Ceasefire hopes briefly lifted sentiment, but Iran’s rejection kept tensions high, sending oil higher and leaving equities volatile while the dollar held steady amid uncertainty.
The new trading week started with rumors of a potential ceasefire deal between the U.S. and Iran, brightening the outlook for the cessation of the conflict in the Middle East, which has been raging on for 38 days now. But the calm did not last long as Iran reportedly rejected the ceasefire proposals and also put forward its own 10-point plan, which however did not cut the ice with the U.S.
How Markets Reacted: The S&P 500 E-mini futures (ES), which has seen a volatile session thus far, has given back most of their gains. The contract tied to the index now trades with only a modest gain. Bond prices were only marginally higher and the U.S. Dollar Index futures are little changed with a slight negative bias.
The West Texas Intermediate (WTI)-grade crude oil futures contract, however, has gained more than 2% to nearly $114-a-barrel, reflecting the lingering fears of the oil supply shock continuing for a while.
Before the rumor surfaced, U.S. President Donald Trump had given a Tuesday deadline for Iran to reopen the Strait of Hormuz, a major global chokepoint for oil trade.
Diplomatic Efforts On: Early Monday, a Reuters report, citing sources, stated that Pakistan has put together a plan to end the hostilities in the Middle East. The normalization was to occur in two stages, an immediate ceasefire followed by a comprehensive agreement, the report stated. The source reported said all elements need to be agreed upon by Monday and that the initial understanding will be structured as a memorandum of understanding and will be finalized electronically through Pakistan, which has acted as the sole interlocutor to help clinch a deal.
A separate Axios report had said a 45-day ceasefire was being discussed with Pakistan, Turkey and Egypt serving as moderators.
Iran Refutes Deal Rumors: Iran's Army Spokesman Brigadier General Mohammad Akraminia reportedly told media that Tehran will stay on, at least until what its political leaders deem it necessary, semi-official state media outlet Fars News reported.
“The Iranian Foreign Ministry officially rejects the reported ‘15-point’ U.S. proposal as ‘unrealistic.’ Iran firmly refuses any negotiations conducted under the shadow of illegal sanctions, military threats, or coercion. #Diplomacy requires mutual respect, not pressure,” the Iranian government stated on its official X account.
Also state news agency IRNA stated in an exclusive report that Iranian Foreign Ministry spokesperson Esmaeil Baqaei said Iran has outlined its demands, based on national interests, as part of a plan with the U.S. to end the war.
Trump Resolute: When asked about Iran’s proposals, Trump reportedly told the media that Iran's counterproposal was "very significant" but "not good enough." He also suggested that the Tuesday deadline is a firm one. This is despite him backtracking on similar threats earlier.
A U.S. official called Iran’s 10-point plan “maximalist,” the report said.