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May 19, 2026 – 05:02

(Bloomberg) — Stocks headed for a third day of declines as little progress on de-escalating the situation in Iran kept inflation concerns front and center, with oil prices and bond yields remaining elevated.

MSCI’s All Country World Index dropped 0.1%, with Asian shares falling 0.7% as concerns around Iran lingered even after President Donald Trump said he was holding off on fresh strikes on the Islamic Republic. Technology shares were weak, with South Korean stocks tumbling 3.6% after a gauge of chipmakers dropped during the US session. Contracts for the Nasdaq 100 Index also retreated.

While Brent crude fell 2% to about $110 a barrel Tuesday after Trump’s comments, the commodity is still up 80% this year with the vital Strait of Hormuz still effectively shut.

Higher oil prices and concerns about inflation are weighing on bonds, sending yields of government debt from Japan to the US to multi-year highs. The yield on the US 30-year bond edged up one basis point to 5.13%, having climbed to the highest since 2023 in the prior session. On Monday, yield on Japan’s 30-year government debt surged to its highest since the maturity was first sold in 1999.

Tuesday’s moves followed weeks of volatility sparked by the US-Iran conflict and the closure of the Strait of Hormuz, with investors brushing aside geopolitical risks as the AI-driven rally pushed equities higher. Markets now face a key test as bond yields from Japan to the US climb and crude oil prices remain elevated, increasing the likelihood the Federal Reserve will keep interest rates higher for longer.

“In this environment of high oil and rising yields, risk appetite is starting to dry up a bit,” said Tim Waterer, chief market analyst at KCM Trade. “Global bond yields moving higher is sending a clear reality check – sustained high energy prices could bring tighter monetary conditions sooner rather than later.”

Rising US bond yields pose a threat to Asia’s stock rally, as growing inflation fears offset ongoing optimism over benefits from the artificial intelligence boom.

Over the past five years, the MSCI Asia Pacific Index has fallen in 16 of the 19 weeks when the US 10-year Treasury yield rose by 20 basis points or more, losing 1.6% on average, according to data compiled by Bloomberg.

“I see elevated yields as a wake up moment for investors as they start to price in long-term impact of higher for longer oil prices,” said Justin Lin, an investment strategist at Global X ETFs Australia.

Earlier Monday, both the US and Iran said they’d rejected fresh offers as insufficient to secure a deal. The White House said a proposal delivered by Tehran through mediators Sunday lacked meaningful improvement, Axios reported. Iran, meanwhile, indicated US demands are unacceptable.

Trump has repeatedly threatened renewed military action against Iran without following through. There was no immediate confirmation from Tehran of renewed talks. Trump said the US was prepared to attack if an acceptable deal wasn’t reached but didn’t set a deadline.

Elsewhere, the US on Monday issued a new waiver allowing the sale of Russian crude oil and petroleum products that are already loaded on tankers, days after the previous one lapsed. Treasury Secretary Scott Bessent said in a post on X that the new general license “will help stabilize the physical crude market.”

“Oil prices are still elevated, despite coming off a bit,” said Nick Twidale, chief market analyst at AT Global Markets. “Treasury yields are dictating a lot of equity moves at the moment. In these higher yield conditions we will see a move out of stocks, when any uncertainty hits the market with the higher growth sectors likely to take more of the strain.”

Corporate Highlights:

Seagate Technology Holdings shares fell 6.9% Monday in its worst one-day drop in nearly two months after management comments at a JPMorgan conference sparked investor fears that the company won’t be able to keep up with soaring demand for memory chips. Nvidia Corp. Chief Executive Officer Jensen Huang, speaking days after he joined President Donald Trump’s summit in China, said he expects Chinese authorities will eventually allow the import of artificial intelligence chips from the US. A jury rejected Elon Musk’s claims that OpenAI under Sam Altman’s leadership betrayed its mission to benefit the public by morphing into a for-profit business, finding that he waited too long to sue the company. The Justice Department sought to drop criminal charges against the Indian billionaire, just after an announcement that the Treasury Department was resolving a sanctions-related probe involving the Adani Group’s flagship company. Alphabet’s Google and Blackstone plan to create an artificial-intelligence cloud company to rival the likes of CoreWeave using Google’s specialized chips. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.2% as of 11:57 a.m. Tokyo time Japan’s Topix rose 0.4% Australia’s S&P/ASX 200 rose 0.9% Hong Kong’s Hang Seng rose 0.1% The Shanghai Composite fell 0.4% Euro Stoxx 50 futures rose 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1643 The Japanese yen was little changed at 158.97 per dollar The offshore yuan was little changed at 6.8018 per dollar Cryptocurrencies

Bitcoin fell 0.3% to $76,591.48 Ether rose 0.3% to $2,121.76 Bonds

The yield on 10-year Treasuries was little changed at 4.60% Japan’s 10-year yield was little changed at 2.740% Australia’s 10-year yield declined seven basis points to 5.05% Commodities

West Texas Intermediate crude fell 0.9% to $107.71 a barrel Spot gold fell 0.4% to $4,549.23 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Abhishek Vishnoi.

©2026 Bloomberg L.P.