Financial markets swung sharply on Monday after Donald Trump announced a five-day pause in US strikes against Iran, only for Tehran to flatly deny that any negotiations had taken place — leaving traders struggling to assess whether a genuine diplomatic opening had emerged or whether the ceasefire announcement would quickly unravel.
Trump posted on Truth Social that he had held “very good conversations” with Iran and was halting planned strikes on Iranian power plants and energy infrastructure while talks continued. The announcement triggered an immediate and dramatic response in commodity markets, with crude oil futures plunging more than 14 per cent — a sharp reversal from the elevated prices that had prevailed throughout the conflict.
European stock markets, which had opened the week with heavy losses following the escalation over the weekend, rebounded sharply in response. However the recovery quickly ran out of momentum after Iranian state broadcaster IRIB reported that no discussions between Tehran and Washington had taken place. A graphic on the channel stated that Trump had “backed down” from his 48-hour ultimatum — framing the pause not as a diplomatic development but as a retreat in the face of Iranian resolve.
Crude futures pulled back from their initial lows and were trading down around nine per cent as the contradictory signals muddied the picture. European gas prices fell four per cent. UBS commodities analyst Giovanni Staunovo urged caution, telling AFP that further clarity was needed before drawing firm conclusions.
The difficulty of navigating the market environment was captured by Neil Wilson, investor strategist at Saxo UK. “It’s incredibly difficult to trade these markets when Trump is swinging between massive escalation and declaring peace and victory,” he said, adding that the market was “happy for now that we do not enter a new phase of danger.”
Whether Trump’s pause represents a genuine step toward a negotiated settlement or a temporary lull in hostilities remains deeply unclear, with the competing narratives from Washington and Tehran offering little firm ground for markets or governments to stand on. The coming days are expected to bring greater clarity on whether the five-day window produces any substantive progress.
