Market reaction
U.S. equity futures declined on Monday evening after Iranian officials denied engaging in talks with the United States about reducing tensions in the ongoing conflict, now in its fourth week. The move came after Wall Street had climbed by more than 1% earlier in the session when President Donald Trump announced he had postponed a planned strike on Iran’s electricity grid and characterized interactions with Tehran as productive.
By 20:19 ET (00:19 GMT), S&P 500 Futures were down 0.3% at 6,614.75 points. Nasdaq 100 Futures fell 0.3% to 24,335.75 points, while Dow Jones Futures also slid 0.3% to 46,378.0 points.
Iran’s denial and official statements
Late on Monday, top Iranian officials publicly contradicted the U.S. characterization of talks. Iran’s Speaker of the Parliament posted on social media that no such conversations had taken place, and Iranian state media broadcast senior military officer Mohsen Rezaee Miragha'ed declaring that the war will continue. Those statements came shortly after the U.S. decision to hold off on strikes following a 48-hour ultimatum related to the Strait of Hormuz.
The conflicting messages left markets without clear confirmation of any diplomatic progress, contributing to the evening retreat in futures despite the earlier intraday gains.
Earlier rally and market dynamics
The earlier Wall Street advance - with the S&P 500, NASDAQ Composite, and Dow Jones Industrial Average each jumping between roughly 1.1% and 1.4% - was driven by hopes for de-escalation after the president delayed the threatened strike. That rally was also supported by bargain hunting, following four straight weeks of losses tied to investor concern about the inflationary consequences of the conflict.
Reports during the day indicated that while senior Iranian figures denied direct talks, some Asian and Gulf states were relaying messages between Tehran and Washington. Yet strikes between Iran and neighboring Gulf countries continued into late Monday, offering little immediate evidence of de-escalation on the ground.
Energy, inflation and broader market implications
Oil prices, which had plunged by more than 10% earlier on hopes of de-escalation, rebounded after Iran’s denial that talks occurred. The conflict’s impact on energy markets - including Iran’s prior closure of the Strait of Hormuz - remains a central concern for investors because higher oil-driven inflation could pressure major central banks to adopt a more hawkish stance in coming months.
That dynamic has weighed on risk-driven assets in recent weeks as market participants weigh the potential for energy-led inflation to affect monetary policy and corporate costs.
Outlook
With official statements from Tehran contradicting U.S. remarks and ongoing strikes in the Gulf region, investors face continued uncertainty about the trajectory of the conflict and its implications for energy markets and inflation. The market reaction on Monday evening underscored how sensitive risk assets are to shifts in perceived prospects for de-escalation.