The S&P 500 rose 0.8% last week, extending its advance as strong corporate earnings and continued enthusiasm around artificial intelligence outweighed concerns over energy disruption and geopolitics. The upbeat mood on Wall Street contrasted with growing anxiety in Europe, where investors are increasingly focused on the economic fallout from the standoff around the Strait of Hormuz.
RBC BlueBay Asset Management warned that Europe risks sliding into recession if Hormuz remains closed for another month, underscoring how exposed the region remains to imported energy shocks. The pressure is already feeding through into industry: BASF has raised prices again for plastic additives, citing supply-chain disruption and higher costs linked to the war.
Diplomatic efforts showed little sign of progress, with talks between Washington and Tehran still deadlocked. Against that backdrop, Iran’s foreign minister is set to meet President Vladimir Putin, a move that could tighten coordination between Moscow and Tehran as both countries navigate sanctions pressure and global energy politics.
The diplomatic impasse helped keep oil elevated, with Brent crude up 1% at $106 a barrel.
In China, authorities blocked Meta Platforms’ $2 billion acquisition of AI platform Manus, in a fresh sign of Beijing’s resistance to large foreign takeovers in strategically sensitive technology. Officials are also beginning to restrict U.S. capital from investing in Chinese high-tech sectors, adding another layer to the growing financial decoupling between the world’s two largest economies.
At the same time, Chinese AI startup DeepSeek cut prices for its new model, intensifying pressure across the sector as companies race to win market share. Beijing’s broader technology posture remains mixed: it is encouraging domestic innovation while tightening political control over foreign ownership and funding.
One notable shift in the domestic economy came from households. China’s household debt has fallen for the first time in three decades, a sign that consumers may be deleveraging after years of rapid credit expansion, even as the country’s wider economy has held up better than expected this year. China’s first-quarter GDP growth accelerated to 5%, beating forecasts and reflecting resilience in exports and manufacturing. bloomberg.com
Relations between China and the European Union have also soured after the bloc’s latest sanctions package against Russia included some Chinese companies, broadening the diplomatic fallout from the war in Ukraine and complicating trade ties between Brussels and Beijing.
In markets, attention in Asia centered on CATL, which is seeking to raise $5 billion in Hong Kong in what would be the city’s largest share sale of 2026. The deal is expected to test investor appetite for major Chinese listings as global funds weigh geopolitical risk against the country’s central role in electric-vehicle supply chains.
European and Japanese stocks rose 0.6%, while Chinese equities traded mostly flat. U.S. futures pointed to a muted open after the S&P’s latest record push, and Brent remained firm at $106.
The broader picture is one of markets still willing to buy into earnings and AI momentum, even as energy chokepoints, stalled diplomacy and worsening China-West relations keep the macro backdrop fragile.
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