Iran denies talks
The market's moves were tentative, though, after Iran denied such talks took place and Iranian parliament speaker Mohammad Bagher Qalibaf said that "fakenews is used to manipulate the financial and oil markets" in a posting on X. The Dow Jones Industrial Average went from a surge of nearly 1,135 points during the morning to a more modest gain of 540 before accelerating to finish with a climb of 631.
Over the weekend, Trump had threatened to "obliterate" Iran's power plants if it didn’t open up the Strait of Hormuz within 48 hours. The narrow waterway off Iran's coast has become a sore point for Trump and the economy because a sharp slowdown in traffic is preventing oil tankers from leaving the Persian Gulf to supply customers around the world.
Trump said on Monday that he was postponing attacks on Iranian power plants for five days to allow talks to continue. Quickly afterward, though, came the denials from Iran about talks, while Iran's semi-official Fars and Tasnim news agencies portrayed the American president as backing down.
Turkey and Egypt, meanwhile, said they had spoken to the warring parties, the first sign of coordinated mediation, which could be an encouraging signal.
Oil prices fall
Amid all the developments, the price of Brent crude fell as low as $US96 immediately after Trump announced the postponement but quickly recovered a chunk of that loss. Benchmark US crude had a similar reaction, immediately dropping toward $US84 per barrel before yo-yoing back above $US92 and then settling at $US88.13, down 10.3% from Friday.
Financial markets have had vicious swings, both up and down, since the war began because of uncertainty about how long it may last. The fear is that a long-term disruption could keep so much oil and natural gas off global markets that it creates a punishing wave of inflation for the global economy.
The swings of the past few weeks are similar to, but not as dramatic as, those that hit last year when Trump shocked the global economy on "Liberation Day." Many of his worldwide tariffs ended up being milder than he initially threatened, and the back-and-forth in negotiations led to historic moves up and down.
US markets rally after Asia’s fall
Monday's overriding reaction in financial markets was nevertheless one of relief. The S&P 500 rose 74.52 points to 6,581.00. The Dow climbed 631.00, or 1.4%, to 46,208.47, and the Nasdaq composite jumped 299.15, or 1.4%, to 21,946.76.
In Europe, stock indexes immediately flipped from losses to gains following Trump's announcement. France's CAC 40 rose 0.8%, and Germany's DAX returned 1.2%.
That compares with sharp drops for Asian stock markets, which finished trading before Trump made his announcement. South Korea's Kospi careened 6.5% lower, Japan's Nikkei 225 dropped 3.5% and Hong Kong's Hang Seng fell 3.5%.
The S&P 500, which is the main measure of the U.S. stock market's strength, pulled back within 5.7% of its own all-time high set early this year.
The Associated Press
