Trump Blockades, Irans Blockade of Hormuz

The “peace dividend” that drove global equities sharply higher last week has evaporated overnight after US–Iran negotiations in Islamabad collapsed following 21 hours of talks. President Trump has declared a full US Navy blockade of the Strait of Hormuz “effective immediately,” with CENTCOM confirming enforcement commences at 12am Tuesday AEST. The Australian dollar fell 1% in early Sydney trading as risk-sensitive currencies led losses, oil is expected to retrace last week’s decline, and the ASX faces a sharply lower open as the Hormuz war premium reasserts itself.