President Donald Trump’s statement on a five‑day suspension of planned military strikes on Iran triggered a collapse in oil prices

Trading on the US stock market ended with gains. By the end of Friday, the Dow Jones Index (US30) jumped by 1.38%. The S&P 500 Index (US500) rose by 1.15%. The Technology Index NASDAQ (US100) closed higher by 1.22%. The main driver of optimism was President Donald Trump’s announcement of a five‑day suspension of planned military strikes on Iran’s energy infrastructure. This step temporarily removed the threat of a full‑scale regional war from the agenda, which had dominated headlines in recent weeks. The sudden easing of geopolitical tensions triggered a collapse in global oil prices, providing strong support to sectors suffering from high costs, especially airline stocks. Despite Wall Street’s positive reaction, Iranian officials stated that the US administration is simply trying to buy time and push down energy prices. Therefore, the situation remains uncertain.

On Monday, the Canadian dollar stabilized at 1.37 per US dollar, holding near two‑month lows. Trading dynamics were driven by a sharp reversal in geopolitical sentiment: President Donald Trump’s decision to postpone military strikes on Iran’s energy infrastructure for five days in the name of “productive negotiations” instantly removed the risk premium. This led to a collapse in oil prices (WTI corrected after testing 101.5 dollars), depriving the Canadian currency of its main growth driver of recent weeks. Despite losing support from the oil market, the loonie managed to avoid further decline thanks to the weakness of the US dollar itself. The monetary backdrop remains tense: although the Bank of Canada kept the rate at 2.25% last week, it openly acknowledged rising inflation risks due to energy costs.

European stock markets partially recovered. Germany’s DAX (DE40) rose by 1.22%, France’s CAC 40 (FR40) closed up 0.79%, Spain’s IBEX 35 (ES35) gained 1.04%, while the UK’s FTSE 100 (UK100) closed at 0.24% lower. The main driver of growth was President Donald Trump’s decision to suspend preparations for strikes on Iran’s energy infrastructure for five days. This step was perceived by investors as the first real chance for de‑escalation in four weeks of conflict, allowing markets to temporarily set aside fears of deep stagflation. Although Tehran quickly denied the existence of direct negotiations, the signal from the White House about its intention to push down energy prices provided strong support to the most affected sectors. Europe’s banking industry led the rally amid an overall improvement in risk appetite.

One of the sharpest reversals in history occurred in the global energy market: WTI crude futures collapsed by more than 10%, falling to around 87 dollars per barrel. Just in the morning, prices were testing 101.5 dollars amid Donald Trump’s harsh ultimatum, but the situation changed dramatically after his announcement of a five‑day pause in preparations for strikes on Iranian power plants and oil and gas infrastructure. The US president described the past 48 hours as a period of “constructive and deep negotiations” with Tehran aimed at a complete cessation of hostilities, which have been ongoing for the fourth week. This diplomatic maneuver temporarily removed the threat of the immediate destruction of Iran’s energy sector and gave markets hope for the imminent reopening of the Strait of Hormuz – a key artery through which about 20% of global oil and LNG supplies pass.

However, investor optimism was overshadowed by a sharp reaction from Iran. The Fars news agency, linked to the IRGC, categorically denied any direct or indirect negotiations with Washington. According to Tehran’s position, Trump was forced to “back down” not because of diplomacy, but because of Iran’s symmetrical threat to strike all power plants and desalination facilities in Western Asia, which would have led to a regional humanitarian and economic collapse.
The US natural gas market faced a noticeable pullback on Monday, with futures falling more than 5.5% to 2.92 dollars per million BTU. The main driver of the decline was updated meteorological expectations predicting unusually warm weather across the western two‑thirds of the United States through early April, sharply reducing the need for heating fuel in the residential sector. Alongside the climate factor, the overall collapse of the energy sector, triggered by President Donald Trump’s announcement of a five‑day pause in preparations for strikes on Iranian facilities, also pressured prices. Despite global instability, the domestic US market shows strong resilience to external shocks thanks to substantial accumulated fuel reserves. The latest data from the EIA confirms that current storage levels exceed last year’s figures by 10.4% and are 2.6% above the five‑year average.

Asian markets also mostly declined yesterday. Japan’s Nikkei 225 (JP225) fell sharply by 3.48%, China’sFTSE China A50 (CHA50) dropped by 3.01%, Hong Kong’s Hang Seng (HK50) fell by 3.54%, and Australia’s ASX 200 (AU200) posted a negative result of 0.74%.

Tuesday brought a sharp reversal for the Australian dollar: the currency lost all of yesterday’s gains and fell to 0.69 US dollars. The optimism caused by the five‑day pause in strikes on Iran quickly turned into caution after Tehran officially denied Donald Trump’s claims of “productive negotiations.” The situation for the aussie was worsened by extremely weak domestic business activity data. The March PMI Indices indicated a serious cooling of Australia’s economy: the manufacturing sector is balancing on the edge of stagnation (50.1 points), while the services sector fell into contraction at 46.6 points – the worst reading in two years. Such an economic slowdown amid uncertainty in the Persian Gulf puts the RBA in a difficult position ahead of Wednesday’s inflation data release.