Morning brief: global markets eye Hormuz as geopolitical risks persist

Global markets showed resilience on Monday, choosing to look beyond escalating tensions in the Middle East and instead focus on hopes for a deal that could keep shipping routes open through the Strait of Hormuz.

Markets traded thinly but remained relatively stable, suggesting investors were not yet pricing in a worst-case scenario.

The cautious optimism came despite headlines over the weekend pointing to the risk of a wider regional conflict.

Equities show mild pullback

S&P 500 futures edged lower, though the decline remained limited.

Futures were down 0.6% by Asia’s lunchtime, a modest retreat considering Friday’s record highs.

The drop was also attributed to low trading volumes, indicating a lack of strong conviction among investors.

Asian markets, however, showed a more positive tone, with most indices advancing.

In contrast, European futures pointed to a weaker open, falling around 1.1%.

Oil prices rise but stay below key level

Oil markets reacted more sharply to geopolitical developments.

Prices initially surged but later eased slightly, settling around 5–6% higher on the day.

Oil remained below the psychologically important $100-per-barrel mark, suggesting that while supply concerns were rising, markets were not yet anticipating severe disruptions.

US-Iran tensions escalate

Geopolitical risks remained a key concern.

The United States said it had seized an Iranian cargo ship that attempted to evade its blockade, prompting a strong response from Tehran.

Iran, in turn, vowed retaliation and announced it would not participate in a second round of talks that Washington had hoped to initiate before a ceasefire expires on Tuesday.

These developments added to uncertainty, particularly around the stability of shipping routes in the Strait of Hormuz, a critical artery for global energy supplies.

Allies express concern over diplomacy

Tensions are also reshaping diplomatic relations.

European allies have expressed concerns that an inexperienced US negotiating team may be pushing for a quick, headline-driven deal with Iran that could create longer-term risks.

As cited in a Reuters report, Canada’s Prime Minister Mark Carney said that close ties with the United States, once considered a strength, have now become a weakness.

His remarks reflect growing unease among allies over Washington’s approach.

Strait of Hormuz remains in focus

Despite Iran stating that the Strait of Hormuz was closed again, market sentiment found support in shipping data.

Data from Kpler showed more than 20 ships passed through the strait on Saturday, marking the busiest day since March 1.

This indicated that, at least for now, trade flows were continuing despite political tensions.

Markets appeared to take comfort from this data, reinforcing the idea that disruptions might remain limited in the near term.

Beyond geopolitics, traditional market drivers are gradually coming back into focus.

Earnings reports, economic data, and political developments are expected to influence sentiment in the coming days.

In the United Kingdom, Prime Minister Keir Starmer is set to address parliament on Monday.

He faces mounting pressure over his handling of the appointment of Peter Mandelson as US ambassador, following controversy linked to Mandelson’s past associations.