Iran War: Trump Says New Talks to Begin After Strike Canceled

US President Donald Trump says new negotiations with Iran are set to begin after he scrapped a planned military attack, according to reports from Bloomberg Daybreak Europe. The surprise announcement on Tuesday rattled global markets, with oil prices tumbling and government bonds gaining ground as investors embraced hopes for a diplomatic resolution to reopen the strategic Strait of Hormuz.

The development marks a sharp pivot away from earlier threats of imminent military action, suggesting that Washington may be willing to give diplomacy another chance. However, many uncertainties remain, and market participants are carefully watching for concrete signs of progress.

Oil Tumbles on Hopes of Diplomatic Breakthrough

Crude prices fell sharply in early trading as the prospect of negotiated reopening of the strait reduced the immediate risk of supply disruptions. Bond markets, meanwhile, rallied as investors sought safer assets amid still-high uncertainty. The moves underscore how sensitive global markets remain to any signs of progress or setbacks in the Iran file.

Analysts noted that the price action reflected cautious optimism rather than outright euphoria, given that no formal agreement has yet been announced. The cancellation of the strike has been widely interpreted as a signal that the Trump administration is open to talks, but the details of any potential deal remain unclear.

Strait of Hormuz: Talks with Oman Enter Final Stage

Iran has stated that it is in the final stages of negotiations with Oman over a new route through the Strait of Hormuz, one of the world's most critical oil passageways. However, those talks reportedly do not cover whether the strait will be open or closed, leaving a key question unresolved.

This ambiguity may explain why the market reaction, while positive, has not been more pronounced. Traders will likely require more clarity on this issue before fully pricing in a lasting peace. The strait carries roughly 20% of the world's oil supply, making any disruption a major concern for global energy security.

Yen Intervention and Coordinated Market Action

In a separate but equally significant development, Japan and the US have confirmed their first joint intervention in currency markets in 15 years, aimed at lifting the yen from a near four-decade low. The two nations also warned that further coordinated action could follow if needed, signaling a new level of cooperation in managing foreign exchange volatility.

The intervention underscores the growing concern among global policymakers about the economic impact of a sharply weaker yen, which has been driven by diverging monetary policies. The warning of further action suggests that authorities are prepared to step in again should market conditions warrant it.

Expert Analysis on Daybreak Europe

Today's edition of Bloomberg Daybreak Europe featured Ludovic Subran, Chief Investment Officer and Chief Economist at Allianz, who provided perspective on how these intertwined risks are shaping investment decisions. The program highlighted the delicate balance between geopolitical tensions, energy prices, and currency volatility, and what they mean for European investors as trading begins.

Subran's insights likely emphasized the need for diversified portfolios and caution in the face of unpredictable geopolitical developments. The combination of Iran negotiations and FX intervention creates a complex backdrop for asset allocation, with both opportunities and risks emerging.

Outlook and Next Steps

Looking ahead, the fate of the renewed Iran talks will likely remain the dominant influence on oil prices and risk sentiment in the coming days. Any concrete agreement on the strait could ease supply concerns and support economic growth, while a breakdown in negotiations would quickly reverse the market's relief and potentially reignite fears of conflict.

At the same time, the potential for further coordinated FX intervention adds another layer of uncertainty for global investors, particularly those with exposure to the yen and other major currencies. As the situation develops, market participants will be closely monitoring diplomatic signals from Washington and Tehran, as well as any policy announcements from central banks and finance ministries.