Strait of Hormuz Blocked Again, Oil Prices Surge Over 7%

Market Overview

Last Friday, global markets rallied on optimism surrounding a “prolonged ceasefire” narrative. All three major U.S. equity indices posted their third consecutive weekly gains, with the Nasdaq extending its winning streak to 13 sessions — the longest since 1992.

However, the geopolitical script flipped once again during Mondays Asian session. The Strait of Hormuz was reportedly blocked once more, triggering a sharp rebound in oil prices of over 7%. Risk-off sentiment quickly resurfaced across markets. Spot gold opened more than 1% lower as ceasefire hopes faded over the weekend, while U.S. equity futures broadly weakened.

Technology & Consumer Sectors

Mega-cap technology stocks were the primary drivers of last weeks rally, with both Microsoft and Tesla posting gains exceeding 10% for the week. Airline and tanker stocks outperformed on expectations of recovery following the earlier reopening of the strait.

That said, valuation compression remains a key theme this earnings season. Netflix plunged nearly 10% after issuing weaker-than-expected Q2 guidance, highlighting the markets increasingly stringent expectations for earnings growth.

Energy & Precious Metals

Oil prices had previously dropped more than 10% last week amid the temporary reopening of the strait, marking a one-month low. However, the renewed blockade at Mondays open has brought bullish momentum sharply back into the energy market.

Gold delivered strong performance last week, rising over 2% intraday to hit a one-month high. It is now facing a potential technical gap fill amid renewed geopolitical volatility.

Fixed Income & FX Markets

The U.S. Dollar Index fell to a one-and-a-half-month low last Friday, while Treasury yields declined to a one-month low on increased safe-haven demand. The offshore yuan strengthened to 6.81 against the dollar, marking a three-year high.

During Mondays Asian session, the dollar showed signs of a rebound as the blockade news triggered renewed demand for safe-haven assets.

Asian Market Dynamics

Asian markets displayed notable divergence. Chinas ChiNext Index surged to an 11-year high, driven by strong momentum in the optical communications sector, with Yuanjie Technology leading gains.

Meanwhile, Kweichow Moutai, a leading liquor stock, unexpectedly declined 4%. The Hang Seng Tech Index fell 1%, suggesting that some capital is rotating into defensive positioning amid the earnings season.

Key Events AheadTrump Convenes Another “War Room” Meeting

The two-week ceasefire agreement between the U.S. and Iran is set to expire late on April 21, with uncertainty surrounding a potential extension. On the same day, a Federal Reserve chair nomination hearing for Christopher Waller is scheduled.

Earnings releases from Tesla, Intel, Eoptolink, and Kweichow Moutai are also due. At Google Cloud Next, new-generation TPU architecture and optical switching technologies may be unveiled.

In addition, Chinas Politburo meeting at the end of April is approaching, alongside multiple product launch events from Huawei. The U.S. Customs will also begin implementing tariff refund measures on April 20.

Hedge Funds Build Record Exposure to U.S. Treasuries

According to the chief economist at Apollo, hedge fund positioning in the $31 trillion U.S. Treasury market has reached a record 8% share, supported by over $6 trillion in leveraged capital.

A forced unwind of these highly leveraged positions could send shockwaves through global fixed-income markets. In the event of heightened volatility, the impact could quickly spill over into equities, corporate bonds, mortgage markets, and broader financing conditions.

Key Focus

23:00 (GMT+8)

German Chancellor Friedrich Merz and ECB President Christine Lagarde are scheduled to deliver remarks.