Financial market data screens showing declining prices
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TL;DR

Global stocks are selling off Friday morning after President Trump returned from his two-day Beijing summit with Xi Jinping without delivering the concrete results markets had priced in. Trump's departure comment that the US does not need the Strait of Hormuz "open at all" reversed expectations of a China-brokered energy deal, sending Brent crude above $109 per barrel. As of 8:00 a.m. ET, S&P 500 futures are down about 1%, South Korea's KOSPI has lost over 6%, and European indices are broadly lower heading into the US open.

What Happened

Trump and Xi wrapped up their two-day summit at Zhongnanhai, China's leadership compound, on Friday, May 15. The first day of talks had sent Wall Street to record highs: the S&P 500 closed above 7,500 for the first time and the Dow Jones Industrial Average retook the 50,000 level. Markets had priced in three tailwinds: a trade truce extension ahead of the October expiry, a China-mediated reopening of the Strait of Hormuz, and a broader diplomatic reset that might ease the inflation shock tied to the ongoing Iran war.

The final day delivered far less. Trump told reporters the two sides made "fantastic trade deals" but provided no specifics. China's government described "a series of new common understandings" without detail. UBS economist Paul Donovan summed up the Wall Street reaction in a note to clients: "Much increasingly scarce jet fuel has been burned to produce nothing of real substance."

The most market-sensitive moment came when Trump, speaking aboard Air Force One on his return, said the US does not need the Strait of Hormuz "open at all." That directly reversed a statement from Treasury Secretary Scott Bessent on Thursday, who told CNBC that China would use its influence on Iran to help reopen the critical waterway. Bessent's comment had been a key catalyst for Thursday's equity rally.

On trade, China agreed to order 200 Boeing jets, well below the 500 aircraft White House sources had previewed before the trip. Boeing fell 4.73% Thursday on that disappointment alone, continuing lower overnight.

Why Global Stocks Sold Off After Trump-Xi Summit

The core issue is that the market's entry into Friday was positioned for at least partial wins on Hormuz, trade, and diplomatic reset. The exit delivered verbal alignment but no binding commitments.

When Trump walked back the Hormuz signal on his flight home, the energy calculus for traders changed immediately. Brent crude rose to $109 per barrel as fears of a prolonged strait blockage returned. The International Energy Agency's May report had already flagged that the Iran conflict has removed an estimated 12.8 million barrels per day from global supply, with inventories depleting at a record pace. A China-mediated reopening had been viewed as the most realistic near-term supply catalyst.

On the trade side, the October truce deadline remains uncertain. US Trade Representative Jamieson Greer said both sides have a "willingness" to extend the truce if it continues to benefit each country, but made no formal commitment. Deutsche Bank strategists noted that the Hormuz-hope trade had driven much of Thursday's rally, and with that unwound, equities face a vacuum heading into the weekend alongside the inflation concerns flagged by Wednesday's CPI beat.

Implications for Traders

Equity and Futures Traders

S&P 500 futures are down roughly 1% pre-market, pulling back from Thursday's 7,500 record close. South Korea's KOSPI has lost over 6%, reflecting sharp repricing in export-dependent economies on continued tariff and trade-deal uncertainty. Japan's Nikkei 225 is off about 2%, the Stoxx 600 is down 1.28%, and the FTSE 100 is down 1.42%. Boeing and aerospace supply chain names face additional pressure from the order disappointment relative to pre-trip expectations.

Watch whether the S&P 500 holds above the 7,400 level on the open. A stabilization there could attract dip buyers given the underlying macro backdrop of record corporate earnings; a break below it could accelerate weekend-facing de-risking.

Oil and Energy Traders

Brent at $109 is the highest level since the April 8 ceasefire. With the IEA flagging inventory depletion at a record pace and Trump signaling no urgency on Hormuz, the near-term supply resolution outlook has worsened. Traders long energy futures may hold positions into the weekend; traders short via equity proxies face continued pressure as energy stocks likely outperform the broader index.

Crypto Traders

Bitcoin held around $80,500 through the overnight sell-off, showing relative stability compared with equities. In a risk-off environment driven by macro and geopolitical uncertainty rather than a crypto-specific catalyst, BTC's correlation with equities is mixed. A significant deepening of the equity sell-off could pull crypto lower, but Bitcoin has at times served as an inflation and dollar-uncertainty hedge, both themes that remain elevated in the current environment.

Potential Positives vs Negatives

Positives from the summit outcome:

  • Both Trump and Xi verbally agreed they want the Hormuz conflict resolved and Iran to avoid nuclear weapons. The shared framing, even without a mechanism, leaves diplomatic room for future coordination.
  • Xi was formally invited to the White House for a September 24 visit, giving markets a near-term diplomatic milestone to trade around.
  • A "double-digit-billions" agriculture sale to China is expected after the summit, which could support commodity producers and farm-belt equities.
  • The October trade truce expiry is neither cancelled nor locked in, preserving optionality rather than delivering a clean break.

Negatives from the summit outcome:

  • Trump's Hormuz comment removes the China-mediation narrative that had been a key near-term energy supply catalyst for markets.
  • The 200-jet Boeing order fell well short of the 500-aircraft preview, suggesting deal scope was limited relative to White House expectations-setting before the trip.
  • No trade truce extension was formally announced, adding uncertainty into Q3 for companies with US-China supply chain exposure.
  • A KOSPI decline of over 6% points to sharp repricing in export-sensitive Asian economies, which could spill into US industrial and semiconductor supply chains next week.

What Could Happen From Here

Base Case (50%)

US equities open 0.5 to 1% lower and stabilize through the morning session. The S&P 500 holds above 7,400. Oil stays in the $107 to $112 range. Confirmed by: limited follow-through selling after the first 30 minutes of trading, no new Iran escalation headlines, and Brent staying below $112. Invalidated by: additional dismissive Trump statements on Hormuz or trade, a new Strait incident, or a clean break below 7,400 on the S&P 500.

Upside Case (25%)

A clarifying statement from Bessent, Rubio, or Greer restores the Hormuz-cooperation narrative. Equities partially recover toward Thursday's close, and oil eases back below $105. Confirmed by: an official White House or State Department statement walking back Trump's departure comment, or a concrete Beijing announcement on Iran. Invalidated by: White House silence or additional dismissive Trump energy comments through the weekend.

Downside Case (25%)

Selling accelerates through the US open as summit disappointment compounds with lingering inflation concerns from Wednesday's CPI beat. The S&P 500 breaks below 7,300, and Brent tests $112 to $115. Confirmed by: S&P futures breaking Thursday's pre-open low, Brent moving above $112, and further analyst commentary warning of a prolonged energy shock. Invalidated by: strong dip-buying in the first 30 minutes of US trading or a positive Iran-related geopolitical headline.

What to Watch Next (Next 24 Hours)

  • White House follow-up: Any statement from Bessent, Rubio, or Greer walking back Trump's Hormuz comment is the single biggest potential market mover through today.
  • S&P 500 open behavior: Watch whether 7,400 holds as support or the sell-off extends.
  • Brent crude: A move above $112 per barrel would signal that traders are pricing a prolonged strait-blockage scenario rather than a near-term resolution.
  • Iran's response to Trump's "I am not going to be much more patient" departure comment, made on Fox News from Air Force One.
  • Boeing pre-market and open price, given the 200-jet miss and its broader aerospace supply chain read-through.
  • Bitcoin: If BTC holds $80K while equities sell off further, that signals a partial safe-haven bid in the context of inflation and dollar uncertainty.

Frequently Asked Questions

Why did stocks rally Thursday but sell off Friday from the same summit?

Day 1 produced headline optimism: a White House official said both sides agreed to keep the Strait of Hormuz open, and Cisco earnings beat estimates. Day 2 delivered vague final communiques. Trump's departure comment dismissing urgency around Hormuz reopening directly reversed the supply-side trade that had lifted markets on Thursday, hitting equities in Asia, Europe, and US pre-market overnight.

What is the Strait of Hormuz and why does it matter to stock and commodity markets?

The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly 20% of global oil trade passes. Since the US-Israel conflict with Iran began in February 2026, the strait has been partially closed to shipping, removing an estimated 12.8 million barrels per day from global supply. Oil prices are up more than 65% year-over-year. A resolution to the blockage would be a significant deflationary catalyst for energy markets and a potential relief valve for inflation and rates globally.

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Sources

Header image source: pexels by Rene Terp. License: PEXELS.