Will Trump's Gradual De-Escalation Remarks Spark a Market Rebound? Analysts Warn: Don't Take It at Face Value

President Trump of the United States hinted on Truth Social on Friday that he will gradually end military operations in the Middle East. According to CCTV, the U.S. government has also begun preliminary discussions on peace negotiations with Iran. This has given some investors hope for a rebound.

After Trump suggested a phased de-escalation on Friday, U.S. stocks saw strong buying, with ETFs tracking the Dow Jones, S&P 500, and Nasdaq 100 indices all rising sharply later that evening. On Friday, Brent crude oil closed at $112 per barrel, but influenced by Trump’s remarks, trading was light after settlement, and oil prices fell back to around $108 per barrel.

Analysts expect that Asian markets may open flat or higher on Monday, as Trump’s comments could lead to a drop in oil prices, reducing global inflation risks and prompting the Federal Reserve to reconsider rate cuts. Gold, silver, and cryptocurrencies are also expected to rise accordingly.

However, some analysts believe that despite Trump’s public inclination to ease tensions, his military presence in the Middle East has actually increased, which could mean that short-term conflicts are unlikely to end, representing significant uncertainty for global markets.

A few hours after Trump’s post, the Pentagon confirmed that thousands of Marines have been deployed to the Middle East. Israeli Defense Minister Israel Katz also emphasized on Saturday that joint U.S.-Israel military actions will be significantly strengthened.

Contradictions

Richard N. Haass, a former member of the U.S. National Security Council, said that Trump’s contradictory statements might reflect a new approach to the Middle East—despite destabilizing the region, others will bear the consequences.

The core of the U.S.-Iran conflict lies in the Strait of Hormuz. Since the outbreak of hostilities, the strait has been closed, disrupting about 20% of global oil and natural gas supplies, rapidly pushing up oil and gas prices.

In his phased de-escalation tweet, Trump pointed out that the guarding and patrol of the Strait of Hormuz should be undertaken by other countries that use the strait when necessary, and the U.S. will no longer bear this responsibility.

Analysts believe that, given Trump’s emphasis on maintaining military pressure while urging major energy-consuming countries like Japan and South Korea, which rely on the Strait of Hormuz, to expand their influence in Iran, his remarks seem more like a signal of a turning point in the conflict rather than a simple ceasefire.

The term “gradual de-escalation” is currently interpreted by military experts as a shift from full-scale escalation to limited intervention, mainly air strikes, while reducing the likelihood of ground invasions.

From this perspective, Trump’s de-escalation comments do not guarantee a drop in oil prices, as the ongoing conflict makes it unlikely for the Strait of Hormuz to return to normal flow. Analysts remain cautious; given Trump’s repeated changing stances over the past three weeks, they advise investors not to take his words at face value.

(Source: Cailian Press)