Global markets rebounded strongly this month following the temporary ceasefire between Iran, Israel, and the United States. Equity markets recovered a significant portion of their earlier losses as investors initially positioned for a rapid normalization in oil flows and a reopening of the Strait of Hormuz. However, the cease fire evolved into a double US & Iran blockade that kept the Strait close, preventing the flow of Middle East oil to the markets in Europe and Asia.
The latest phrase circulating across trading desks is “NACHO,” short for “Not A Chance Hormuz Opens.” The term reflects growing doubts that repeated statements from U.S. President Donald Trump regarding the reopening of the critical shipping corridor will translate into a durable peace agreement. The phrase captures a broader shift in investor psychology: markets are increasingly treating the Strait of Hormuz disruption not as a temporary geopolitical shock, but as a prolonged macroeconomic challenge.
This shift has become increasingly visible across multiple asset classes. Although Brent crude has retreated from the wartime peak of $126 per barrel reached at the height of the conflict, prices remain structurally elevated above $100 per barrel, still significantly higher than levels seen before the escalation. The persistence of elevated oil prices suggests that energy markets continue to price in substantial disruption risks despite the ceasefire headlines. Markets that price risk professionally continue to behave as though the threat of renewed disruption remains significant.
This has complicated expectations surrounding central-bank policy. Prior to the conflict escalation, markets had aggressively priced in multiple Federal Reserve rate cuts on expectations of slowing growth. However, persistently elevated oil prices now raise the risk of a stagflationary environment where inflation remains high even as economic growth slows.
The Paradox of Oil and Gold
The interaction between oil and gold markets has also become more nuanced. Gold initially rallied sharply during the early stages of the conflict before experiencing a significant correction as investors took profit following its strong run over the past year. Going forward, the relationship between oil and gold may become increasingly important. If oil prices remain above $100 per barrel over the coming months, persistent inflation pressures may force interest rates to remain elevated, potentially limiting the upside momentum for gold despite ongoing geopolitical uncertainty.
On the other hand, a successful reopening of the Strait of Hormuz accompanied by a sustained decline in oil prices could create conditions for central banks to resume monetary easing. Such a scenario may weaken the U.S. dollar further and reignite momentum in precious metals, potentially driving gold to new highs.
For now, the base case remains a gradual de-escalation in U.S.-Iran tensions, which will eventually eventually drive a rally in Gold price, though the timing remains highly uncertain. Markets are likely to continue reacting sharply to developments surrounding ceasefire negotiations, shipping flows, and energy infrastructure security.
AI trade soared back.
Technology stocks experienced a difficult period in late 2025 as fears surrounding a potential AI bubble triggered a sharp correction across the sector. Concerns over stretched valuations and excessive optimism led investors to aggressively sell down technology shares, particularly in AI-related names.
However, the correction has also brought valuations back to more reasonable levels. Recent earnings reports from major technology companies have restored investor confidence, with several firms delivering stronger-than-expected growth driven by continued AI adoption, data-center expansion, and persistent demand for high-performance chips.
April saw a renewed rally in technology stocks, supported both by improving earnings momentum and by the sector’s relatively limited exposure to rising oil prices. As investors retreated from traditional brick-and-mortar industries more vulnerable to higher transportation and energy costs, capital rotated back into technology and AI-related sectors, reinforcing the strength of the ongoing AI investment cycle.
Portfolio Performance and Positioning Strategy
The portfolio delivered a stellar return this month, reflecting the strong market recovery following the ceasefire. Cash increased by 5.67%, CPF-IS by 6.62%, and SRS by 5.68%.
The tactical increase in equity allocation from 50% to 60% during March proved beneficial, allowing the portfolio to benefit from the cease fire rally. The recent rotation away from Asian economies that are more vulnerable to prolonged high oil prices and into the technology sector, which continues to rally on the back of the ongoing AI investment cycle has also helped to improve the performance of the portfolio.
Even as the U.S. stock market reaches new highs, risks surrounding the Strait of Hormuz remain unresolved. As such, maintaining a 60/40 equity-to-bond allocation provides flexibility to navigate sudden market reversals while preserving the ability to capitalize on future opportunities. Portfolio positioning remains focused on balancing resilience with selective exposure to long-term structural growth themes, while tactically reducing exposure to sectors most vulnerable to sustained elevated oil prices.
[Download the fund factsheet for the month here]
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