Trump’s Claim U.S., Iran Have Had ‘Productive’ Talks May Spark Early Rally

The major U.S. index futures are currently pointing to a sharply higher open on Monday, with stocks likely to show a strong move back to the upside following the sell-off seen over the past few sessions.

Traders may look to pick up stocks at reduced levels following the recent slump, which dragged the Nasdaq and the S&P 500 down to their lowest closing levels in over six months.

Buying interest is likely to be generated in reaction to President Donald Trump backing down from his threats to “obliterate” Iran’s power plants unless they fully reopen the Strait of Hormuz.

In a post on Truth Social, Trump said the U.S. and Iran have had “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”

Trump said he has subsequently instructed the War Department to postpone all military strikes and Iran’s power plants and energy infrastructure for a five-day period.

The president previously threated to “obliterate” Iran’s power plants of they didn’t reopen the Strait of Hormuz within 48 hours and claimed he wasn’t interested in a deal with Iran.

Iran warned it would strike energy and water infrastructure across the Gulf in retaliation if Trump followed through with his threat.

While the price of crude oil has plummeted in reaction to Trump’s latest claims, a report from Iran’s official Fars news agency denied Tehran was engaged in any direct negotiations with the U.S. nor through intermediaries.

Extending the slump seen over the two previous sessions, stocks moved sharply lower during trading on Friday. With the extended nosedive, the Nasdaq and the S&P 500 plunged to their lowest closing levels in over six months.

The Dow and the Nasdaq dipped into contraction territory, reflecting a 10 percent plunge from their latest highs, before regaining some ground going into the end the day.

The tech-heavy Nasdaq led the way lower, plummeting 443.08 points or 2.0 percent to 21,647.61, while the S&P 500 tumbled 100.01 points or 1.5 percent to 6,506.48 and the Dow slumped 443.96 points or 1.0 percent to 45,577.47.

The major averages more than offset the strength early in the week, with the S&P 500 diving by 1.9 percent for the week and the Dow and the Nasdaq both plunging by 2.1 percent.

The sell-off on Wall Street came amid continued volatility by the price of crude oil, which has been a key driver of trading in recent sessions.

The price of crude oil for May delivery has shown wild swings over the course of the session but is currently spiking by nearly 3 percent in electronic trading.

Crude oil prices initially surged amid news of new attacks on energy infrastructure in the Middle East but gave back ground amid reports suggesting the U.S. is weighing lifting sanctions on some Iranian oil to increase supply and bring down prices.

However, the surge resumed due in part to comments from Trump, who suggested in an interview with MS Now’s Stephanie Ruhle that the U.S. would continue to attack Iran until they can “never rebuild.”

Trump later told reporters he is not interested in a ceasefire with Iran, saying, “You don’t do a ceasefire when you’re literally obliterating the other side.”

While oil prices have been on a rollercoaster rise in recent sessions, they remain sharply higher compared to when the war began, fueling concerns about the outlook for inflation and interest rates.

CME Group’s FedWatch Tool currently indicates the Federal Reserve is not likely to cut interest rates this year and there’s a chance rates could even be higher by the end of the year.

Computer hardware stocks turned in some of the worst performances on the day, with the NYSE Arca Computer Hardware Index diving by 6.0 percent after ending the previous session as a record closing high.

Super Micro Computer (SMCI) led the sector lower, plummeting by 33.3 percent after U.S. prosecutors charged several of the information technology company’s employees with smuggling Nvidia (NVDA) chips to China.

Substantial weakness was also visible among networking stocks, as reflected by the 4.6 plunge by the NYSE Arca Networking Index. The index also ended Thursday’s trading at a record closing high.

Interest rate-sensitive utilities stocks also saw considerable weakness, dragging the Dow Jones Utility Average down by 3.7 percent to its lowest closing level in over a month.

Gold, commercial real estate and airline stocks also showed significant moves to the downside amid broad based selling pressure on Wall Street.

Commodity, Currency Markets

Crude oil futures are plummeting $6.86 to $91.37 a barrel after surging $2.68 to $98.23 a barrel last Friday. Meanwhile, after falling $30.80 to $4,574.90 an ounce in the previous session, gold futures are plunging $186.80 to $4,388.10 an ounce.

On the currency front, the U.S. dollar is trading at 158.67 yen versus the 159.22 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1591 compared to last Friday’s $1.1570.

Asia

Asian stocks plummeted on Monday after Washington and Tehran threatened to escalate hostilities. U.S. President Donald Trump threatened military action against Iran’s power plants unless the Strait of Hormuz reopens within 48 hours.

Iran warned it would strike energy and water infrastructure across the Gulf in retaliation if Trump follows through with his threat.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that any attack on Iran’s power plants would trigger irreversible damage to regional energy and desalination infrastructure.

Escalating the three-week war, there were also reports of the U.S. weighing a possible ground operation to seize Kharg Island, Iran’s primary oil export hub, and preparing for a full-scale ground troop deployment against Iran.

Most Asian currencies weakened, while the dollar strengthened due to risk-off sentiment prevailing in the markets.

Benchmark Brent crude futures traded up nearly 3 percent above $109 a barrel in late Asian trading, while gold slumped more than 6 percent toward $4,200 an ounce on inflation and rate-hike jitters.

China’s Shanghai Composite Index tumbled 3.6 percent to 3,813.28 as the oil shock from the Middle East fanned stagflation fears. Hong Kong’s Hang Seng Index plunged 3.5 percent to 24,382.47.

Japanese markets slumped as investors weighed the risks of a worsening regional conflict in the Middle East and abandoned bets on Federal Reserve rate cuts.

The Nikkei 225 Index briefly sank over 5 percent before regaining some ground to settle 3.5 percent lower at 51,515.49. The broader Topix Index dove 3.4 percent to 3,486.44 as trading resumed after a long holiday weekend.

South Korea’s Kospi Index plummeted 6.5 percent to close at 5,405.75 amid an extended standoff between the United States and Iran over the Strait of Hormuz.

Trading was briefly suspended after the Kospi 200 futures Index fell by over 5 percent. Among the prominent decliners, Hyundai Motor, KB Financial, Samsung Electronics and SK Hynix lost 6-7 percent.

Australian markets fell notably on concerns about energy flows, supply chain disruptions and rising inflation triggering higher interest rates.

The benchmark S&P/ASX 200 Index dropped 0.7 percent to 8,365.90, with banks and heavyweight miners leading losses. The broader All Ordinaries Index ended 0.9 percent lower at 8,552.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended down 0.7 percent at 12,899.72, after having fallen to an over 7-month low earlier.

Europe

After moving sharply lower early in the session, European stocks have shown a substantial rebound over the course of the trading day on Monday.

While the U.K.’s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is up by 1.3 percent and the German DAX Index is up by 1.7 percent.

The turnaround comes in reaction to President Donald Trump backing down from his threats to “obliterate” Iran’s power plants unless they fully reopen the Strait of Hormuz.

In a post on Truth Social, Trump said the U.S. and Iran have had “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.”

Trump said he has subsequently instructed the War Department to postpone all military strikes and Iran’s power plants and energy infrastructure for a five-day period.

The president previously threated to “obliterate” Iran’s power plants of they didn’t reopen the Strait of Hormuz within 48 hours and claimed he wasn’t interested in a deal with Iran.

Iran warned it would strike energy and water infrastructure across the Gulf in retaliation if Trump followed through with his threat.

While the price of crude oil has plummeted in reaction to Trump’s latest claims, a report from Iran’s official Fars news agency denied Tehran was engaged in any direct negotiations with the U.S. nor through intermediaries.

Among individual stocks, Metall Zug Group shares have tumbled. The Swiss medical devices maker scrapped dividend after reporting a loss in fiscal 2025 amid one-time items and weak net sales.

Steelmaker Salzgitter has also moved sharply lower after reporting a pre-tax loss of €28 million in 2025.

French food company Danone has also moved to the downside after it agreed to acquire U.K.-based fortified drinks maker Huel.

Meanwhile, Delivery Hero has rallied. The Germann online takeaway food group has agreed to sell its Taiwan food delivery business to Grab Holdings for $600 million, with proceeds used to repay debt.

U.S. Economic News

The Commerce Department is scheduled to release its report on construction spending in the month of January at 10 am ET. Construction spending is expected to inch up by 0.1 percent in January after rising by 0.3 percent in December.