The S&P 500 has surged to new all-time highs in April, brushing aside concerns about the war in Iran and the sustained closure of the Strait of Hormuz. The waterway normally carries a fifth of the world's oil and natural gas supply. This market resilience comes despite developing Asia already facing an energy crisis that could spread westward if the strait remains blocked.

Two factors explain the rally: investor habit and strong corporate earnings. Buyers have been conditioned to "buy the dip" over the past decade, with the market recovering from rate pressure, Covid-19, tariffs and other crises. S&P 500 earnings per share have compounded at 11 per cent annually over the past ten years, with earnings growing in the mid-teens for the past year or more.

Wall Street is betting on a swift resolution. One research group released a report this week titled "The Post-War Boom," reflecting optimism that tankers will soon resume transit through Hormuz. The market's detachment from geopolitical risk suggests investors expect the strait to reopen before long, but that assumption remains the critical wildcard.