US markets opened strong on Monday, with all three major indices in the green. At 9:30 AM EST, Dow Jones rose 703.68 points, or 1.54%, to 46,281.15. S&P 500 gained 95.83 points, up 1.47% to 6,602.31, while the Nasdaq climbed 383.64 points, or 1.77%, to 22,031.25.
The rally followed comments from US President Donald Trump, who said the US and Iran had held “very good and productive conversations” over the past two days regarding “a complete and total resolution of our hostilities in the Middle East”.
He wrote on Truth Social, “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 remarks raised hopes that tensions in West Asia may cool, at least for now. However, Iran on Monday denied holding any talks with the US, contradicting Trump’s remarks.
The semi-official Mehr news agency reported that there is “no dialogue” between Tehran and Washington citing an Iranian source. The source added that Trump’s comments were part of his efforts “to lower energy prices and buy time to implement military plans.”
The Iranian source acknowledged that regional countries have put forward initiatives aimed at reducing tensions, adding, “We are not the party that started this war, and all such demands should be directed to Washington.”
Relief rally after weeks of pressure
Markets had been under pressure in recent weeks due to rising geopolitical risks. Both the Dow and Nasdaq were close to correction territory, while the S&P 500 was also down from its recent highs.
“Equity markets finally found an off-ramp to the dramatic uncertainty and significantly oversold conditions due to the Iranian conflict,” wrote Jeff Kilburg, founder and CEO of KKM Financial told CNBC. “If this proves to be a foundation for peace in the Middle East, equities could get back to all-time highs.”
Oil prices fall sharply
Oil prices dropped after the news, as fears of supply disruptions eased. Brent and WTI crude fell more than 14% from the previous session. The conflict had raised concerns around the Strait of Hormuz, a key route for global oil shipments, but hopes of de-escalation helped calm markets. US Treasury yields also moved lower. The 10-year yield fell to around 4.35%, while the 2-year and 30-year yields declined as well.
Analyst said markets were looking for a reason to bounce. “The market has been desperate for any good news, and this appears to be, at least on the surface, the best news we can expect,” said Art Hogan, chief market strategist at B. Riley Wealth Management to CNBC. “If we were able to see any downward pressure on energy prices, the market is like a coiled spring looking for a reason to move higher.”
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.