US President Donald Trump has moved markets again, with the S&P/ASX 200 Index (ASX: XJO) jumping 1.6% in early response to potential talks with Iran.
The Middle East war of the US & Israel against Iran has gone on longer than some in the US Administration may have expected. But, now it seems that President Trump is angling for a truce.
Trump highlights talks with Iran
Over the weekend, Trump threatened to attack Iran’s power plants within 48 hours if it didn’t allow all vessels to start travelling through the Strait of Hormuz.
However, less than two full days later, Trump announced that he had given instructions for US forces to “to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period.”
According reporting by Al Jezeera, Trump also told the media the US had been in talks with a “top person” in Iran and then he said:
They want very much to make a deal. We’d like to make a deal, too. We’re doing a five-day period, we’ll see how that goes. And if it goes well, we’re going to end up settling this. Otherwise, we’ll just keep bombing our little hearts out.
That’s quite a turnaround considering what the situation may have looked like had Trump followed through with the threat to attack Iran’s power plants (and then what Iran may have done to important infrastructure facilities across countries like the UAE, Qatar and Saudi Arabia). It’s a good thing that didn’t become reality.
Iran has denied how much talking has happened, but I imagine there will be (more) official talks after Trump’s words.
ASX 200 jumps
There is a lot of uncertainty – the longer the Strait of Hormuz is shut the more lasting oil price pain there could be.
With Trump now looking to end the conflict, it makes it much more likely that the fighting and blockage will come to an end sooner rather than later, which is why the ASX 200 jumped 1.6% at the open, in my view.
It’s possible that the lag effect of inflation could cause 2022-style problems, but a few years ago the peak inflation came after strong COVID period spending and an enduring Ukraine – Russia conflict.
I view this as a buying opportunity because the worst (share price wise) could be over, or close to the bottom if it hasn’t been reached.
I’ve been putting my money into both ASX dividend shares and ASX growth shares during this period and I’m still looking across the market for opportunities that could be undervalued and deliver strong market returns from here at the cheaper prices. I recently wrote about two ASX 200 shares I was looking at (but haven’t bought this week).
