures fresh orders worth ₹1.3 billion from Central Bank of India and Andhra Pradesh government.
OIL INDIA Jan-Mar profit jumps 122% QoQ to ₹17.9 billion on revenue of ₹59.6 billion; board approves Re 1/share dividend and signs JV for compressed biogas projects.
PNC INFRATECH’s JV with SPS Constructions emerges L1 bidder for ₹5.7 billion Kanpur bridge and road project.
TEAMLEASE SERVICES files writ petition in Karnataka High Court against EPFO notice involving dispute of ₹1.8 billion.
VA TECH WABAG and PEAK to develop a Bio-CNG project in Ghaziabad under BOT model.
ZYDUS LIFESCIENCES approves acquisition of US-based Assertio Holdings for nearly ₹15.9 billion and will consider share buyback on May 19.

Must Read