Markets stabilize as investors weigh Iran war developments and the Hormuz blockade

Over the weekend, negotiations between the U.S. and Iran to end the war failed. In response, President Trump announced a blockade of the Strait of Hormuz, a move intended to prevent Iran from exporting oil and to pressure the country into accepting U.S. terms to end the conflict.

Stock futures trended lower Sunday night and Monday morning following the announcement. By this afternoon, however, all three major indexes were up, suggesting investors were willing to look past the latest setback in the war.

Oil prices rise, then fade

Oil prices were higher on Monday, but the gains faded during the session. The market reaction indicates investors are weighing the potential impact of the Strait of Hormuz blockade against other factors affecting energy prices.

Ceasefire expectations and the Strait of Hormuz

For weeks, investors have closely tracked developments in Iran, with markets swinging on major shifts in the conflict and on commentary from President Trump. The market surge last week followed Trump’s announcement of a two-week ceasefire.

The ceasefire was expected to include a reopening of the Strait of Hormuz, but that reopening “hasn’t really happened.” With fighting paused at least temporarily, investors may now be viewing the most severe outcome—a sustained conflict leading to a global energy crisis—as less likely than before.

Stalemate risk and what investors will watch

Even if the conflict does not end with a decisive peace agreement, the bottleneck around the Strait of Hormuz remains a key focus for investors. The article notes that the war could persist as a stalemate, and that resolving the Strait issue would be important for market stability.

What else is moving markets

As investors shift attention away from the Iran story, they are looking for other opportunities. One area highlighted is software stocks.

Software sector gains on risk-on sentiment

The iShares Expanded Tech-Software Sector ETF (IGV) was up more than 5% in afternoon trading, reflecting a risk-on appetite. The article says there was no clear single piece of news driving the move, but it points to a post from Goldman Sachs arguing that tech stocks were oversold last Friday as a potential catalyst for the sector’s recovery.

While it is too early to conclude that the worst is behind investors regarding the Iran conflict, the article suggests markets are positioning for that possibility and taking advantage of oversold stocks.

Decoupling from Iran headlines

Investors are advised to keep an eye on news from Iran and movements in oil prices. At the same time, the article notes that markets may begin to decouple from events in Iran as other narratives take hold.