Overview
Markets are entering the week facing intersecting geopolitical and economic forces. The temporary halt in hostilities between the U.S. and Iran is due to lapse, fresh incidents at sea have stoked tensions, and oil has resumed an upward trajectory that keeps inflation worries at the fore. Against this backdrop, investors will parse testimony from Kevin Warsh as he appears before lawmakers for his confirmation hearing to lead the Federal Reserve, monitor preliminary purchasing managers' indexes for April, and digest results from a batch of major corporate earnings reports.
1. Ceasefire nearing expiration
Developments in the U.S.-Iran conflict are likely to remain the primary driver of market sentiment through the coming days. A temporary two-week cessation of hostilities is scheduled to expire later this week, and its durability has come into question following a U.S. seizure over the weekend of a vessel flying an Iranian flag that was attempting to run an American blockade.
President Trump has indicated that U.S. envoys will travel to Pakistan for another round of negotiations. Iran, however, has rejected taking part in a second set of talks with Washington, according to a report by Axios, citing comments from Iran’s state news agency IRNA. Tehran said it would not engage because of what it described as Washington’s "excessive demands" and shifting positions, calling out "unrealistic expectations," "constant shifts in stance," and "repeated contradictions" from the U.S. Iran also flagged the ongoing blockade as a breach of the ceasefire, and Axios reported that Tehran suspects the U.S. may be preparing a surprise attack.
2. Oil’s renewed rise and market implications
Oil is again moving higher, approaching the $100-per-barrel level after Iran asserted that the Strait of Hormuz had been closed once more. Late in the prior week, prices fell when Iranian and U.S. officials said the narrow chokepoint for roughly a fifth of the world’s oil shipments had reopened to commercial traffic. The strait has effectively been shut since the onset of the war in late February, a development that earlier pushed crude as high as nearly $120 a barrel, compared with pre-war levels near $70 a barrel.
The energy-driven surge in fuel costs has been a focal point for investors because of the implications for inflation and growth. Sharp swings in crude tied to Middle East developments have rippled across asset classes. Precious metals, for example, only partly recovered as investors fretted that a jump in energy-induced inflation could push interest rates higher for longer, a scenario that tends to be unfavorable for non-yielding assets such as gold.
Reflecting on the broader market reaction, Lukman Otunuga, Head of Market Research at FXTM, said, "Uncertainty remains the dominant force in global markets as investors navigate an increasingly complex geopolitical landscape. The situation around the Strait of Hormuz has amplified volatility, particularly in oil markets where prices are highly sensitive to supply disruptions."
3. Warsh confirmation hearing and the interest-rate outlook
Kevin Warsh, President Trump’s nominee to be the next Chair of the Federal Reserve, will testify in a Congressional hearing on Tuesday. Lawmakers face a compressed timeline to confirm Warsh as the successor to Jerome Powell, whose term as Fed Chair is set to end in less than a month.
Markets will be watching for indications of how Warsh expects monetary policy to evolve in coming months. The issue is politically charged: President Trump has pushed for steep, rapid rate cuts to stimulate growth, while Powell has resisted direct political influence, defending the Fed’s independence in setting policy. With the Iran war already influencing inflation dynamics, there is uncertainty about how any incoming chair would balance the potential for political pressure against evolving macroeconomic data. At present, market pricing effectively rules out any rate reductions this year.
4. Flash U.S. PMIs offer an early April read
On the economic data front, S&P Global will publish its flash purchasing managers’ index for April on Thursday. The preliminary PMI will provide an early snapshot of U.S. business activity and offer signals on how companies are coping with higher prices linked to the Iran conflict.
For context, the March PMI dropped to 50.3 from 51.9 in February, marking the weakest reading since September 2023. At the time, S&P Global’s Chief Business Economist Chris Williamson said the readings showed "the U.S. economy buckling under the strain of rising prices and intensifying uncertainty, as the war in the Middle East exacerbates existing concerns regarding other policy decisions in recent months, notably with respect to tariffs." The April flash PMI will therefore be scrutinized for signs of improvement or further weakening in activity amid the ongoing shock to energy prices.
5. A heavy calendar of corporate results
This week’s corporate earnings schedule is packed with high-profile companies whose results may illuminate the economic impact of the conflict and price pressures. Market participants will examine reports from American Express, Intel, UnitedHealth, RTX Corporation, and Tesla, among others. Analysts and investors will be looking for commentary on revenues, margins and forward guidance that reflect the current inflationary backdrop and supply-chain or demand-side adjustments.
As Otunuga cautioned, "Looking ahead, a combination of geopolitical developments, key U.S. data, and major earnings releases - particularly from Big Tech - could set the tone for markets and potentially trigger sharp moves across asset classes."
What to watch as the week unfolds
- Confirmation of whether the ceasefire will be renewed or lapse and how maritime incidents affect risk sentiment.
- Movements in crude oil prices and related commentary from companies sensitive to input costs.
- Key signals from Warsh’s testimony on the Fed’s interest-rate path and any shifts in market expectations.
- April’s flash PMI reading for evidence of the economy’s resilience or further strain from rising prices.
- Earnings commentary that sheds light on how corporations plan to navigate higher energy and input costs.
Conclusion
Traders and strategists will need to balance rapidly evolving geopolitical developments with incoming economic data and corporate results. The expiration of the short-term ceasefire, renewed disruptions around a critical oil chokepoint, a pivotal Fed confirmation hearing, preliminary PMI data and a broad slate of earnings all converge this week to create a potentially volatile market environment. How these elements interplay will influence inflation expectations, the outlook for interest rates and the near-term direction of asset prices.