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(Bloomberg) — Traders are preparing for a bumpy open to the week as a continued standoff around the Strait of Hormuz revives the uncertainty that Wall Street had been eager to look past, after a week that drove the S&P 500 Index to a record and pushed oil back toward $90 a barrel.

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Iran warned over the weekend that ships approaching the waterway “under any pretext” would be treated as violating the ceasefire, with its Revolutionary Guard Corps firing on commercial vessels and leaving tanker operators waiting on Tehran. The moves hardened an impasse that had appeared to ease Friday, when signals of a thaw fueled a broad rally in risk assets. Iran’s semi-official Tasnim news agency said the Islamic Republic would skip a second round of US-Iran talks in Islamabad this week while the American naval blockade remained in place, with messages still moving through intermediaries.

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President Donald Trump, who on Friday said a deal was all but agreed, threatened by Sunday morning to destroy every power plant and bridge in Iran if negotiations fail. The whiplash underscores how much of last week’s rally was built on hope rather than resolution. The S&P 500 notched a third straight week of gains above 3% and is set for its biggest monthly advance since 2020. The dollar on Friday briefly erased all of its war-era gains. Brent crude plunged, while US bonds rallied. Trading resumes in earnest for US stocks, Treasuries and oil at 6 p.m. New York time Sunday.

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“It appears that investors may have celebrated too early,” said Martin Hennecke, head of Asia and Middle East investment advisory at St. James’s Place, adding that the weekend’s developments “could lead to some of the recent market gains to be retraced in the short term.”

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In early Asian trading Monday, the dollar was indicated higher against major peers, while the Aussie led losses among risk-sensitive currencies.

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Inflation risks remain high, and won’t easily dissipate even if the shaky US-Iran ceasefire extends beyond its Tuesday deadline. Businesses are already passing higher input costs through to customers, Hennecke noted, citing the latest S&P Global US Flash PMI — a dynamic that erodes cash and fixed-income holdings and argues for staying invested in equities through the volatility.

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The Strait of Hormuz has been effectively shut for most of the seven-week conflict, crude remains materially above pre-war levels, and central banks have already been forced to rethink rate cuts — damage that won’t reverse even if a deal gets signed.

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“Even though the US stock market has pushed to a new record high, the risks are growing in the marketplace every time there is a setback in the negotiations to reopen the Strait of Hormuz,” said Matt Maley, chief market strategist at Miller Tabak + Co LLC. “We’re reaching the time when it’s not just higher prices that will create headwinds, it’s the shortages that are developing as well.”

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Ship Seized

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Vice President JD Vance, special envoy Steve Witkoff and Jared Kushner are scheduled to arrive in Islamabad on Monday night for talks the Trump administration says will continue on terms Vance presented last week. The US naval blockade is allowing ships carrying non-Iranian cargo to depart the Persian Gulf but not any ships that left Iranian ports — a distinction Tehran has cited in hardening its stance.

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On Sunday, Trump posted on Truth Social that a US Navy ship stopped an Iranian-flagged cargo ship in its tracks “by blowing a hole in the engine room” and US marines have custody of the ship.