The United States major benchmark averages gained and crude prices plunged on Monday (Tuesday AEST) as investors welcomed a more restrained-than-feared response from Iran following U.S. airstrikes on its nuclear facilities over the weekend.
The Dow Jones Industrial Average gained 375 points, or 0.9%, to finish at 42,581.8. The S&P 500 rose 1% to close at 6,025.2, while the Nasdaq Composite advanced 0.9%, ending the session at 19,631.0.
Tensions escalated over the weekend after the United States struck Iranian nuclear sites in Fordo, Isfahan and Natanz.
In response, Iran’s armed forces claimed to have targeted an American military base in Qatar. However, the strike was intercepted, and no casualties were reported.
The limited nature of retaliation calmed market nerves and prompted a sharp reversal in crude oil prices, with traders betting that global supply disruptions would be minimal.
West Texas Intermediate (WTI) crude futures dropped 7.2% to settle at US$68.51 per barrel, after briefly topping $78 overnight - its highest level since January.
Oil prices were further pressured by comments from President Donald Trump, who urged producers to keep prices low. “Everyone, keep oil prices down,” Trump said in a Truth Social post, warning that rising prices would “play into the hands of the enemy”.
Despite Monday’s relief, analysts cautioned that further escalation is still possible. Iran could attempt to close the Strait of Hormuz, a critical global oil transit point.
U.S. Secretary of State Marco Rubio urged China - Tehran’s biggest oil customer - to dissuade Iran from such actions during an interview with Fox News on Sunday.
On the bond markets, yields fell as investors moved back into government debt. The 10-year Treasury yield slipped to 4.342%, down 0.8%, while the 2-year yield fell by 1.1% to 3.863%.
