Iran rejects Trump's "48-hour" ultimatum! Wall Street is on edge: What will happen after April 6?

It is reported that Abdolrahai, the commander of the Hartam Anbia Central Headquarters of Iran’s armed forces, on Saturday (April 4) responded to the so-called “48-hour” ultimatum issued by U.S. President Trump—namely, that if Iran does not accept a peace agreement within 48 hours, the United States will destroy the country’s key infrastructure. Abdolrahai emphasized that Iran’s armed forces will firmly defend national rights, protect national assets, and make the aggressor pay.

Abdolrahai said that Trump’s threats were “a helpless, panicked, unbalanced and foolish act.” He also quoted Trump’s remarks on social media with a religious tone: “The meaning of this message is very simple—Hell’s door will be opened for you (the United States).”

Earlier that day, Trump posted on social media saying, “Remember, I gave Iran 10 days to reach an agreement or to reopen the Strait of Hormuz. Time is running out—after 48 hours, hell will fall upon their heads.”

Abdolrahai emphasized that if the United States and Israel carry out such attacks, “we will launch continuous and devastating strikes without restriction against all infrastructure used by U.S. forces and against Israel’s infrastructure.” He reminded the U.S. and Israel that since this war imposed on Iran began, “everything we have said has been put into action.”

Abdolrahai said, “Remember: if hostile actions expand, the entire region will become your hell. The fantasy of defeating the Islamic Republic of Iran has turned into a swamp that will eventually swallow you.”

On March 26, Trump said that, at the request of the Iranian government, he would extend the deadline for the pause on strikes against Iran’s energy facilities by 10 days, until April 6.

And as both the U.S. and Iran again traded uncompromising verbal blows before April 6, many people on Wall Street also became on edge again during this Easter long weekend.

On Saturday, Iran said that the joint U.S.-Israel airstrikes hit Iran’s petrochemical plants and forced personnel at a large industrial area to evacuate. Iran’s semi-official Tasnim News Agency reported that other attacks targeting areas around the Bushehr nuclear power plant resulted in the death of a security personnel. Tasnim also said that the plant’s main area was not affected.

Over the weekend, Iran continued to fire missiles and drones at most parts of the Middle East. Dubai authorities reported that on Saturday morning, debris from an airborne intercept missile fell on the exterior wall of the Oracle company building in Dubai Internet City. They also reported that the debris hit a building in the nearby Dubai Marina area. No injuries or fires were reported.

In addition, two U.S. Air Force aircraft were shot down by Iran in consecutive incidents on Friday and crashed, and one pilot remained missing. This is the first time since February 28, when the United States and Israel launched a large-scale military operation against Iran, that a U.S. Air Force aircraft has been shot down inside Iran.

Wall Street is on edge: What will happen after April 6?

Over the past two weeks, JPMorgan’s trading floor thinking has been that, if any escalation occurs in the following areas, capital markets will suffer further blows:

(i) attacks on energy infrastructure, especially Saudi Arabia’s oil production and refining; (ii) U.S. ground forces getting involved, or attempting to use force to reopen the Strait of Hormuz; (iii) U.S./Israel attacks targeting civilian infrastructure in Iran; (iv) any attacks on water-supply systems.

JPMorgan’s traders believe that unless the situation escalates, the market is expected to remain range-bound and choppy, but for now it seems that, as Trump’s final “ultimatum” is approaching, it is more likely in the short term to see decisive developments—either moving toward a ceasefire or a new round of escalation.

Little Mo noted that the market now seems to be at a crossroads, facing choices about the shape of the Middle East conflict (including the remaining duration and intensity). Trump’s remarks earlier this week provided some insight:

(i) More military attacks may be on the way; Trump said the United States will “strike them (Iran) hard in the next two to three weeks.” This statement neither supports nor denies the use of ground forces, and it does not clearly indicate whether the attack would escalate beyond the level of the past month.

(ii) Trump reiterated threats related to the final April 6 deadline—i.e., if they do not comply with the requirement to reopen the Strait of Hormuz, the United States will target infrastructure, which may include desalination plants.

(iii) Trump did not commit to reopening the Strait of Hormuz, but instead reiterated that the countries importing oil through the strait should be the ones responsible for reopening it—either to seize their oil from Iran or to buy it from the United States.

(iv) Trump said that all Iran’s nuclear capabilities have been destroyed, but they may be buried under rubble and dust. The core message here is that U.S. military satellites will monitor the bombed locations and may carry out renewed airstrikes if Iran tries to dig them up. This reduces some downside risk regarding an “American-led ground invasion to divert and enrich uranium,” because such an operation requires more military force and soldiers, and the timeline would be pushed to the second half of 2026 or later.

JPMorgan’s market intelligence department said that if the next wave of U.S. attacks includes ground forces, they are expected to end by late April. As for ceasefire negotiations, there is still no answer. The redeployments of U.S. forces point to a major military strike that could take place over this weekend, and it may involve ground forces.

Meanwhile, signals from U.S. attack operations also mean people should expect Iran to retaliate. These retaliation targets may include:

(i) regional oil infrastructure, such as Saudi Arabia and the UAE; (ii) blocking the Red Sea, which may again lead to supply disruptions of about 5 million barrels per day or a $20 per barrel increase in oil prices; (iii) regional water-supply infrastructure, triggering a humanitarian crisis.

As for the future of the energy market, ProfitGate Capital Services LLP founder Nakul Sarda is tracking a combination of the following indicators: (i) shipping insurance premiums—assuming insurers will lower prices when the situation reaches an “all-clear” status; (ii) real-time monitoring of vessel transits; (iii) the spread between Dubai and Brent crude oil; (iv) tracking its so-called “mid-April cliff point.”

The “mid-April cliff point” includes:

(1) On April 1, Formosa Plastics announced force majeure (triggered);

(2) On April 10, the expiration of the U.S. exemption for sanctions on Russian seaborne crude oil;

(3) On April 15, the expected date when the release of 400 million barrels of strategic petroleum reserves is exhausted;

(4) On April 30, the final deadline for all emergency measures expiring.

The head of the International Energy Agency, Birol, issued the latest warning saying that if the Strait of Hormuz is not reopened for shipping, the number of crude oil and refined products lost globally in April will be twice the losses in March. Even if the conflict ends, it will take a long time to return to normal. Some countries have already been stockpiling energy, which weakens the effectiveness of the International Energy Agency’s move to release 400 million barrels of crude oil and fuel from emergency reserves to stabilize the market during the current conflict.

Of course, there are also people in the industry who remain relatively calm for now. In a latest research note published over the weekend, Bank of America’s chief investment strategist Michael Hartnett said, “Based on the trend of Trump’s approval ratings, we expect the war to be short-term and that the economy will not fall into a recession.”

Hartnett believes that investors can therefore set up a series of “risk-hedging allocations” to boost portfolio performance. He proposed “4C” trading:

① Curve: go long on the yield curve bull steepening strategy, capturing opportunities from falling interest rates and rate cuts;

② Commodities: allocate to commodities, betting on the global contest for resources in a geopolitical context;

③ China: allocate to China assets, focusing on the May meeting between leaders of China and the United States and the trend of China’s economic transition toward consumption-led growth;

④ Consumer: allocate to consumer stocks, capturing investment opportunities as the post-war policy focus shifts to people’s livelihoods and as it addresses issues related to the cost of living.

(Source: Caixin Finance)