Traders work on the floor of the New York Stock Exchange during morning trading on April 8, 2026 in New York City.
Michael M. Santiago | Getty Images
The US move to close off the vital Strait of Hormuz has resulted in the familiar market reaction of soaring oil prices, rising bond yields and a stronger dollar.
But this time, unless there is oil movement, the response has been significantly muted. Monday’s decline in stocks was relatively modest, suggesting investors are pricing in more of the geopolitical risks and are less responsive to headlines.
“A lot of it is considered a negotiating tactic,” said Billy Leon, investment strategist at Global XETF, referring to Trump’s announcement. “Market uncertainty has reached its peak. Reaction functions are no longer as extreme as they were before.”
Asian stock markets generally fell, but the magnitude of the movements was noticeably muted, with most major benchmarks down about 1%. Futures for major U.S. indexes also fell less than 1%.
Gold price since the beginning of the year
spot gold Prices fell about 0.5% to $4,720.28 per ounce. us dollar index Added 0.38%. A strong dollar makes dollar-priced gold more expensive for holders of other currencies, making bullion less attractive.
Leung said recent market movements suggest investors are becoming accustomed to geopolitical shocks, with volatility moderating compared to previous weeks. “So I think the market is pricing it better and understanding President Trump’s motives better,” he said.
Similarly, TenCap’s lead portfolio manager Jun Bei Liu said volatility indicators suggest the worst of the panic may be over. “We saw the VIX index go up a few weeks ago, and that’s probably the peak of the fear and there will be a sell-off…Now the market is really trying to figure itself out.”
However, a key short-term risk lies in the political timeline surrounding U.S. military action. Leon pointed to the War Powers Resolution, which effectively gives the government a limited window of opportunity to seek parliamentary approval. “In the coming weeks, you’ll see a growing sense of desperation from the Trump administration,” he said, adding that markets may not yet fully understand the constraints.
US lawmakers are reportedly once again aiming to pass a resolution that would halt the Iran war and force President Trump to seek Congressional approval before any further attacks.
Oil prices fall, stock prices expected to recover
The US move to close the Strait of Hormuz, which has already reduced traffic only slightly since the war began, has increased expectations that energy supplies will tighten, pushing up oil prices and raising inflation concerns globally.
Inflation concerns are also clouding expectations for rate cuts, with bond yields rising even as the dollar strengthens and stock prices fall. Since the start of the war, the 10-year Treasury yield has increased by more than 333 basis points. The dollar index rose about 1.4% over the same period.
U.S. oil prices have soared more than 55% since the start of the war. U.S. crude oil futures for May delivery rose more than 8% to $104.93 a barrel by 10:50 p.m. ET. Brent, the international benchmark, for June delivery rose 7% to $102.17.
Analysts expect oil prices to eventually fall as the geopolitical situation stabilizes, even if short-term fluctuations persist.
“I’m pretty confident that oil prices will go down from here. Oil prices will go back to $80 a barrel,” said Michael Yoshikami of Destination Wealth Management, adding that he expects the U.S. and Iran to eventually reach a negotiated solution, adding that the current risk premium could soon be unwound.
Standard Chartered’s Steve Bryce said higher oil prices would reduce prospects for easy monetary policy and put upward pressure on bond yields and the US dollar. “However, we believe these are temporary phenomena as we believe the United States is looking for ways to defuse tensions.”
Gold prices have been acting unexpectedly and falling despite rising geopolitical tensions. Bryce blames this on emerging market central banks selling bullion to stabilize their currencies, but expects demand to return once tensions in the Middle East ease.
So far, markets appear to have taken President Trump’s comments in stride, balancing heightened geopolitical risks with hopes for an eventual easing of hostilities.
“We believe the stock market positioning favors upside, so unless conditions worsen significantly, stocks should continue to rise in the short term,” Bryce said. He added that even though the macro environment remains relatively constructive, investors remain defensive, leaving room for stocks to rebound once the conflict starts to abate.
This presents a delicate environment for investors, with geopolitical shocks still important but no longer triggering the levels of panic selling seen during the conflict.
“It’s not so binary. It’s going to be a bit of a gray area for a while,” Yoshikami said.
