Wall Street stocks mostly rose early Monday after US President Donald Trump said Washington and Tehran had held "very good" talks on the war in the Middle East, despite Iran denying negotiations took place.
Brent dropped as much as 14% to $96, before paring the move and hovering near $102 as Iranian media reported there hasn’t been any communication with the US. The S&P 500 added 2%. Treasury yields and the dollar retreated, with traders lightening bets on Federal Reserve tightening while pricing in some easing.
The reversal came after Trump had given Iran until Monday evening New York time to reopen the Strait of Hormuz or face strikes on power plants. Both sides are keen to “make a deal,” he told reporters on Monday, adding that there are already “major points of agreement.”
“I just want to have as much oil in the system as possible,” Trump said, adding that prices will “drop like a rock” once a deal is achieved.
The abrupt shift caught traders off guard. There had been little sign of diplomatic progress before Trump’s post. Just hours earlier, Israel had launched strikes on Iranian infrastructure and Tehran was retaliating against Gulf nations.
Still, the damage to crude markets may linger well beyond any diplomatic breakthrough. It remains unclear how Iran will respond.
Trump cites ‘productive conversations’
“I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East,” wrote Trump in a Truth Social post.
“Based on the tenor and tone of these in depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions,” the president added.
Markets rebound after recent losses
The rally comes after a weak spell in equity markets last week. The Dow and Nasdaq had fallen around 2 per cent each, while the S&P 500 declined 1.5 per cent as the Iran conflict weighed on investor sentiment.
For the Dow, it marked the first four-week losing streak since 2023.
*With Agency Inputs
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