Oil Falls, Stocks Rise as US, Iran Inch Toward Deal | The Asia Trade 5/25/2026

Key Concepts

• Geopolitical De-escalation: Potential US-Iran deal to reopen the Strait of Hormuz.
• AI Trade & Valuation: Massive funding rounds for Anthropic (potentially exceeding $30B valuation) and SpaceX; "Winner-takes-all" dynamics in AI hardware.
• Central Bank Policy: Transition to the "Kevin Worsh Fed" with a focus on data-dependent rate normalization and "trimmed mean" inflation metrics.
• Energy Markets: Brent crude price volatility; impact of Strait of Hormuz blockade on global supply chains.
• Fiscal Policy: Japan’s supplementary budget ($19B) to subsidize energy costs; Indonesia’s move toward centralized commodity export control.
• Corporate Compliance: Nvidia/Jensen Huang’s pressure on Super Micro Computer regarding compliance; carbon credit verification scandals in Europe.

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1. Geopolitical Developments: The Strait of Hormuz

• Status: US and Iran are reportedly edging toward a deal to reopen the Strait of Hormuz. President Trump indicated that while relations are becoming more productive, he will not "rush" into a final agreement.
• Key Issues: Negotiations remain thin on details. Concerns persist that the deal may be an interim "pause" or ceasefire, with difficult issues—such as Iran’s nuclear ambitions and potential tolls on the Strait—kicked down the road.
• Market Impact: Brent crude prices tumbled approximately 5% on the news, reflecting market optimism for a reduction in energy supply chain risks.

2. The AI Trade and Tech Sector

• Funding & Valuations: Anthropic is set to close a funding round that could push its valuation above $900 billion, potentially surpassing OpenAI. SpaceX is also preparing for a public offering targeting a $75 billion raise.
• Market Dynamics: The AI sector is exhibiting "winner-takes-all" characteristics. Bloomberg data shows that mutual funds failing to pivot to AI-heavy portfolios have significantly underperformed the S&P 500.
• Compliance Issues: Nvidia CEO Jensen Huang publicly urged Super Micro Computer to improve its compliance and regulatory adherence following the detention of three individuals in Taiwan linked to fraudulent AI server declarations.

3. Central Bank Policy and Macroeconomics

• The "Worsh Fed": Kevin Worsh’s leadership at the Federal Reserve is expected to prioritize inflation-fighting credibility over market stimulation. His focus is on "trimmed mean" inflation (removing volatile outliers) and balance sheet normalization.
• Japan (BOJ): The Bank of Japan is expected to hike rates to 1% in June, supported by successful wage negotiations (Rengo) and strong corporate profitability.
• Australia (RBA): The RBA is expected to hold rates in June, with potential hikes in August/September if April CPI data shows a "pass-through" of energy costs into discretionary spending categories.

4. Regional Trade and Policy

• APEC Ministerial Meeting: A brief, unscheduled encounter occurred between Japanese Trade Minister Akazawa and Chinese Commerce Minister Wang Wentao. While not a formal breakthrough, it marked the first ministerial contact since November.
• Indonesia’s Export Strategy: Indonesia is establishing a centralized export agency under the Danantara sovereign wealth fund to control commodity pricing (e.g., palm oil, nickel). The policy aims to capture more value domestically but has created uncertainty regarding implementation timelines.
• China’s Coal Sector: Following a mining disaster in Shanxi province (82 deaths), analysts are monitoring for a potential crackdown on coal production, which could tighten global energy markets if domestic supply is restricted.

5. Notable Quotes

• Jensen Huang (Nvidia): "Ultimately, Super Micro has to run their own company just as everybody has to run their own company and I hope that they will enhance and improve their regulation and compliance."
• Marco Rubio (US Secretary of State): "Energy is... the key behind all of the great industries out there... all of it begins and ends with the ability to generate the power necessary."
• Winston Chung (Lenovo CFO): "We’re defining this as the AI decade for Lenovo and I think we’re in the first year of that journey."

6. Synthesis and Conclusion

The global market narrative is currently defined by a "tentative optimism" regarding the resolution of Middle East geopolitical tensions, which has provided a reprieve for energy prices. However, structural challenges remain: central banks are navigating a complex transition toward inflation-focused normalization, and the AI sector is experiencing a massive capital influx that is reshaping index compositions and corporate compliance standards. Investors are shifting focus from broad market exposure to specific "hard asset" and AI-infrastructure plays, while regional powers like Indonesia and China are increasingly asserting state control over critical supply chains and commodity exports. The overarching theme is a move toward greater fiscal and regulatory scrutiny, even as markets attempt to price in a post-conflict recovery.