The first quarter of 2026 was defined by a series of geopolitical shocks that, taken together, would have seemed implausible even twelve months ago. The year began with the U.S. military intervention in Venezuela on January 3rd, which removed Nicolás Maduro from power and immediately raised questions about the future of South American oil production. Days later, President Trump escalated threats to annex Greenland, triggering a brief but acute diplomatic crisis with Denmark and NATO allies, before ultimately backing down at Davos on January 21st. Then, on February 28th, the U.S. and Israel launched coordinated airstrikes on Iran, prompting Iran to close the Strait of Hormuz to Western-allied shipping. The latter event produced the largest supply disruption in the history of the global oil market, removing roughly 20% of daily global oil supply from the market and sending Brent crude above $120 per barrel.

Three distinct geopolitical events, across three different regions, in the span of roughly eight weeks. And yet, as I write this, the S&P 500 has recovered from its roughly 5% first quarter decline to trade at new all-time highs above 7,000, and the TSX has quietly outperformed, posting a positive return for the quarter led by energy, gold, and financials.

The S&P 500’s recovery has been driven by a combination of factors: a fragile but market-friendly ceasefire between the U.S. and Iran announced April 8th, a strong Q1 earnings season (with bank earnings broadly beating expectations), and the continued willingness of financial markets to look through near-term uncertainty and focus on the underlying earnings trajectory, which remains robust.