{"text":[[{"start":5.45,"text":"The S&P 500 seems able to shake off just about anything. Since Donald Trump returned to the White House last year, it has weathered his tariff-raising agenda and attacks on the independence of the Federal Reserve. In recent weeks, it has erased losses sparked by the US-Israeli war with Iran, and climbed to record highs, with April marking its best month since 2020. That is despite continued disruption to shipping in the Strait of Hormuz — through which a fifth of the world’s oil and liquefied natural gas usually flows — and little sign of progress towards a lasting peace deal. Last week, oil prices reached $126 a barrel, a four-year high. "}],[{"start":44.6,"text":"On the surface, US stock prices look detached from the chaotic reality. But there is method in the market’s apparent madness. First, valuations track corporate profits and these have remained robust. While some consumer and manufacturing companies are being hit by higher energy costs, resilience in earnings elsewhere is providing an uplift for the S&P 500 overall. For instance, trading revenues at Wall Street’s largest banks have been boosted by market volatility, and energy stocks climb higher with the price of oil. Above all, strong earnings results and forecasts among chipmakers and hyperscalers in the first quarter have reinforced optimism around AI. With IT comprising around one-third of market capitalisation, the sector’s performance has propelled the S&P 500 higher."}],[{"start":93.15,"text":"Next, it is difficult for investors to put a price on the uncertainty. Trump has been providing regular updates about ceasefire negotiations via social media, but his posts have often been vague and contradictory — perhaps by design. Though some may attempt to trade on the daily movements, for many it has been easier to look through the noise, and avoid selling funds in S&P 500 trackers, until clearer signals emerge. Likewise, last week’s meetings of the major central banks, including the Fed, European Central Bank and Bank of England, not unreasonably, kept interest rates on hold as they monitor the economic impact of the war. Their wait-and-see approach has provided further buoyancy to stocks. "}],[{"start":135.45,"text":"Investors have also tended to downplay the worst-case scenario of a prolonged closure of the strait. That is partly because they believe there is a limit to how much economic pain the White House will tolerate. Trump has form here. As bond and equity prices plunged following his “liberation day” announcements in April 2025, he diluted his tariff measures. Likewise during the Iran war, the commander-in-chief has often rowed back on his most aggressive rhetoric following adverse market movements. So the S&P 500 has sustained some of its momentum in the belief that “Trump always chickens out”."}],[{"start":171.04999999999998,"text":"Yet while the market’s resilience may be logical, it rests on a fragile stack of assumptions. For one, lofty AI-related earnings forecasts could yet unravel. And, unlike his tariff policies, it is proving far harder for Trump to reverse the effects of the Iran war. Indeed analysts are, once again, raising their oil price forecasts."}],[{"start":192.35,"text":"The longer trade through the strait is hindered, the deeper the economic and market fallout risks becoming. The Fed — and other central banks — could be forced into rate increases. Though Trump’s nomination to chair the central bank, Kevin Warsh, is set to be confirmed soon, last Wednesday’s meeting of the Fed’s Open Market Committee underscored rising concerns around inflation. Rising energy prices and fissures in the global chip supply chain could also dent the euphoria around AI."}],[{"start":219.9,"text":"For now, the rosier narrative is proving more compelling. But with high levels of market concentration and a record share of US households’ financial assets in equities, the costs would be swift and unforgiving if optimism gives way to a gloomier reality."}],[{"start":240.65,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777817482_5043.mp3"}