Markets rebound after President Trump flags ‘productive’ Iran talks, pauses strikes

Investors moved quickly after US President Trump announced a five-day pause on strikes, but “choppy headlines” have left markets facing “immense uncertainty,” says Westpac economist Ryan Wells.  (Image: Pexels) 

Global markets rebounded in late US trading after President Donald Trump said the US and Iran had held “very good and productive conversations” aimed at a “complete and total resolution” of hostilities. 

 

The US President said he had instructed the Pentagon to pause any strikes on Iranian power plants and energy infrastructure for five days, depending on the progress and success of the talks between the two nations. 

 

Investors moved quickly, hoping any shift in Middle East tensions flows through to energy prices, business confidence and inflation expectations.

 

After President Trump’s comments, Iranian officials publicly denied negotiations are under way.

 

Westpac economist Ryan Wells says these mixed signals have left markets navigating conflicting narratives.

 

“Headlines have been very choppy since... leaving markets to strike a balance between welcoming the tentative news of possible de-escalation while weighing the immense uncertainty still clouding this progress,” says Wells.

 

Oil prices showed the largest volatility, rising in Asian trading before reversing sharply after comments from President Trump.

 

Both global oil benchmarks - US crude (West Texas Intermediate/WTI) and Brent - dropped around 10 per cent, yet they remain well above pre‑conflict levels, showing that markets are still pricing in a premium for ongoing disruption risk.

 

Share markets bounced as the prospect of a pause in fighting reduced the most immediate worst-case fears. By the US close, the S&P 500 rose 1.1 per cent and both the Dow Jones and NASDAQ gained 1.4 per cent. 

 

In Europe, the Euro Stoxx 50 closed up 1.3 per cent while London’s FTSE 100 ended only slightly lower (–0.2 per cent).

 

Across Asia, the earlier bout of caution showed up in Monday’s trading day, before the later US headlines hit. Markets fell sharply in Tokyo (–3.5 per cent), Hong Kong (–2.5 per cent), Shanghai (–3.3 per cent) and Seoul (–6.5 per cent).

 

Government bond markets also calmed. US Treasury yields (the effective interest rate investors earn) fell, with the two-year down about 5 basis points to around 3.85 per cent and the 10-year about 3 basis points lower at roughly 4.35 per cent. 

 

Traders also slightly scaled back expectations that the US central bank (the Fed) might need to lift interest rates again this year.

 

At home, Australian government bond yields had earlier climbed to their highest levels since 2011 in local trading, before reversing in futures trading.

 

A version of this article was first published on Westpac IQ.

Marina Karpathios (née Gainulina)

Marina Karpathios (née Gainulina) leads Westpac Wire, the editorial division of the bank. She holds over a decade of experience in marketing communications, a Bachelor of Communications & Media (Journalism) degree and a drive to connect with discerning audiences via authentic storytelling across mediums. She has managed brand comms for the likes of Tiffany & Co., Hugo Boss, NIVEA and GRAZIA.

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