Chinese semiconductor manufacturers have reported record financial results for 2025, primarily driven by stringent export restrictions imposed by the United States. Cut off from Western technologies, China has been compelled to accelerate its import substitution policy, ensuring guaranteed multi-billion-dollar demand for local producers amid the global AI boom.

Analysts and market participants anticipate further explosive revenue growth this year. Faced with isolation, Chinese tech giants are aggressively buying up domestic components to build their own AI infrastructure, despite their technological lag behind global standards.

According to Paul Triolo, a partner at consulting firm Albright Stonebridge Group, export restrictions imposed by the US against China’s tech sector in recent years have “injected ‘rocket fuel’ into Chinese semiconductor demand,” significantly amplifying growth driven by the development of electric vehicles and AI data centers.

China’s largest contract semiconductor manufacturer, SMIC, reported a 16% increase in revenue for 2025, reaching a record $9.3 billion. Analysts at LSEG estimate that this figure could exceed $11 billion in 2026. The second-largest company, Hua Hong, saw a record revenue of $659.9 million in the fourth quarter and forecasts sales volumes between $650 million and $660 million in the upcoming quarter.

Current dynamics are supported by two key factors. On the one hand, the booming production of electric vehicles in China ensures stable demand for older-generation chips. On the other hand, the need for high-performance components for AI is growing rapidly.

Recent US bans on the export of advanced AI accelerators from Nvidia to China have forced Beijing to leverage administrative resources. Authorities are strongly advising local corporations to transition to domestic alternatives, even if their performance lags behind American competitors.

“While China is not yet a leader in the highest-performance GPUs, these domestic solutions are filling the domestic 'computing gap' and driving record sales,” Parv Sharma, a senior analyst at Counterpoint Research, explained.

Memory chip manufacturers have gained the most from the current situation, with revenue at ChangXin Memory Technologies showing a dramatic 130% surge year-over-year, exceeding $8 billion.

However, despite historic financial records, the technological gap between China and global leaders remains significant. National giants like SMIC and Hua Hong still lack capabilities for industrial-scale production of advanced chips comparable to Taiwan's TSMC.

The United States, Iran, and regional intermediaries are engaged in closed-door consultations regarding the terms of a 45-day ceasefire, which is intended to be the first step toward a complete cessation of the military conflict. This was reported by Axios, citing four American, Israeli, and Middle Eastern officials familiar with the negotiations.

Representatives from Pakistan, Egypt, and Turkey are actively participating in this round of diplomatic efforts. At the same time, there is direct communication between the US special envoy to the Middle East, Steve Witkoff, and Iranian Foreign Minister Abbas Araqchi.

The draft document under discussion proposes establishing a 45-day ceasefire regime (phase one). During this time, negotiators will attempt to define the terms for a permanent peace agreement. If necessary, the ceasefire period may be extended.

According to Axios, the likelihood of signing even an interim agreement in the next 48 hours is considered low. However, intermediaries view the current dialogue as the last viable opportunity to avoid a major regional escalation. If negotiations fail, the conflict could lead to mutual strikes on Iran's civilian infrastructure, as well as energy and water facilities in the Gulf countries.

On Sunday, US President Donald Trump extended the ultimatum requiring Iran to resume shipping through the Strait of Hormuz until 3:00 AM Moscow time on Tuesday. In an interview with Axios, the US leader confirmed that Washington is engaged in "intensive negotiations" with Tehran but accompanied this with a stern warning.

"There’s a good chance, but if they don’t make a deal, I am blowing up everything over there," Trump stated.

In preparation for the agreement, intermediaries are developing a scenario for limited confidence-building measures. Tehran is expected to make concessions regarding the unblocking of commercial shipping in the Strait of Hormuz and freezing its stocks of highly enriched uranium. In turn, Washington is considering providing Iran with firm guarantees that the ceasefire will not be abruptly terminated by the American side immediately after its conclusion.

Global Brent crude prices surged 5%, reaching $106.16 a barrel, immediately after the highly anticipated address by US President Donald Trump. According to Reuters, the president’s remarks triggered a spike because investors did not receive the expected signals of de‑escalation in the Middle East conflict.

The oil market reacted to Trump’s promise to carry out “more aggressive strikes” on Iranian targets. Traders’ hopes for a quick end to the war and the restoration of stable hydrocarbon supplies were extinguished. The situation is worsened by the lack of any guarantees about the reopening of the Strait of Hormuz, a key shipping artery through which a significant share of the world’s oil exports passes.

In his address, Donald Trump stressed the military threat from Tehran. The president warned that Iran is rapidly increasing its stockpiles of conventional ballistic weapons, making an immediate exit from armed confrontation impossible. Financial institutions interpreted this rhetoric as a signal to prepare for a prolonged crisis in the Persian Gulf.

Analysts say that current dynamics reflect deep disappointment among market participants who had hoped for diplomatic progress. Instead, uncertainty over the security of energy routes has only intensified. Traders have begun actively pricing in the risk of further supply cuts, which could push oil prices to new multi‑year highs in the coming weeks.

In late March 2026, analysts at Goldman Sachs presented a report confirming China's exceptional resilience to the current oil crisis. While the blockade of the Strait of Hormuz and the conflict in Iran may lead to a 0.4% drop in US GDP, the Chinese economy is expected to slow down by only a symbolic 0.2%. The foundation of this stability lies in the timely and extensive transformation of the country's energy balance.

By early 2026, Beijing significantly reduced its dependence on fossil fuels, with crude oil and LNG now accounting for only 28% of primary energy consumption. An impressive 40% of electricity is generated from renewable sources, effectively shielding the industrial sector from price shocks in the hydrocarbon market. This allows China to maintain its manufacturing competitiveness even amid global instability.

In addition, Beijing has built an unprecedented system of strategic reserves. China's oil reserves are sufficient for 110 days of complete autonomous operation. In comparison, the US capabilities in this regard are nearly five times smaller, as American reserves were critically depleted in March 2026 to restrain pump prices. This creates a significant gap in energy security between the two superpowers.

Lastly, China has established a robust logistics system. The country relies on direct pipeline supplies from Russia and northern routes, while imports from Australia and Malaysia bypass dangerous zones. This diversification, combined with structural reforms, positions Chinese assets (A-shares) as a safe haven for investors. While global indices decline due to stagflation threats, the Chinese market is showing steady momentum.

A new ECB analysis from April 2026 reports that foreign exporters have passed 95% of the cost of the new US tariffs onto US businesses and households. A 10 percentage‑point increase in tariffs leads to an immediate rise in output prices of 9.5%, while firms’ ability to absorb those costs through margins is nearly exhausted. At present, consumers directly bear one‑third of all tariff costs, but analysts forecast that this share could rise to 50% or more over the long term. The corporate sector — manufacturers and retailers — will have to shoulder about 40% of the increased costs.

The sharp increase in tariff rates from 3% to 18% triggered an import collapse: every 10 percentage‑point rise in tariffs reduces goods imports by 37%. The auto industry has been hit particularly hard, as the US has actively substituted supplies from China and the EU with inputs from regional partners — Mexico and Canada. While Japan and the EU lose export volumes and revenue, the US economy faces a negative trend in the unit value of imported goods, confirming a significant drop in consumer demand amid higher prices.

According to the WTO, the effective tariff rate amounted to 9.8% versus a nominal rate of 18.2%. This gap reflects importers’ adaptation — quickly finding alternative suppliers or goods with lower tax burdens. Nevertheless, attempts to protect the domestic market have forced American companies to operate under extreme financial strain. Besides, ordinary consumers have become the main payers in the trade confrontation, effectively bearing almost the entire cost of the imposed restrictions. 

On March 31, 2026, US President Donald Trump addressed European allies on his social network, Truth Social, issuing a firm ultimatum regarding energy security. The president emphasized that countries, including the UK, facing a shortage of aviation fuel must either purchase resources directly from the United States or take military action in the Strait of Hormuz.

According to a report from the Wall Street Journal, Trump informed his aides of his readiness to phase down active operations against Iran within the next six weeks. Washington believes it has nearly achieved its primary objectives of weakening Tehran’s missile capabilities and naval forces. The US strategy going forward will focus on diplomatic pressure, while the physical safeguarding of trade flows will fall on regional partners.

The White House is officially distancing itself from the role of "global guarantor" of maritime navigation. According to Trump, it is time for European countries and Gulf monarchies to "learn to defend themselves," as the US no longer intends to provide military support to those unwilling to participate in neutralizing the Iranian threat. Responsibility for resuming commercial transit is now entirely placed on an international coalition without direct involvement from the American fleet.

France faced particularly sharp criticism for its ban on flights carrying military cargo for Israel over its territory. The US president reminded everyone of the successful removal of a key figure in the Iranian regime, describing Paris as "very unhelpful." Trump emphasized that Washington will "remember" this refusal when building future economic and defense relations with European leaders.

On April 1, 2026, the International Monetary Fund (IMF) released its forecast for the global economy against the backdrop of the US and Israeli military confrontation with Iran. According to a report published by Bloomberg, the conflict has triggered a large asymmetric shock that has hit developing countries hardest — those that had not yet recovered from previous crises.

The greatest difficulties are being faced by countries in Africa and Asia that are critically dependent on hydrocarbon imports. Supply disruptions and rising prices are depriving these regions of access to energy resources even when they are willing to pay a supramarket premium. The IMF allows for the possibility that the global system may move into a “transitional” state — a prolonged period of expensive energy and persistently high inflation that will be extremely difficult to control with standard monetary policy measures.

The crisis has spread beyond the energy sector, affecting food and fertilizer markets from the Middle East to Latin America. Shortages of agricultural inputs pose a direct threat to social stability in low‑income countries. As the fund’s analysts emphasize, “any spike in food prices becomes not only an economic but also a socio‑political problem in the context of constrained fiscal resources.”

The World Trade Organization (WTO) has confirmed that the previous global order has undergone irreversible change. The global trading system faces unprecedented uncertainty caused not only by military actions but also by the impact of US tariffs. A return to the previous status quo is regarded as impossible in the current geopolitical environment. 

Global energy prices may reach $150 per barrel if navigation through the Strait of Hormuz remains blocked within the coming month. This prediction was made on April 1, 2026, by Bruce Kasman, JPMorgan's chief economist. He estimates that the ongoing transportation isolation of the Persian Gulf could lead to a critical supply shortage and forced consumption restrictions for major industrial enterprises.

Analysts at Citigroup are considering even more drastic scenarios for the Middle Eastern crisis. They assign a 30% probability to the benchmark Brent crude rising to $150. However, if large-scale attacks on Iranian infrastructure occur or the blockade extends until June 2026, oil prices could soar to $200. Experts from the bank emphasize that investors are pricing in the risk of the conflict expanding geographically and damaging major refining hubs.

Saudi Arabia's national energy company, Saudi Aramco, has also revised its short-term expectations. According to analysts at the Saudi giant, prolonged closure of the waterway by Tehran could push prices to $180 by late April. While oil prices did not reach the previously predicted $138–140 by the end of March, volatility remains extremely high due to uncertainty surrounding the resumption of safe shipping.

The current situation in the Strait of Hormuz, through which approximately 20% of global hydrocarbon supplies flow, remains a key destabilizing factor for the global economy. Bruce Kasman of JPMorgan points out that each additional day of tanker fleet downtime increases inflationary pressure and depletes strategic reserves of importing countries. The market is awaiting official decisions from the governments of leading countries regarding measures to ensure the security of trade routes to prevent an energy collapse.

The US technology sector is undergoing its toughest valuation test since the dot‑com crash. The NASDAQ Composite has officially entered a correction amid the escalating military conflict between the US and Iran. However, analysts at Capital Economics view the current decline as a temporary re-pricing of assets rather than the start of a systemic market collapse.

Although the forward price‑to‑earnings (P/E) multiple for the IT sector within the S&P 500 has nearly converged with the rest of the market, the fundamental link between profits from AI adoption and long‑term growth remains intact. The sharp drop in market quotes has inevitably prompted comparisons to the 2000 tech bubble, when market slumps presaged a complete breakdown in corporate earnings expectations.

Capital Economics highlights a key difference: the convergence of big‑tech multiples with the broader market merely removes the initial “euphoria premium,” not a harbinger of profit recession. Unlike the speculative startups of the late 1990s, today’s hardware and software makers are deeply embedded in global infrastructure. They have solid balance sheets and generate strong cash flows even amid high inflation, giving them remarkable resilience.

Although the escalation in the Middle East has triggered a broad rotation into safe‑haven assets, institutional investors increasingly view the current correction as a “healthy reset.” Analysts assume this market sentiment clears the way for a recovery by mid-year once the fundamental environment gets back on track.

Meanwhile, Wall Street is anticipating the corporate earnings season starting in April, which will serve as the main stress for the sector. If the armed conflict does not spread beyond the Middle East, and the energy market rally is tamed, the US high-tech sector should again show outstanding performance. For now, the market is balancing geopolitical risks against AI’s long‑term potential, and many funds are using the drawdown as a strategic entry point for targeted long positions. 

The US stock market has entered the first-quarter earnings season of 2026 in a state of stark dissonance: valuation multiples are rapidly contracting, while corporate profit forecasts continue to rise.

According to the latest weekly report from Goldman Sachs Group Inc. (NYSE:GS) titled "Weekly Kickstart," the S&P 500 index has dropped by 9% from its January highs. The primary driver of the sell-off has been a combination of macroeconomic shocks: a sharp spike in energy prices, rising interest rates, and geopolitical instability fueled by the escalation of the military conflict in Iran.

Against this backdrop, the price-to-earnings (P/E) ratio of the benchmark index has decreased from 21x to 19x over the past month. The paradox of the current situation is that despite the market's steep correction, analysts have raised their consensus earnings per share (EPS) forecasts for 2026 by 3%.

Sentiment reset and fundamental background

Technical analysis indicates that some investors are capitulating. Goldman Sachs' sentiment indicator for US stocks has fallen to -0.9, the lowest level since August 2025. Historical statistics show that when the indicator falls below -1, it typically precedes a period of above-average market returns.

However, bank strategists warn that mere technical oversold conditions are insufficient to trigger a sustainable rally. The market requires a clear improvement in fundamental prospects. Otherwise, current valuations are pricing in the risk of further declines if the Middle Eastern conflict continues to escalate.

That said, the fundamental basis of the US corporate sector remains solid for now. Goldman Sachs maintains its baseline 2026 profit growth forecast for the S&P 500 at 12%, noting that this scenario holds only if macroeconomic shocks do not take on a protracted character.

Inflation, rates, and earnings season

The upcoming earnings season will serve as a critical test for Wall Street's optimism. Investors will be looking for evidence in balance sheets that companies can maintain margin levels amid soaring oil costs and disrupted global trade routes.

Market attention is also shifting to the Federal Reserve's response. Stagflationary pressures from geopolitical events and persistent core inflation make the path to potential interest rate cuts particularly challenging. In the context of a paradigm of "higher rates for longer," investors are increasingly favoring companies with strong quality metrics and resilience on their balance sheets.

According to Goldman Sachs, it is the quality of corporate guidance from top management in first-quarter reports that will determine whether the S&P 500 can find a true bottom at current levels.

If military actions in Iran and the effective blockade of the Strait of Hormuz stretch into June, global oil prices could surge to a dazzling $200 per barrel, analysts at Macquarie Group warn.

A team led by Vikas Dwivedi laid out two possible scenarios for the commodities market. The base case, “Quick Peace,” which analysts assign a 60% probability, assumes that the conflict ends by the end of the next month, allowing logistics to recover and prices to get back on track rapidly.

The alternative scenario, “Protracted War” (40% probability), suggests that fighting continues throughout Q2. In that case, according to the estimates of the investment bank, inflation‑adjusted oil prices could reach record highs and comfortably top $200 per barrel.

“If the strait remains closed for a prolonged period, prices will have to rise so high that they physically ‘destroy’ historically massive volumes of global oil demand,” Macquarie’s analysts state. They argue that the timing of reopening the waterway and the magnitude of actual physical damage to regional energy infrastructure will be the fundamental factors determining the long‑term fallout for global markets.

The report underlines the unprecedented scale of the current logistics crisis. The closure of the Strait of Hormuz has triggered a price shock not only in crude oil but also in refined products. Before the escalation, roughly 15 million barrels per day of crude and 5 million barrels per day of refined products transited the route. Macquarie concludes that it is physically impossible to instantly replace those volumes via alternate routes or reserve capacity. 

The American currency is on course for its best monthly showing since July 2025. The military conflict in the Middle East and the subsequent oil shock have completely upended Wall Street's scenarios, forcing the largest investment banks to urgently revise their forecasts for the primary reserve currency.

The Bloomberg Dollar Spot Index, which tracks the dollar's performance against a basket of major global currencies, soared by more than 2% in March. This unprecedented strengthening was driven by a mass flight of global investors to safe-haven assets and a sharp decline in expectations regarding an imminent cycle of interest rate cuts by the US Federal Reserve.

This represented a dramatic turn for the market. Just before the onset of hostilities, the dollar was experiencing its fourth consecutive monthly decline. The protracted geopolitical conflict caught investment banks and traders off guard, as they had been aggressively betting on further weakening of the American currency until the last moment.

A notable example is the reaction of strategists at JPMorgan Chase & Co., who officially changed their dollar forecast to bullish for the first time in a year. In the futures market, speculators also moved swiftly to close short positions and switch to long ones, despite holding their bearish trades at near five-year highs just mid-February. It is noteworthy that in January, financial giants like Goldman Sachs and Deutsche Bank entered 2026 with confident forecasts for a weaker dollar, solely based on anticipated easing of the Fed's monetary policy.

Analysts remind us that in 2025, the US dollar index lost about 8%. At that time, demand for the currency was undermined not only by three consecutive Fed rate cuts but also by Donald Trump’s aggressive tariff war. This sparked rumors of potential capital flight from dollar assets. However, paradoxically, investors continued to purchase American securities while actively hedging currency risks.

Currently, many investment firms prefer to refrain from updating their macro forecasts altogether. The dense fog of uncertainty regarding the duration of the war, risks of further escalation, and prospects for a peace agreement is prompting Wall Street to take a pause in its assessments.

BofA Securities analysts warned on March 26, 2026, that the Federal Reserve could shift back into a rate‑hiking cycle amid soaring energy prices. The escalation of the military conflict in Iran and the effective blockade of the Strait of Hormuz have created conditions for a prolonged increase in inflationary pressure in the United States.

BofA Securities expert Aditya Bhave said that tightening monetary conditions is the most likely scenario if WTI averages in the $80–100 range. On Wednesday, the Brent futures contract plunged 4.1% to $100.23 a barrel.

The disruption of tanker traffic through the key waterway, which carries about one-fifth of global oil consumption, has already driven up gasoline prices at US pumps. S&P Global business survey data shows that US industrial firms already face high additional costs for commodity purchases.

The Federal Reserve will only revert to a dovish policy if consumer demand collapses sharply as a result of a short-lived price spike. The negative impact of a prolonged sell‑off in the stock market and the threat of weakening employment will force the central bank to balance between containing inflation and supporting economic growth during the crisis. 

The current energy resource deficit in the European Union is less severe compared to the crisis of 2022. According to Bloomberg, the diversification of import channels has reduced the sensitivity of the European economy to Middle Eastern supplies compared to the previous reliance on Russian gas.

The blockage of the Strait of Hormuz and strikes on Qatar's energy infrastructure have led to rising prices at the Dutch TTF hub. Nevertheless, current gas prices remain significantly lower than the levels seen at the end of 2022. Economic analyst Lionel Laurent points out that Europe’s dependence on Middle Eastern exports is not critical for the stability of the system.

The primary damage from disruptions in maritime logistics has been observed in countries within the Asia-Pacific region. As Lionel Laurent, a Bloomberg columnist, noted, many Asian countries find themselves in a highly vulnerable position due to their energy systems' direct reliance on transit through Middle Eastern arteries. Regional markets are experiencing a deeper supply deficit than European consumers.

The supply crisis has been most acute in India, where a shortage of cooking fuel emerged in March 2026. The LNG deficit has negatively impacted the operations of hotels, restaurants, and social facilities. According to industry reports, the available reserves in the country are sufficient only to meet minimal needs until the end of April 2026.

Fresh business surveys issued on March 24, 2026, confirmed a synchronized macroeconomic shock on a global scale. Purchasing managers’ indices (PMIs) registered a sharp fall in major economies, driven by a decline in commodity supplies and rising logistics costs due to the military conflict in Iran.

The euro area’s composite PMI worsened more than markets had expected, and manufacturing activity in India hit its weakest level since 2021. “An incipient recovery will be suppressed by the combination of higher oil prices, tighter financial conditions, and fading business confidence,” Jamie Rush, head of global economics at Bloomberg Economics, said.

The ECB and the Bank of England have shifted rhetoric toward hawkish vigilance to curb inflation expectations amid the energy crisis. The European Central Bank is considering a rate hike in April 2026, while the Bank of Japan does not rule out a similar move to stabilize the financial system.

Forecasts point to greater resilience in the US manufacturing sector compared with European and Asian markets. The key factor shaping macro dynamics in 2026 will be the duration of the Strait of Hormuz blockade and how quickly monetary authorities can counter the effects of a sharp rise in oil prices.

On March 26, 2026, European Council President Antonio Costa characterized the current state of the European Union’s economy as a “very strong economic shock.” The escalating instability in the Middle East has triggered a sharp rise in energy prices and set the stage for a potential new migration crisis in the region. 

According to Antonio Costa’s statement, Brussels has begun immediate preparations for a potential influx of refugees amid ongoing hostilities. The prolonged conflict in Iran poses a threat to the socio-economic stability of member states and necessitates an urgent reassessment of budget priorities to secure borders. 

The European Central Bank has initiated an emergency risk assessment in the banking sector related to the Middle East crisis. The regulator is requesting liquidity data and changes in customer behavior from credit institutions. Particular attention is being paid to direct financial obligations that may be affected by the blockage of trade routes and declines in business activity.

The recent spike in natural gas prices has forced officials to acknowledge that European production is facing an inevitable major setback. Earlier, EU authorities had denied the direct impact of commodity market volatility on the bloc’s macroeconomic indicators. However, current price trends suggest a risk of a prolonged recession in key industrial sectors across Europe.