President Donald Trump has announced that the United States will begin assisting ships to leave the Strait of Hormuz from Monday, a move that Iran swiftly rejected even as diplomatic channels between the two countries remain open. The US Central Command said the support would involve guided-missile destroyers, more than 100 land- and sea-based aircraft, and 15,000 service members. However, a report from Axios later claimed the Navy would not necessarily escort vessels through the waterway, introducing a degree of ambiguity about the precise nature of the American commitment.
Iran’s foreign ministry stated on Sunday that it had received a US response to its own 14-point counterproposal, which had been delivered via Pakistani intermediaries. The Iranian plan calls for a permanent end to hostilities and a full withdrawal of US forces from the region. Tehran said it was reviewing the American reply. President Trump, writing on Truth Social, expressed scepticism, saying he could not imagine Iran’s plan would be acceptable because the country had not yet paid a “big enough price.” He added that he would be reviewing the proposal nonetheless. The Iranian foreign ministry spokesperson, Esmail Baghaei, emphasised that the plan was “exclusively focused on ending the war” and that the nuclear issue had “absolutely no place” in its clauses. Reports that Iran had agreed to clear sea mines at the Strait of Hormuz were dismissed as “media fiction.”
The diplomatic dance plays out against the backdrop of a broader crisis that began in February 2026 following a US-Israeli air war against Iran and subsequent Iranian retaliations. A ceasefire took effect on 8 April, and one round of talks between US and Iranian delegations in Islamabad failed to produce a deal. The US and Israel suspended their bombing campaign four weeks before the current reporting. Iran’s 14-point proposal, which responds to a nine-point US plan, demands guarantees against military action, the withdrawal of US forces from areas surrounding Iran, the lifting of the naval blockade and sanctions, the unfreezing of Iranian assets, payment of compensation, and an end to hostilities across multiple fronts, including Lebanon. It also includes a framework for the Strait of Hormuz itself.
On Sunday, a bulk carrier reported being attacked by multiple small craft while transiting approximately 11 nautical miles west of Sirik, Iran. The United Kingdom Maritime Trade Operations (UKMTO) confirmed the incident, logging it as report 050-26. Iran’s semi-official Fars news agency stated the vessel had been stopped for a document check by the Iranian navy as part of standard supervisory procedures, a claim that directly contradicts the attack report. All crew members were reported safe, and no environmental impact was recorded. The vessel departed the area after the incident. The episode occurred amid a backdrop of significantly reduced traffic through the Strait of Hormuz, ongoing mine reports, and sporadic GNSS interference. Another incident involved vessel masters near Ras Al Khaimah, UAE, being directed to move from their anchorages.
Investors reserved judgement on the unfolding situation. Brent crude futures were little changed at $108.35 per barrel, having recovered from an initial drop of more than two per cent, while US crude eased 0.1 per cent to $101.85. Dealers noted the bulk carrier attack but said it was not clear how many ships would try to run through the strait even with Navy protection. Oil-driven inflation fears have also lifted bond yields, challenging equity valuations.
Market reactions across the board
A public holiday in Japan for Greenery Day made for thin trading conditions in Asia. Nikkei futures were up only modestly at 59,880 versus a cash close of 59,513. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2.8 per cent, led by tech-heavy South Korean stocks, which jumped 4.05 per cent after returning from holiday. Chinese blue chips were off 0.06 per cent. In Europe, Euro Stoxx 50 futures and Dax futures each added 0.3 per cent. S&P 500 futures gained 0.1 per cent and Nasdaq futures rose 0.3 per cent, as markets braced for more than 100 earnings reports this week. Companies reporting include Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney and McDonald’s.
Analysts at Goldman Sachs noted in a research note that the S&P 500 earnings per share growth rate was running at 25 per cent, or 16 per cent when accounting for one-off gains. “Despite elevated energy prices and geopolitical uncertainty, corporate guidance and analyst estimate revisions have remained strong so far this quarter,” they said. “However, the reward for EPS beats has been unusually small.” Concerns remained about the scale of artificial intelligence capex investment, now at $751 billion for 2026, $80 billion above estimates at the start of the earnings season and 83 per cent above 2025 spending.
Several major central banks have turned hawkish. Markets implied just 2 basis points of easing from the Federal Reserve by the end of the year, compared with 11 basis points a week ago. Expectations for the European Central Bank had climbed to 76 basis points of hikes, with the Bank of England at 63 basis points. Australia’s central bank meets on Tuesday and is considered likely to raise its cash rate for a third consecutive time as it battles stubborn inflationary pressures.
Broader economic factors weigh
The outlook for Fed policy could be budged by a raft of data this week, including the payrolls report for April on Friday. Median forecasts are for a rise of 60,000 jobs after March’s outsized 178,000 gain, though problems with seasonal adjustment create much uncertainty. Analysts at Citi are predicting a 15,000 drop in payrolls and a rise in unemployment to 4.3 per cent.
In currency markets, the dollar was a shade softer as investors waited for more developments in the Middle East and, crucially, whether the Strait of Hormuz could be opened. The dollar was steady at 157.21 yen, still smarting from last week’s Japanese intervention, which analysts thought could have amounted to around $35 billion. The euro was flat at $1.1726, while the pound held at $1.3584 ahead of local elections in Britain on 7 May, which could see heavy losses for the ruling Labour Party. The 2026 UK local elections include councillors in England and directly elected mayors; most seats were last contested in 2022, and key deadlines for voter registration and postal vote applications have passed.
In commodity markets, gold was 0.2 per cent lower at $4,603 an ounce, well within recent trading ranges.
