Trump Threatens Strait of Hormuz Blockade

Global markets face renewed volatility as US-Iran peace talks collapsed over the weekend. President Donald Trump announced that the U.S. will blockade the Strait of Hormuz, a crucial passage for approximately one-fifth of global oil and liquefied natural gas shipments. His social media post warned of severe consequences for any Iranian actions against U.S. or peaceful vessels.

The breakdown in negotiations has erased the 'peace dividend' that briefly boosted risky assets, including the S&P 500 Index and emerging-market equities, and lowered oil futures late last week. Traders are shifting back to defensive strategies as markets reopen. The potential blockade threatens to further constrict global oil supplies.

Iran's Islamic Revolutionary Guard Corps responded, stating that any military vessels approaching the strait would be considered a ceasefire violation. This escalating rhetoric complicates investor strategies, which have been navigating significant market swings since the conflict began in late February. Investors remain cautious, balancing potential downside risks with the possibility of market rebounds.

Adding to market uncertainty, the first-quarter earnings season is commencing in the U.S., with projections for S&P 500 profits showing the weakest year-over-year growth since the second quarter of 2025. Goldman Sachs Group Inc. is set to report first, with analysts closely watching corporate outlooks on inflation, energy supply, and consumer spending amid these mounting risks. Data released on Friday indicated a significant jump in U.S. consumer prices, though consumer sentiment declined.