Economy
Stability in focus after Trump-Xi summit despite Iran war concerns
The focus on “strategic stability” during a summit between U.S. and Chinese leaders last week is considered to have reduced geopolitical risks for Chinese markets, but little progress on trade and the Iran war concerns will keep investor enthusiasm in check.
Trump’s first visit to Beijing since 2017 ended on Friday with no major breakthroughs on trade or tangible help from Beijing to end the more than two-month-old U.S.-Israeli war on Iran that has roiled the global markets.
While investors had limited expectations from the summit, they had hoped the talks could provide a pathway for a resolution to the war, which has sent energy prices surging amid rocky negotiations between Washington and Tehran.
The Chinese yuan on Monday slipped to a near two-week low against the dollar, as investor focus shifted from the summit to a global bond selloff triggered by inflationary worries and fresh signs of Middle East tensions.
Chinese stocks were largely flat on Monday after sliding more than 1% on Friday, as a risk-off mood descended upon global markets.
William Bratton, BNP Paribas’ head of cash equity research for Asia-Pacific, said while the summit was unlikely to result in immediate wins for equity investors, the longer-term outcomes were positive in terms of reducing geopolitical risk.
“This should, in turn, alter investor risk perceptions and may encourage U.S. capital to revisit the relative attractiveness of Chinese investment opportunities,” he said.
“We have, after all, seen U.S. investors turn incrementally more positive on Chinese equities year-to-date and we expect this to continue as the U.S.-China bilateral stabilises or, perhaps more accurately, becomes more predictable.”
The subdued market reaction to the summit on Monday also came after data showed China’s growth lost momentum in April, with industrial output and retail sales both sharply missing expectations.
Capital Economics analysts said that the glass-half-full interpretation is that although there were no breakthroughs, the summit helped to cement the trade truce, reducing the near-term risk of a renewed escalation.
“The fact that Trump has invited Xi to visit the U.S. in September also increases the odds that the two sides will play nice over the coming months,” they said in a note.
‘Tightly managed rivals’
Investors had hoped the talks could help pave the way for a peace deal in the Middle East. But with China, which is the biggest buyer of Iranian oil, offering no clear indication that it would weigh in on the conflict, markets are wary of renewed turmoil.
The geopolitical differences between the two countries have been laid bare, analysts said, by the contrasting positions of Washington and Beijing on the Iran war and the Strait of Hormuz, through which about a fifth of the world’s oil and liquefied natural gas normally passes.
Trump said Xi had agreed Tehran must reopen the critical waterway, while Xi did not comment on his discussions with Trump about Iran. China’s Ministry of Foreign Affairs called it a conflict “which should never have happened, has no reason to continue.”
Charu Chanana, chief investment strategist at Saxo, said without clear follow-through on trade, Taiwan, or the Iran conflict, the meeting risks being seen as a non-event: useful for sentiment, but not enough to change the market backdrop.
“That is where the risk still sits,” Chanana said. “Investors may be underpricing the chance that the Iran conflict keeps oil prices elevated, inflation expectations sticky and bond yields higher for longer.”
Separately, Taiwan will remain a significant factor in U.S.-China relations, analysts said, after Xi told Trump that mishandling the island could lead to conflict between the two powers.
Sam Jochim, an economist at Swiss private bank EFG International, said whether Trump signs off on a $14 billion arms sale to Taiwan will be of importance.
“Such a move would have the potential to destabilise his relationship with Xi,” he said.
Trump himself sowed some uncertainty after saying on Friday he had not decided whether to proceed with a major weapons sale to Taiwan.
A trade truce struck between the U.S. and China after a series of tit-for-tat escalations is due to expire later this year, and the lack of clarity around tariffs during the summit has weighed on investor sentiment.
Even the deal touted as the biggest single deliverable from the talks disappointed investors since Boeing’s stock fell after Trump on Thursday said China would buy 200 of the company’s jets, a number that was far fewer than analysts had expected.
Despite the limited progress on the trade front, Ting Lu, chief China economist at Nomura, called the two-day summit an exercise in “economic and political risk containment,” noting it delivered short-term stabilization for both leaders.
“For the remainder of 2026, the G2 powers have decided that if they must be rivals, they will at least be predictable, transactional, and tightly managed rivals,” Lu said, referring to a term Trump used for the duo in October.
Government bonds from Tokyo to New York extended losses on Monday as rising energy prices fueled by the Iran war stoked inflation concerns and reinforced investor bets on further rate hikes by central banks worldwide.
Benchmark 10-year U.S. Treasury yields, which move inversely to prices, jumped as much as 3.6 basis points to their highest since February 2025, at 4.631%, in early Monday trading, after climbing more than 20 basis points last week.
The two-year yield, which is most sensitive to inflation and rates expectations, touched a 14-month top of 4.105%, while the 30-year U.S. Treasury yield rose to a one-year high of 5.159%.
All three were trading just below those highs by mid-morning in Europe, still enough to cast a shadow over stock markets that have surged on the AI enthusiasm of recent weeks.
The bond selloff came on the back of a climb in oil prices on Monday, with Brent crude futures at $111 a barrel, as efforts to end the Iran war appeared to have stalled following a drone strike at a nuclear power plant in the United Arab Emirates (UAE).
More than two months into the war, investors are beginning to fret about the economic fallout from the conflict, fearing high energy prices will spill over into broader price rises and require central banks to raise interest rates.
Markets are now pricing in a more than 50% chance the U.S. Federal Reserve (Fed) will raise rates by December, according to the CME FedWatch tool, to combat the rise in inflation. Before the war, investors had seen the Fed cutting rates this year.
Market ructions are top of mind for G-7 finance ministers who met in Paris on Monday.
“We are no longer in a period where public debt is not a subject,” French Finance Minister Roland Lescure told reporters as he arrived at the meeting.
Kenneth Broux, head of corporate research FX and rates at Societe Generale, said to stop what he called a “slow-motion crash” in the bond market would require a retreat in oil prices, recession fears growing enough to spark a safe-haven rush to bonds, or prices falling low enough to attract buyers.
Japan bond yields at record high
Adding to the selloff on Monday was news that Japan’s government will likely issue fresh debt as part of funding for a planned extra budget to cushion the economic blow from the war, worsening already strained government finances.
Yields on the 30-year Japanese government bond (JGB) jumped more than 10 basis points (bps) to their highest on record at 4.200%, while the 10-year yield touched its highest since October 1996 at 2.800%.
DBS senior rates strategist Eugene Leow said news of the extra budget would compound current bond market anxieties.
“Sentiment was already weak heading into last week’s close. Additional fiscal spending from Japan definitely worsened matters,” Leow said.
“This feels like a rolling re-pricing across curves in the region as investors grapple with inflation worries.”
Eurozone bonds were also under pressure, with Germany’s 10- year yield, the benchmark for the currency bloc, hitting a 15-year top of 3.193%, extending last week’s 14 bp gain.
Markets see an 80% chance the European Central Bank (ECB) will raise interest rates next month and are pricing three such moves by year-end. Before the war, the ECB was expected to remain on hold this year.
Inflationary pressures coming through
Monday’s bond rout followed a steep selloff last week, as investors were spooked by a recent raft of hotter-than-expected inflation figures globally, particularly in the United States.
“The fact that we are now seeing data backing up inflationary fears that have been in the market since the Middle East conflict started I think is key,” said Nick Twidale, chief markets analyst at ATFX Global.
Data last week showed U.S. consumer and producer prices surged in April, with similar readings seen in China, Germany and Japan.
Much emphasis had also been placed on a closely watched two-day summit between U.S. President Donald Trump and Chinese President Xi Jinping last week, but investor hopes the talks would produce a breakthrough in the Iran war fell flat.
Though the bond rout was global, many of the drivers were at least partly local in nature.
Britain last week was at the forefront of the selloff amid domestic political upheaval as Prime Minister Keir Starmer’s future was called into question after poor local election results, raising investor fears he will be forced out and replaced by a more left-wing challenger.
On Monday, however, gilts were an unusual outperformer, with the 10-year yield down 4 bps to 5.14%. It jumped 26 bps last week to an 18-year high of 5.187%.
Despite ongoing settler violence, land seizures and forced displacement of Palestinians, tourists can book stays on occupied West Bank land through Booking.com, which lists accommodations in Israeli settlements there, according to a report by the U.S.-based advocacy group Eko.
The report, titled “Booking.com: experience Israel’s illegal occupation,” found 41 accommodation listings spread across 14 Israeli settlements in the occupied West Bank and annexed East Jerusalem, ranging from private rooms and apartments to resorts and so-called luxury camping sites.
According to Eko, some properties were advertised at nightly rates exceeding $7,000, while the listings collectively had received at least 3,800 customer reviews.
The group argued that by offering such properties to international travelers, Booking is helping normalize and economically support settlements widely considered illegal under international law.
Israeli settlements in the West Bank and East Jerusalem are viewed as violations of the Fourth Geneva Convention by much of the international community, including the United Nations.
Making occupation look ‘normal’
Eko said the listings were primarily concentrated in two areas: the Jordan Valley and Dead Sea region, and settlement blocs surrounding East Jerusalem.
Properties were identified in locations including Kalia, Almog, Ovnat, Mitzpe Shalem and Vered Yeriho in the Jordan Valley, where accommodations were marketed with descriptions such as “desert hospitality,” “luxury camping,” and “beach vacation.”
Additional listings were found in and around settlements such as Ma’ale Adumim, Kfar Adumim, Neve Daniel, Pisgat Ze’ev and French Hill, as well as within East Jerusalem’s Old City area.
The report said none of the listings disclosed that the properties were located on occupied land or referenced allegations that the areas had been seized from Palestinians through military confiscation, state land declarations, forced displacement, or settler violence.
“The settlement economy does not sustain itself by military force alone,” Eko said. “It depends on Israel’s ability to make occupation look normal – and tourism is one of the primary mechanisms for doing that.”
One case highlighted in the report involved land near the Palestinian town of al-Khader, south of Bethlehem, where Eko said property listed on Booking sits on land historically owned by the al-Sbeih family.
The report said the land, once used by the family for wheat and barley farming, now lies within the boundaries of the Israeli settlement of Neve Daniel, established in 1982.
Using geolocation data and Palestinian land registry documents, Eko researchers said they linked a Booking listing called “Mountain View” to the disputed land parcel.
The report said family members claiming legal ownership are unable to access, cultivate, or build on the land, while the accommodation is currently offered to tourists for roughly $170 per night. Title deed records at al-Khader Municipality show that the land is registered to the al-Sbeih family.
Legal complaints, calls for removal
The report comes amid heightened scrutiny of businesses operating in Israeli settlements.
Eko said human rights groups, U.N. investigators, journalists and shareholders have repeatedly raised concerns with Booking regarding settlement-related listings.
It also referenced a 2023 criminal complaint filed with Dutch prosecutors by organizations including al-Haq and SOMO, suggesting that revenues generated from settlement listings could amount to proceeds linked to war crimes and potentially constitute money laundering under Dutch law.
The groups have urged Booking to remove all listings connected to settlements in the occupied West Bank and East Jerusalem, conduct an independent human rights impact assessment and establish compensation mechanisms for affected Palestinian landowners.
Settler violence, displacement
The report also linked tourism activity to broader settlement expansion and displacement trends.
Citing data from the U.N.’s humanitarian office (OCHA), Eko said Israeli settlers carried out 1,828 attacks against Palestinians in 2025, averaging around five incidents per day.
It added that since 2023, thousands of Palestinians from 85 communities, many of them Bedouin or herding communities in Area C of the West Bank, have been displaced due to settler violence and movement restrictions.
A production facility for a domestically developed nanotechnology product that can lower water consumption in agriculture by up to 50% while boosting crop yields by as much as 25% has been recently inaugurated in Türkiye.
The nanomaterial technology developed by ANT Systems, following 15 years of scientific research at Sabancı University’s Faculty of Engineering and Natural Sciences, has entered serial production at a newly established domestic facility in Istanbul with an annual capacity of 3,000 tons.
The company’s flagship product, NANOTERN, is a biodegradable nanomaterial designed to retain water in soil for longer periods and release it to plants in a controlled manner when needed.
The technology can hold up to 1,800 times its own weight in water, reducing irrigation water use by up to 50% and increasing agricultural productivity by as much as 25%.
It also improves the efficiency of fertilizers and other agricultural inputs, helping lower production costs.
NANOTERN is actively used not only in Türkiye but also in the U.S., South America, Gulf countries and Africa. The global patent portfolio of the technology is held in Türkiye.
Example of the transition from academia to industry
Speaking at the opening ceremony, Agriculture and Rural Development Support Institution (TKDK) President Ahmet Antalyalı said the initiative represents a tangible example of Türkiye’s goal of producing high technology in the agricultural sector.
Antalyalı emphasized that the project shows the transition from academia to industry can be successfully achieved, describing it as a development model in its own right.
Sabancı University Rector Yusuf Leblebici said that behind such ventures lies a strong vision and many years of dedicated effort, adding that Sakıp Sabancı’s support and the founding philosophy of the university made a meaningful contribution to the process.
Leblebici also stressed that work on technology has continued determinedly throughout the various periods of crisis the world has gone through.
ANT Systems Vice Chairperson and CEO Can Yurdakul warned that land can be lost not only through war, but also due to water scarcity, inefficiency and unsustainable production models.
“Energy, water and agriculture are now among the world’s greatest issues,” Yurdakul said.
“The agricultural sector uses roughly 70% of the world’s freshwater resources. One of the most critical questions for the future is therefore how to produce more sustainably with existing resources,” he added.
He said much of the technology globally remains at the research and development stage, while Türkiye is among the few countries producing it at an industrial scale with proven field applications.
“The issue is no longer to produce more – it is to produce more intelligently with limited resources,” he noted.
“We have built a system that does not simply use water; it manages water. Today we are talking about a Turkish technology that is in the field across five continents, from the U.S. to Africa,” he said.
Yurdakul said the company aims to transform ANT Systems from a Türkiye-based technology firm into a global standard-setting structure.
‘Technology is the only thing we can rely on against water stress’
Speaking to Anadolu Agency (AA) after the ceremony, Parliament’s Agriculture, Forestry and Rural Affairs Committee Chairperson Vahit Kirişci highlighted the increasing average age of workers in the agricultural sector, saying technology use in farming is critical to attracting younger generations.
He said that integrating technology at every level, including nanotechnology, would make the sector more appealing to young people.
“If we make a specific assessment here, we should note that we are not a water-rich country. In a country whose water stress is no longer in doubt, we must use water in the most effective and efficient way possible,” Kirişci said.
He stressed that technological solutions are essential to ensuring efficient and loss-free use of water in agriculture.
Güler Sabancı, chair of the founding board of trustees of Sabancı University and investor in ANT Systems, said water stress caused by the climate crisis is becoming increasingly visible both globally and in Türkiye.
“In facing the climate crisis, the major disasters we are already experiencing and will experience, and the water stress we are living through – the only thing we can rely on for the future is technology, science-based research, and the successful ventures that emerge from such research. This is also what the world trusts and expects,” Sabancı said.
Sabancı said entrepreneurship and technology-focused initiatives supported at Sabancı University since 2007 have, in nearly 15 years, turned into tangible results aimed at addressing global problems.
She added that the first production facility has now moved beyond the laboratory stage and will play a key role in combating climate change.
Nanotechnology products deliver more effective results
ANT Systems Chairperson and CTO Yusuf Ziya Menceloğlu said the concept of sustainability began gaining prominence around 15 years ago, as rapid population growth accelerated resource consumption and carbon emissions, contributing to global warming and water scarcity.
“In agriculture, there is in fact a water crisis, a chemical input crisis – particularly the pesticide problem – and post-harvest storage problems,” he said.
“Today, our food losses amount to almost 5% of Türkiye’s gross national product. Food preservation and post-harvest protection are therefore very important,” he added.
Menceloğlu said the company has developed nanotechnology products for these sectors because nanomaterials allow for more effective results with less material use.
“It is for this reason – because of their high effectiveness – that they are widely accepted,” he added.
Irish no-frills carrier Ryanair posted on Monday a strong rise in annual profits but warned that the Middle East war has clouded its outlook for the upcoming year.
Profit after tax jumped 35% to 2.17 billion euros ($2.52 billion) in the 12 months to the end of March compared to the period a year earlier.
CEO Michael O’Leary said it was “far too early” to provide meaningful full-year profit guidance because of “significant fuel price/potential supply volatility.”
“The conflict in the Middle East has created economic uncertainty, and we still don’t know when the Strait of Hormuz will reopen,” he said in an earnings statement.
Oil prices have soared since the start of the U.S.-Iran war in late February, resulting in much higher jet fuel costs.
Ryanair said it had hedged 80% of its fuel costs at $67 a barrel through to April 2027, which should help insulate its earnings amid “very volatile oil markets.”
But its full-year outlook remains “heavily exposed to adverse external developments,” including any escalation in the Middle East war.
Ryanair’s share price fell around 3% in Dublin.
Cost pressures
Ryanair said its costs could rise in the year ahead as it faces a higher bill for unhedged fuel costs, as well as crew expenses and aircraft maintenance.
The company also expects European Union environmental taxes to rise by 300 million euros this year.
“Under normal circumstances, Ryanair would respond to cost pressures by putting up fares and passenger charges, but the market environment is currently too fragile,” said Dan Coatsworth, head of markets at AJ Bell.
“Consumers are spooked by oil prices shooting up,” he said, adding that “it’s made the cost of living go up, and that drives more caution towards spending.”
Coatsworth added, however, that Ryanair had “a strong enough balance sheet to weather any storms”.
In its latest financial year, revenue increased 11% to 15.5 billion euros as ticket fares rose.
But fares for its peak July-September period, previously forecast to rise, are now trending flat.
“Pricing in recent weeks has eased somewhat in response to economic uncertainty caused by higher oil prices, the fear of fuel shortages and the risk of inflation adversely impacting consumer spending,” O’Leary said.
The group carried 208 million passengers last year, marking a 4% annual increase, and is targeting 300 million passengers by 2034.
It expects traffic to rise by another 4% in the current financial year, to 216 million passengers.
The airline added that talks to extend O’Leary’s contract until April 2032 have almost concluded.
China has agreed to buy at least $17 billion of U.S. agricultural products in 2026, 2027 and 2028, the White House said in a fact sheet released on Sunday.
The commitment was made during meetings between U.S. President Donald Trump and Chinese President Xi Jinping last week, the White House said.
The $17 billion figure does not include the soybean purchase commitments China made in October 2025, the White House said.
There has been a marked reduction in U.S. agricultural exports to China after last year’s rounds of tit-for-tat tariffs sharply curtailed trade, which fell 65.7% year-over-year to $8.4 billion in 2025, according to U.S. Department of Agriculture data.
China has dramatically scaled back its reliance on U.S. farm goods since Trump’s first term, sourcing roughly 20% of its soybeans from the U.S. in 2024, the year before he returned to office, down from 41% in 2016.
China will work with U.S. regulators to lift suspensions of U.S. beef facilities and resume imports of poultry from U.S. states determined to be free of avian influenza, the White House said.
Confirming earlier statements from the Chinese government, the White House also said on Sunday the world’s two largest economies would establish a U.S.-China Board of Trade and the U.S.-China Board of Investment.
The boards will resolve concerns over market access for agricultural products and expand trade “under a reciprocal tariff-reduction framework,” Chinese Foreign Minister Wang Yi said in a statement last week.
The European Union is reportedly preparing plans to force companies in the bloc to buy critical components from at least three different suppliers in an attempt to curb reliance on China, according to the Financial Times on Monday.
The new rules would affect businesses in a handful of key sectors, such as chemicals and industrial machinery, the report added, citing two EU officials familiar with the matter.
Under the new legislation, companies would be limited to buying about 30% to 40% of components from a single supplier and would have to source the rest from at least three different suppliers not coming from the same country, the FT said.
This comes as China continues to use its chokehold on the processing of many minerals as leverage, at times curbing exports, suppressing prices and undercutting other countries’ ability to diversify their sources of the materials used to make semiconductors, electric vehicles and advanced weapons.
European Union Trade Commissioner Maros Sefcovic is planning a series of punitive tariffs on Chinese chemicals and machinery in a bid to tackle the bloc’s 1 billion euro ($1.16 billion) a day trade deficit and insulate companies from China’s “weaponization of trade,” the newspaper said.
Last month, Sefcovic signed a memorandum of understanding with U.S. Secretary of State Marco Rubio for a partnership on producing and securing critical minerals, as part of a push to loosen China’s grip on materials crucial to advanced manufacturing.
According to the FT report, these early-stage plans will be presented to a commission meeting dedicated to China on May 29 and could then be endorsed by EU leaders in late June.
A European Commission spokesperson confirmed to Reuters that it will hold an orientation debate on EU-China relations on May 29 but declined to comment on internal discussions, adding that such debates do not involve the adoption of formal proposals.
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