Emerging Asian markets plunged on May 15, driven by a nearly 2% drop in MSCI's emerging Asia equities gauge and a more than 6% fall in South Korea’s Kospi. Losses in chipmakers Samsung Electronics and SK Hynix, which declined 8.6% and 7.7% respectively, weighed heavily on the market [1].

Oil prices rose over 5% during the week by May 15, primarily due to the closure of the Strait of Hormuz amid escalating US-Iran tensions. This energy supply disruption intensified inflation concerns globally [1, 2, 3]. European markets also slipped, with the pan-European Stoxx 600 falling about 1.5% and Germany’s DAX dropping over 2%. Semiconductor companies in Europe paused their recent gains; shares of ASML and Aixtron fell 4.4% and 6%, respectively [2, 3].

The inflation pressures linked to rising energy costs affected consumer and producer prices across Europe, prompting investors to expect at least two European Central Bank rate increases by the end of 2026 to combat inflation [2, 3]. Michael Hewson of iForex said, "Energy prices are pretty much the biggest problem facing Europe and ultimately, there doesn’t appear to be any political will to address that and markets are pricing that" [3]. Daniel von Ahlen of GlobalData TS Lombard noted, "Markets which are more reliant on foreign energy imports and manufacturing heavy, which is energy intensive, feel the pain a bit more" [3].

The deteriorating US-Iran relations remain a critical factor. US President Donald Trump and China's Xi Jinping concluded a two-day summit agreeing to prevent Iran from acquiring nuclear weapons and to keep the Strait of Hormuz open, though peace talks remain stalled [1, 2, 3]. Kyle Rodda of Capital.com said, "There's definitely some unease about the stalled peace talks between the US and Iran, especially concerning the impact on inflation and interest rates via higher energy prices" [1]. Song Zhe of BNP Paribas Asset Management added, "We see today's pressure more as markets digesting the strong recovery rally since April, rather than a decisive shift into broad risk-off" [1].

Malaysia's economy performed better than expected in the first quarter of 2026, supported by domestic demand despite shocks from Middle East conflicts. Malaysia's central bank raised its 2026 growth forecast but warned headline inflation would rise this year. Nevertheless, Malaysian shares and the ringgit fell about 0.4% on May 15, though the ringgit has gained nearly 3% year-to-date [1].

Political uncertainty increased in the UK on May 15 as Prime Minister Keir Starmer faced a leadership challenge, adding to market jitters in Europe [3].

Markets will closely watch further developments in US-Iran diplomacy and energy supply conditions in the days ahead.