by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with an update on the war in Iran, where a hoped-for peace deal is looking increasingly at risk. We next review several other international and US developments that could affect the financial markets today, including a warning from China that it would retaliate if the EU proceeds with protectionist trade barriers against it and a US autoworkers’ strike that threatens to disrupt the production of key pickup trucks.

United States-Israel-Iran: At a meeting on Friday to look at the draft US-Iranian peace deal, President Trump reportedly asked for several changes, especially regarding Iran’s nuclear program. The requested amendments are likely to spur several days of additional negotiations and delay any final deal until later this week. The continued talks will further postpone any normalization of energy and other commodity shipments through the Strait of Hormuz, which will in turn keep alive the risk of further price hikes for energy and other commodities.

• Separately, the US and Iran exchanged fresh attacks over the weekend, with the US striking Iranian air defense and drone sites and Iran retaliating with attacks on Kuwait.
• The continued back-and-forth regarding a peace deal and the threat to it from the new attacks have pushed energy prices higher today. As of this writing, near Brent crude oil futures are trading at $93.67 per barrel, up 2.8%.

China-European Union: After EU leaders met on Friday to discuss new trade barriers against the current wave of cheap Chinese exports, Beijing on Saturday warned that it would retaliate against any additional restrictions. The warning highlights the dilemma faced by the EU: It can either remain wide open to Chinese imports, putting domestic industries at risk, or it can put up trade barriers and possibly invite devastating retaliation.

• Separately, the Organization for Economic Cooperation and Development has released new research showing that nearly 60% of Chinese firms’ global market share gains since 2005 could be attributed to unfair subsidies and cheap loans. The research reflects company-level analysis across 15 industrial sectors.
• The report suggests that Chinese firms received three to eight times more government support on average in 2024 than companies in the other 38 OECD countries.
• The report will likely help incentivize leaders in Europe and beyond to push back more strenuously against China’s enormous excess capacity and predatory trade policies.

China: More broadly, Beijing today also published new rules limiting outbound corporate investment and operations that could result in the transfer of critical technologies. Under the rules, the government will have the authority to conduct reviews of overseas investments that could affect national security. For unapproved investments that have already been made, authorities may order entities to halt investment activities and divest related shares and assets. The rules also allow bans on foreign operations or personnel assignments that risk the transfer of technologies.

• Beijing’s move today shows how the fracturing of the world into relatively separate geopolitical and economic blocs isn’t just about trade barriers.
• Driven by the US-China geopolitical rivalry, restrictions on cross-border investment, technology transfers, and personnel assignments will also have the effect of making the global economy less efficient than it otherwise would be. In turn, that will likely keep price inflation higher and more volatile than in the past.

Japan: New data over the weekend showed that the Japanese government spent the equivalent of $73.6 billion over the last month to prop up the yen as it slid past 160 JPY per dollar. The figure was larger than expected, highlighting how Prime Minister Takaichi’s government is prioritizing its defense of the yen, at least in part to forestall criticism from the US.

France: Japanese tech investor Softbank has announced that it will invest 75 billion EUR ($87 billion) in a fleet of data centers in France as the country tries to catch up to the artificial intelligence infrastructure enjoyed in the US and China. Although Europe, in general, is far behind in the AI infrastructure race, the deal seeks to leverage France’s unique combination of plentiful nuclear power and fast-tracked approval for AI facilities. In our recent Bi-Weekly Geopolitical Report from May 4, 2026, we argued that investors shouldn’t yet write off Europe’s ability to build up its AI sector.

Colombia: In the first round of the presidential election yesterday, far-right candidate Abelardo de la Espriella came in first with 43.7% of the vote, while Iván Cepeda of the current president’s leftist party came in second with 40.9%. The two will compete in a run-off election on June 21. De la Espriella’s unexpected victory suggests Colombia could be the next Latin American country to see its traditional center-right parties eclipsed by populist far-right parties.

US Labor Market: Almost 1,000 employees with the United Auto Workers are set to walk out on strike over a labor contract at American Axle today. The strike is expected to be especially painful for General Motors, as the targeted plant is a key supplier for GM’s mid- and full-size pickup trucks.

US Artificial Intelligence Industry: AI semiconductor giant Nvidia today announced its new RTX Spark chip, which will be a key component for the first personal laptop computers designed to run artificial intelligence agents. According to Nvidia, new computers using the chip will be “targeted at creators, AI developers and gamers” and priced at the premium end of the market. The new chip and AI computers illustrate how the frenzy over AI is continuing to touch more products and sectors in the economy, suggesting the AI investment craze could continue for now.

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