Trump's pivot to diplomacy with Iran sends oil and gold lower while stocks rally on de-escalation hopes.
WTI crude prices fell over 3% after Trump scrapped a planned attack on Iran and set Monday talks, unwinding the security-of-supply premium. Direct negotiations lower the odds of a Persian Gulf disruption.
WTI crude dropped over 3%, with Brent also falling sharply, as the immediate war premium was priced out.
Yes, if negotiations stall or Iran continues nuclear activities, the risk of future strikes or sanctions could push oil prices back up quickly.
Gold fell 2% as safe-haven demand evaporated after Trump called off Iran strikes. Reduced geopolitical risk curbs gold's appeal, pushing prices below $2,400.
Gold is a traditional safe haven; as the probability of military conflict drops, investors rotate out of gold into riskier assets, driving prices lower.
Gold is testing support around $2,380, with the next major level at $2,350. A break below could open the way to $2,300.
The S&P 500 rallied as Trump called off strikes on Iran and set Monday talks, removing a major geopolitical tail risk. Energy-sensitive sectors and defense stocks led the reversal.
Removing the threat of a US-Iran military conflict reduces uncertainty and the risk of higher oil prices, supporting corporate earnings and investor sentiment.
It depends on the progress of the talks. If negotiations stall or break down, the geopolitical risk premium will quickly return, potentially erasing gains.
The VIX dropped as immediate military conflict with Iran faded, reducing expected near-term equity volatility.
A lower VIX indicates decreasing fear and expected volatility, often coinciding with equity rallies as investors price in lower risk.
Only if the Iran talks progress positively; any setback could quickly send volatility higher again.
The dollar edged lower as safe-haven flows reversed on the Iran de-escalation, but losses were limited by expectations of steady Fed policy.
It reduces demand for the dollar as a safe haven, causing mild weakness against major peers, though the effect is tempered by U.S. rate expectations.
Unless geopolitical risks resurface or U.S. data disappoints, the dollar's downside may be limited as other factors like rate differentials remain supportive.
President Trump scrapped a planned military attack on Iran and announced direct talks starting Monday, cooling immediate geopolitical tensions. Oil prices dropped 3% as supply disruption fears eased, while gold slipped from its safe-haven bid. Equities rallied on reduced conflict risk, with the S&P 500 gaining 0.8%.
Trump said he called off a planned military strike on Iran and that direct bilateral talks will start on Monday, aiming to de-escalate tensions.
The scrapped attack removes the threat of immediate supply disruptions in the Persian Gulf, unwinding the risk premium that had been priced into crude.
Equities are rallying, with the S&P 500 up 0.8%, while haven assets like gold and the dollar are slipping as geopolitical fears recede.