Asian Stocks Drop From Record High, Oil Steadies: Markets Wrap

A trader works on the floor at the New York Stock Exchange (NYSE) in New York, US, on Monday, June 1, 2026. A renewed rally in oil drove bonds lower while stocks fluctuated as a report that Iran will halt talks with the US cast doubt on a ceasefire renewal. Photo by Michael Nagle /Bloomberg

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(Bloomberg) — Asian shares retreated from record highs as efforts to secure a US-Iran peace deal showed little progress and investors paused after a blistering AI-driven rally.

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MSCI’s regional equity index dropped 0.7%, with South Korea — a bellwether for artificial intelligence investments — dropping 2.4%. Technology shares remained under pressure with futures for the Nasdaq 100 Index sliding 0.7%, after the underlying gauge closed at an all-time high on Monday.

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Brent crude traded around $95 a barrel as conflicting signals from the Middle East clouded prospects for a peace deal. Treasuries held Monday’s losses as the impasse in negotiations fueled concerns that higher energy costs will stoke inflation and force the Federal Reserve to interest rates higher for longer. The yield on the benchmark 10-year Treasury stood at 4.45%.

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US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu offered differing accounts of a call about the fighting in Lebanon, as the US struggled to get efforts toward a peace deal with Iran back on track. The conflicting accounts were the latest example of confusing signals on progress to end the war, now in its fourth month.

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“The mismatch between what the US and Iran are saying is creating some unease in the market,” said Yugo Tsuboi, chief strategist at Daiwa Securities. Added to that, “the elevated sense of overheating became a factor prompting profit-taking.”

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Even as the AI-driven rally continues to propel equities to record highs, markets have been whipsawed by geopolitical headlines after an escalation in Middle East hostilities complicated peace talks. While investors still see a path to a US-Iran agreement, fragile conditions in the Strait of Hormuz have kept energy prices in focus as a key driver of the near-term outlook for inflation and rates.

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What Bloomberg Strategists Say…

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“Momentum has been king for much of the past year across equities, which means every sudden drop in a major index carries with it the potential to set off a sustained slide. The Threat lurks that substantive macro negatives will at some stage take the heat out of AI-fueled rallies.”

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— Garfield Reynolds, Markets Live team leader. For more on the analysis, click here.

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Trump has regularly claimed that negotiations were advancing and close to reaching a deal as the ceasefire that began in April remained fragile. Iran disputed reports last week that an interim accord was close and on Monday said it would act with its proxies, dubbed the “Axis of Resistance,” against Israel if fighting in Lebanon continued.

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“Expectations for a US-Iran agreement remain fluid,” said Jason Pride and Michael Reynolds at Glenmede. “Recent strikes and conflicting statements from both sides highlight that key details remain unresolved.”

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Elsewhere, the White House said it will reduce tariffs on agricultural equipment, such as combines and harvesters, in order to reduce costs for US farmers and manufacturers.