Europe has floated a British-French plan to help secure the Strait of Hormuz, but Tehran and Washington remain in charge as shipping headlines rattle markets and a U.S.-Iran cease-fire nears expiration.
Europe’s bid to shape the Iran war is still largely on the sidelines even as the Strait of Hormuz again became a pressure point for global markets. A British-French plan to help secure the waterway would give the continent a role, but Tehran and Washington remain the main decision-makers, according to the New York Times.
Markets have whipsawed on conflicting signals about the strait, which handles roughly 20% of global oil and liquefied natural gas flows. After Iran said Friday the channel was open, stocks surged; traffic then faltered again and equities turned lower Monday, CNBC reported. The fragile U.S.-Iran cease-fire agreed April 7 is set to expire Tuesday.
Last week’s relief rally was sharp: the S&P 500 rose 4.5% and the Nasdaq Composite gained 6.8%, with the Nasdaq logging a 13th straight winning session on Friday, its longest such run since 1992, CNBC said. But analysts cautioned that investors are misreading war headlines and underestimating risks if shipping disruptions persist.
Matt Gertken, chief geopolitical strategist at BCA Research, told CNBC that markets shouldn’t assume President Donald Trump can orchestrate Middle East dynamics as neatly as last year’s so-called “liberation day.” “We could be in a different situation now, because Iran has been attacked, and they have a higher pain threshold,” he said.
Investment manager Orbis said sustained equity gains hinge on a durable reopening of Hormuz. Deutsche Bank warned of a 2022-style replay, when early optimism over a negotiated end to the Ukraine war gave way to a sharp equity sell-off later that year.
Policy makers are also signaling caution. Federal Reserve Governor Christopher Waller said Friday that risks from the Iran war and a vulnerable labor market could keep interest rates on hold until the outlook clarifies. He warned the conflict’s price shocks, following earlier tariff-driven pressures, could prove more lasting than many expect. “That may mean maintaining the policy rate at the current target range if the risks to inflation outweigh those to the labor market,” Waller said in a speech, according to CNBC.
What to watch next: whether tanker traffic through Hormuz resumes in a sustained way and if the U.S.-Iran cease-fire is extended. Any durable security arrangement — including a potential British-French role — would likely hinge on decisions in Tehran and Washington.
Comments (0)