The Dow Jones Industrial Average rose 1,021.70 points, or 2.24 percent, to 46,599.17, while the S&P 500 rose 136.26 points, or 2.09 percent, to 6,642.74 and the Nasdaq Composite added 493.02 points, or 2.28 percent, to 22,140.63. Gone.
Trump’s delayed relief rally on Iran attack begins
The reversal came after Trump said he would postpone military action against Iranian power plants and energy infrastructure, reducing immediate fears of a deeper escalation into the Middle East war.Trump made the announcement just hours before the deadline, raising concerns of further conflict. In a post on Truth Social, he said the US and Iran had “very good and productive” talks over the past two days on “a complete and total resolution of hostilities in the Middle East.”Trump also said he was delaying strikes on Iranian power plants by five days to allow negotiations to continue.The announcement marked a marked change from his weekend warning that he would “destroy” Iran’s power plants if Tehran did not reopen the Strait of Hormuz within 48 hours.
Oil prices fall, encouraging risky moves
The sharp rise in equities was linked to the sudden decline in crude oil prices, which had been a major source of market stress in recent weeks.Brent crude fell 10.5 percent to $100.37 a barrel, from about $120 last week. It briefly fell to $96 shortly after Trump’s announcement before recovering part of the fall.Brent was down 9.14 percent at $101.89 a barrel, while US crude fell 8.58 percent at $89.80 a barrel.Benchmark US crude initially fell to $84 a barrel before cutting losses and rising back to $88.85.The softening of oil prices was a big positive for equities as investors worried that prolonged disruption in the Persian Gulf could trigger a fresh shock of inflation in the global economy.
S&P 500 headed for best day since before the war
The S&P 500 jumped 1.9 percent and was on track for its best day since long before the war began, reflecting widespread relief after severe losses in previous sessions.The rally was widespread, with the AP saying nine out of every 10 stocks in the S&P 500 were in positive territory.Companies with larger fuel costs benefited as lower oil prices improved the outlook for operating expenses.Norwegian Cruise Line Holdings rose 7.9 percent, while United Airlines gained 4.5 percent and American Airlines gained 4.9 percent, news agency AP reported.Smaller companies also fared better, with the Russell 2000 rising 3 percent in what the AP called a market-leading move.
Iran rejects Trump’s talks claims
Despite the market’s relief, uncertainty remained high as Iranian media quickly challenged Trump’s version of events.Iran’s Tasnim news agency quoted an Iranian official as saying that the Strait of Hormuz will not return to pre-war conditions and the energy market will remain unstable, adding that no negotiations are underway with the US.Iranian state television said Trump had backed off “after a stern warning from Iran”, while a state-owned newspaper said Iran’s Foreign Ministry denied that any talks had taken place.That contradiction limited the scale of optimism, even as investors welcomed the pause on immediate military escalation.
Global markets surged, but Asia missed the turnaround
The US rally was part of a broader surge in risk assets after Trump’s comments.MSCI’s global stock index rose 1.31 percent to 994.34, while the pan-European STOXX 600 gained 1.87 percent.European markets reversed earlier declines and held on to gains, with France’s CAC 40 rising 1.7 percent and Germany’s DAX rising 2.2 percent.However, Asian markets predated Trump’s announcement and closed sharply lower. South Korea’s Kospi fell 6.5 percent, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng each fell 3.5 percent.
treasury yield Dollar weakens as fear trade eases
Bond markets also saw a reduction in immediate panic.The 10-year U.S. Treasury yield fell to 4.34 percent from 4.39 percent late Friday, though it remained well above the 3.97 percent level seen just before the war began.Two-year and 10-year Treasury yields were each 5 to 6 basis points lower, with the 10-year yield at 4.344 percent.The dollar also weakened after rising at the beginning of the day. The euro was up 0.4 percent at $1.1616, Reuters said.
Analysts warn against complete de-escalation
Market strategists warned that unless diplomatic progress becomes more concrete, Monday’s rally could prove fragile.“The markets woke up to some potentially good news from the Middle East on Monday. But the follow-through of any relief rally will require solid follow-through on the geopolitical front,” Chris Larkin, managing director of trading and investments at Morgan Stanley’s E*Trade, told Reuters.“This is clearly panic in the face of the recession we’ve seen. We’re seeing a little bit of a reaction to this positive news,” Elias Haddad, global head of market strategy at Brown Brothers Harriman, was quoted by Reuters as saying.He added, “There is certainly room for some relief in the fear trade. A more sustained rally in risk assets will depend on whether this is a legitimate de-escalation or simply a pause before the next phase of escalation.”
