Giant stock rally erupts as Trump offers reprieve to Iran

Early Tuesday evening, President Donald Trump announced the United States would defer an attack on Iran for two weeks on hopes a deal over the Strait of Hormuz can be achieved.

The hope was that shipping through the strait would be restarted immediately.

It wasn’t clear Tuesday evening New York time that Iranians would agree to that term. A statement from the Iranian government said it still controlled the strait but did not say if ships would be stopped or, worse, attacked.

The U.S. halted all offensive operations in the Persian Gulf region. The Strait of Hormuz is the narrow slip of water that connects the Persian Gulf to the Indian Ocean and global markets.

The announcements set off a frenzied global rally in stocks and stock futures and crushed oil prices. The first stock market to react in Japan, and the benchmark Nikkei 225 index opened up more than 3%.

In the United States, stock index futures soared with futures in the Dow jumping more than more 800 points and futures trading in the Standard & Poor’s Index up more than 2%.

Related: Goldman Sachs resets oil-price bets as war rages on

Oil prices slumped because the reprieve meant crude oil probably can be shipped out of the Gulf and ease price pressures globally. Most crude oil produced in the region, however, goes to Asia, where shortages were causing major problems.

A day that began with dread

Tuesday opened with a slump in U.S. stock prices as well as a rally in oil prices.

As the day wore on, the U.S. stock market began to recover some of its losses as the Prime Minister of Pakistan traded proposals from Iran and the United States. There was talk that Trump’s threats were really just another negotiating ploy. Trump often makes big threats that he throttles back when he sees the other side in a dispute ready to talk.

When Trump announced he was deferring the attack, he said his reasoning was “that we have already met and exceeded all Military objectives and are very far along with a definitive Agreement concerning Longterm PEACE with Iran.”

Related: Why oil markets could be wildly wrong on Strait of Hormuz

He said that a 10-point proposal received from Iran was a “workable basis on which to negotiate” and that two weeks would “allow the Agreement to be finalized and consummated.”

While markets moved up or down as news or rumors of news surfaced, pressure grew on Trump not to unleash attacks on Iranian power plants, water desalination plants and bridges. He had described his plans in apocalyptic terms, saying the attacks would “wipe out a whole civilization.”

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It wasn’t just government officials at home or abroad making noise.

Pope Leo XIV called the president’s threats unacceptable and suggested Americans could contact their representatives in Congress to stop the conflict.

Conservative commentator Tucker Carlson called the president’s comments vile. Sen. Chuck Schumer called President Trump an “extremely sick person” for threatening that a “whole civilization will die tonight.”

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