If yesterday’s five-minute relief rally taught analysts one thing, it’s that traders are keen to jump on the optimistic bandwagon when it comes to Iran. After weeks of volatile trade, yesterday Wall Street celebrated after President Trump indicated he was working toward a “complete and total” resolution of hostilities with Iran.
There’s one small issue: While Trump said there was “productive” conversations with Iranian leaders, Tehran reportedly maintained that “no dialogue” has occurred between the two nations. There are talks between intermediaries in Riyadh, but it’s not clear how far along they are, or how willing either side is to compromise.
Wall Street, however, has adopted a new behavioural trait since Trump returned to office: Investors are reacting (justifiably or not) to social media posts from the Oval Office without much verifiable evidence to go on.
Wall Street’s early optimism that the war in Iran would resolve relatively quickly means they are more inclined to act on positive updates from the commander in chief, according to UBS’s chief economist Paul Donovan.
