Middle East War updates: US-Iran peace talks fail, Trump threatens to blockade Strait of Hormuz
Hereâs all you need to know about the developments in the Middle East war that took place over the weekend, which is expected to have a significant impact on the markets in the upcoming week.
United States (US) Vice President JD Vance stated on Sunday that the US and Iran have failed to reach an agreement on the peace terms in Islamabad after the negotiations went on for 21 hours.
"We negotiated for several hours, and we have not yet reached an agreement that is satisfactory for both sides. We need to see an affirmative commitment that they will not seek nuclear weapons and tools which will enable them to achieve nuclear weapons. The President is very clear about this," added Vance.
Iranâs Parliament Speaker Mohammad Bagher Ghalibaf, who led Iran in the negotiations, said although he and his colleagues had offered âconstructive initiativesâ, the US had been âunable to gain the trust of the Iranian delegation in this round of negotiationsâ.
It was now up to Washington âto decide whether it can gain our trust or notâ, Ghalibaf added.
US President Donald Trump in his post on Truth Social that the US is going to start âBLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuzâ.
The US Navy is going to start â destroying the mines the Iranians laid in the straitsâ, warning that any Iranian who fires at the US or at âpeaceful vessels will be blown to hell. No one who pays an illegal toll will have safe passage on the high seas,â he said, adding that the blockade â which will involve so far unspecified other countries â will âbegin shortly. Iran will not be allowed to profit off this Illegal Act of EXTORTION. They want money and, more importantly, they want Nuclear,â Trump warned.
In a Fox News interview later on Sunday, Trump reiterated his threat, noting that âI could take out Iran in one day. I could have their entire energy everything, every one of their plants, their electric generating plants, which is a big deal.â
In response to Trumpâs new threats, Qalibaf said: âIf you fight, we will fight, and if you come forward with logic, we will deal with logic. We will not bow to any threats, let them test our will once again so that we can teach them a bigger lesson.
Iranâs Revolutionary Guard (IRGC) warned in its latest statement that âapproaching military vessels to the strait of Hormuz is considered a violation of the ceasefire and will be dealt with harshly and decisivelyâ.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms ârisk-onâ and ârisk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a ârisk-onâ market, investors are optimistic about the future and more willing to buy risky assets. In a ârisk-offâ market investors start to âplay it safeâ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of ârisk-onâ, stock markets will rise, most commodities â except Gold â will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a ârisk-offâ market, Bonds go up â especially major government Bonds â Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are ârisk-onâ. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of ârisk-offâ are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the worldâs reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them â even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
