Markets Shrug Off Strait of Hormuz Blockade, Signaling 'Peak Fear' Has Passed

Investors appear to have already priced in much of the geopolitical risks and are growing less reactive to headlines.

Apr. 13, 2026 at 5:14am

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An extreme close-up of a complex network of industrial gears, pipes, and valves in shades of steel grey, bronze, and black, conceptually representing the intricate financial infrastructure and machinery that underpins global markets.The resilience of global financial markets in the face of geopolitical turmoil is reflected in the continued operation of the complex machinery that powers the world's economic engine.NYC Today

Despite the U.S. move to blockade the critical Strait of Hormuz, leading to a surge in crude oil prices, the market reaction has been relatively muted. Equities fell modestly, while gold and the U.S. dollar saw only modest moves, suggesting investors have already priced in much of the geopolitical risks and are growing less reactive to headlines. Analysts believe the worst of the panic and sell-off has passed, and markets are now trying to work through the situation.

Why it matters

The restrained market reaction indicates that investors have become more accustomed to geopolitical shocks, with volatility easing compared to earlier weeks. This suggests the markets have reached 'peak fear and sell-off' and are now focusing on fundamentals rather than reacting to every headline. However, the political timeline surrounding the U.S. military action remains a key near-term risk that markets may not yet fully appreciate.

The details

The U.S. move to blockade the Strait of Hormuz has led to a familiar market response, with crude oil prices surging over 55% since the war started. However, the reaction in other asset classes has been notably more muted, with equities falling relatively modestly, gold losing only about 0.5%, and the U.S. dollar index adding 0.38%. This suggests investors have already priced in much of the geopolitical risks and are growing less reactive to headlines.

  • The U.S. move to blockade the Strait of Hormuz occurred in early April 2026.
  • Crude oil futures for May delivery jumped more than 8% to $104.93 per barrel by 10:50 p.m. ET on April 13, 2026.
  • Yields on the 10-year Treasury have added more than 333 basis points since the war started.

The players

Billy Leung

Investment strategist at Global X ETFs.

Jun Bei Liu

Lead portfolio manager at Ten Cap.

Michael Yoshikami

Founder of Destination Wealth Management.

Steve Brice

Chief investment strategist at Standard Chartered.

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What they’re saying

“There's a belief that a lot of this is negotiation tactics. Markets have reached peak uncertainty. The reaction function is no longer as extreme as before.”

— Billy Leung, Investment strategist

“We saw the VIX pick up a few weeks ago, and that's probably the peak fear and sell off... from here on, it's really the market trying to work [itself] out.”

— Jun Bei Liu, Lead portfolio manager

“I'm pretty confident that oil is going to go down from here ... we're going to see oil at $80 a barrel again.”

— Michael Yoshikami, Founder

“However, we see these as temporary phenomena as we believe the U.S. is looking for ways to de-escalate.”

— Steve Brice, Chief investment strategist

What’s next

U.S. lawmakers are reportedly again looking to pass a resolution to stop the Iran war and force Trump to seek Congress' approval before any more attacks. This political timeline surrounding the U.S. military action remains a key near-term risk that markets may not yet fully appreciate.

The takeaway

The muted market reaction to the Strait of Hormuz blockade suggests investors have become more accustomed to geopolitical shocks, with volatility easing compared to earlier weeks. This indicates that the markets have reached 'peak fear and sell-off' and are now focusing more on fundamentals than reacting to every headline. However, the political timeline surrounding the U.S. military action remains a key near-term risk that could still impact markets.