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(Sharecast News) - Donald Trump said on Monday that the US was postponing "any and all" military strikes against Iranian energy infrastructure following "very good and productive conversations" about a resolution to the hostilities in the Middle East.
Writing on Truth Social, Trump said: "I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.
"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."
Iran's Fars news agency subsequently denied the claims made by Trump, saying there had been "no direct or indirect contact" with the US.
The FTSE 100 turned higher after his post and by 1130 GMT, was trading up 0.2% at 9,936.09, having fallen sharply earlier in the day. The index has now entered correction territory, down more than 10% from the record high on 27 February, a day before the conflict in the Middle East began.
Meanwhile, the benchmark Stoxx 600 index was 1.7% higher at 583.28, also reversing earlier heavy losses.
Oil prices tumbled after Trump's comments, with Brent crude down 8.5% at $102.71 a barrel and West Texas Intermediate 8.2% lower at $90.16.
Neil Wilson, UK investor strategist at Saxo Markets, said Trump's comments trigger fresh questions.
"Can we believe that it's this easy to end the conflict? Is Iran seeking a way out or do they want to continue asymmetric warfare for months? Can the US stop Israel? Right now, my thinking is Trump has looked at the markets this morning and said anything to walk back the 48hr ultimatum issued on Saturday, without losing face," he said.
"A classic TACO. It's incredibly difficult to trade these markets when Trump is swinging between massive escalation and declaring peace/victory...but the market is happy for now that we do not enter a new phase of danger.
"Iran's media says there was no direct or indirect contact with Trump and claims he withdrew after threatening to attack west Asia energy facilities.
"Markets nevertheless are taking the comments at face value for now with stocks rallying sharply along with bonds."
David Morrison, senior market analyst at Trade Nation summed up the market action succinctly with a commentary note tiled "Bonkers!"
"It's difficult to know how seriously to take this latest interjection from President Trump," Morrison said.
"It certainly doesn't make trading any easier, although that's a side issue when so many lives are a stake. But that's a risk with wars, particularly when there's chaotic and mercurial leadership on both sides. This appears, at first glance, to let the Trump administration off the hook.
"As many analysts pointed out, the lack of any clear, achievable war aims meant that President Trump could walk away, claiming victory, at any point. That appears to be what he is doing now. Unfortunately, the latest spin from Tehran on this is that: 'Trump backs down from attacking Iran's energy infrastructures after Iran's sharp warning.' He's not going to like that."
Stocks had kicked off the session sharply in the red, with oil up, as investors reacted to developments over the weekend. Iran threatened on Sunday to "irreversibly destroy" energy infrastructure across the Middle East after Donald Trump said the US would "obliterate" the country's power plants if it did not reopen the Strait of Hormuz within 48 hours.
In a Truth Social post late on Saturday night, Trump said the US would destroy Iran's "various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!". The US president's threat came just a day after he said he was considering "winding down" the war.
Iran's Revolutionary Guards threatened to completely close the Strait of Hormuz if Trump follows through on his threat.
The Iranian president's speaker, Mohammad Bagher Ghalibaf, said on Sunday: "Immediately after power plants and infrastructure in our country are targeted, vital infrastructure as well as energy and oil infrastructure across the entire region will be considered legitimate targets and will be irreversibly destroyed."
Ghalibaf also said that US-linked financial institutions holding American government bonds would be targeted.
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