Markets in the Shadow of Hormuz: A Week on Edge
Between Middle East war, paralysed central banks and softening macro data, equities enter a phase of lasting volatility.
Sam Andelsson
This week's mood can be summed up in one word: Hormuz. The strait, closed again by Tehran on Sunday evening after a brief reopening, is now moving every global asset on its own.
On Friday, Brent plunged 9% to 90 dollars and Wall Street hit record highs. By Sunday, crude was rebounding to 95 dollars after US forces seized an Iranian cargo ship in the Gulf of Oman. The US-Iran ceasefire expires on Tuesday, April 21: that is the central event of the week.
A macro backdrop reshaped by war
The framing has shifted. On April 14, the IMF released a report bluntly titled Global Economy in the Shadow of War, cutting global growth to 3.1% for 2026. Under a severe scenario, the world would flirt with recession.
Central banks are caught in a vice: energy is reimporting inflation just as activity slows. The ECB has held rates at 2.15% since June 2025, the Fed is expected to stand pat on April 30, and the BoE faces UK inflation forecast at 3.3%. Wednesday's eurozone inflation print will be decisive.
Market readings and the week's two catalysts
On oil, Brent should trade in an 85-100 dollar range, with sharp swings on every headline. The war premium is partly priced in, and buffers exist: OPEC+ spare capacity, strategic reserves, US shale.
On equities, the geographical split is clear. Wall Street shows an almost uncomfortable resilience, lifted by AI and a bet on de-escalation, while Europe, more energy-dependent, should underperform as long as crude holds above 90 dollars. Expect rotation into defensives (healthcare, utilities, staples) at the expense of exposed cyclicals (chemicals, autos, airlines).
On rates and currencies, higher for longer is back. The curve steepens modestly, the dollar stays king as both safe haven and net-producer currency, the euro could retest 1.05, and energy-importing emerging currencies — rupee, rand, real — remain the most exposed. Gold keeps an upward bias, but short-term upside is more limited than headlines suggest.
The takeaway is sober: high volatility, low directionality. Two catalysts concentrate the risks — the ceasefire expiry on Tuesday and European inflation on Wednesday. Any deal, even partial, on Hormuz would trigger a relief rally, particularly in European cyclicals; a lasting breakdown would entrench a stagflationary regime that equities historically handle poorly. This is not a week for bold directional bets, but one for managing exposures.