BY COMFORT OGBONNA
Global financial markets showed mixed performance on Monday as oil prices moved higher and investors reacted cautiously to escalating geopolitical tensions involving Donald Trump and Iran. The warning from the U.S. president that Iran would face severe consequences if it fails to reopen the strategic Strait of Hormuz by his self-imposed deadline has unsettled traders, even as reports of potential ceasefire talks helped ease some of the anxiety.
Trump reiterated threats that Iran could face devastating retaliation if shipping through the Strait of Hormuz is not restored by Tuesday. The narrow waterway is one of the world’s most critical energy transit routes, carrying a significant portion of global crude oil exports. Any disruption in that channel raises immediate concerns about supply shortages and sharp price increases in global energy markets.
The U.S. president also warned that key civilian infrastructure in Iran—including power plants, transportation systems, and bridges—could become targets if Tehran does not allow shipping to resume through the waterway. Such statements have heightened fears that Iran could retaliate by striking energy facilities or shipping infrastructure in neighboring Gulf states, further escalating the conflict and potentially disrupting oil flows from the region.
Market activity was relatively subdued due to thin trading volumes, as several countries in the region were observing Easter Monday holidays. Even so, investors remained highly attentive to developments in the Middle East.
Futures tied to the S&P 500 fluctuated throughout the session, briefly moving between gains and losses before slipping slightly. Contracts linked to the benchmark U.S. index were down around 0.1% as traders balanced geopolitical risks against economic data and central bank expectations.
Across Asia, stock markets showed mixed but generally positive performance. The broad regional benchmark tracked by MSCI Asia-Pacific ex Japan Index rose modestly by about 0.3%, reflecting cautious optimism among investors outside Japan.
Japan’s stock market delivered stronger gains, with the Nikkei 225 climbing roughly 1.3% during the session. In South Korea, the KOSPI also advanced, gaining close to 0.9% as regional investors assessed both geopolitical developments and domestic economic signals.
Some of the market tension eased after a report suggested that diplomatic efforts could lead to a temporary halt in hostilities. According to information cited by the news outlet Axios, officials from the United States, Iran, and several regional mediators are discussing the possibility of a 45-day ceasefire. The proposal, if agreed upon, could serve as a foundation for negotiations aimed at bringing the broader conflict to a permanent end.
The report indicated that the discussions involve multiple diplomatic channels and include participants from the United States, Israel, and other regional stakeholders who are seeking to prevent further escalation. While no agreement has been finalized, the possibility of a temporary pause in fighting helped calm markets slightly after a weekend marked by heightened rhetoric.
Oil markets responded quickly to the geopolitical uncertainty. Prices for Brent crude opened higher before trimming some of the gains later in the trading session. Brent futures were still up about 0.5%, trading near $109.55 per barrel, as traders weighed the possibility of supply disruptions in the Gulf.
Analysts say that any prolonged disruption around the Strait of Hormuz could have a major impact on global energy supplies, given the large volume of crude shipments that pass through the narrow channel each day. Even the threat of conflict in the region tends to push oil prices higher as traders factor in risk premiums.
Sim Moh Siong, a currency strategist at OCBC Bank in Singapore, noted that markets remain highly sensitive to political developments in the region. According to him, investors are still uncertain about whether the current deadline set by the U.S. administration will actually be enforced or extended.
He explained that markets have seen similar deadlines before that were eventually postponed, making it difficult for traders to determine how seriously to treat the latest warning. While there had been growing optimism earlier about the possibility of diplomatic de-escalation, that sentiment weakened after the weekend brought renewed threats targeting Iranian infrastructure.
Meanwhile, traders largely overlooked a production decision by the OPEC+ alliance, which agreed on Sunday to increase output quotas by 206,000 barrels per day beginning in May. The market reaction was muted because several major oil producers located near the Strait of Hormuz have already experienced damage to production facilities and transport networks since the conflict began.
As a result, analysts believe the planned production increase may not fully offset potential disruptions if the conflict intensifies.
Economic data from the United States also played a role in shaping market sentiment. A strong employment report released on Friday showed that hiring rebounded sharply in March. The report indicated that nonfarm payrolls increased by 178,000 jobs, representing the strongest monthly gain in more than a year.
At the same time, the unemployment rate fell to 4.3%, down slightly from 4.4%, partly due to some individuals leaving the workforce. The resilience of the labor market complicates the outlook for monetary policy at the Federal Reserve, which has been closely monitoring economic data as it considers when to adjust interest rates.
The central bank’s next policy decision is scheduled to come at the conclusion of a two-day meeting ending on April 29. However, financial markets appear to believe that significant policy changes may still be far off. According to market pricing tracked through the FedWatch tool from CME Group, traders are currently expecting no interest-rate adjustments from the Federal Reserve until September 2027.
Currency markets reflected the cautious tone. The U.S. Dollar Index, which measures the strength of the U.S. currency against a basket of six major global currencies, edged down about 0.1% to around 100.15.
In bond markets, yields on U.S. government debt moved slightly higher. The yield on the benchmark U.S. 10-Year Treasury rose by roughly 0.8 basis points to around 4.352%.
In Japan, government bond yields reached levels not seen in decades as investors reacted to growing concerns about inflation. The yield on the Japanese 10-year government bond climbed to approximately 2.41%, marking the highest level since February 1999.
Currency trading between the United States and Japan remained relatively steady. The U.S. dollar held nearly unchanged against the Japanese yen, trading around 159.555 yen.
Precious metals experienced some downward pressure during the session. Gold prices fell about 0.6% to roughly $4,646.27 as investors balanced safe-haven demand against broader market dynamics.
In digital asset markets, cryptocurrencies posted gains. Bitcoin rose about 2.2% to around $69,120, while Ethereum advanced approximately 3.0% to about $2,130.
Overall, global markets remain highly sensitive to geopolitical developments in the Middle East. Investors continue to monitor the situation around the Strait of Hormuz closely, knowing that any escalation or disruption to energy shipments could quickly ripple through financial markets worldwide.