Market Reactions to Trump's Cancellation of Attacks on Iran
By Elior Manier | 18 May 2026
Summary
On May 18, 2026, President Trump announced the cancellation of planned military attacks on Iran, a decision that has significantly impacted global financial markets. This announcement came after a firm rejection of Iran's latest diplomatic proposal, which had raised concerns about a potential escalation in hostilities between the United States and Iran.
Trump's decision to halt military action was influenced by requests from the Crown Prince of Saudi Arabia and the President of the UAE, who urged the U.S. to pursue diplomatic negotiations instead. This shift towards diplomacy has led to a notable rebound in investor sentiment, alleviating fears of immediate military conflict.
Following the announcement, U.S. stock markets experienced a rally, with major indices such as the S&P 500 recovering from earlier losses. The S&P 500 managed to retest the 7,400 level after initially breaking below it. Conversely, oil prices, which had surged to nearly $110 per barrel, faced selling pressure as the market adjusted to the new geopolitical landscape.
Market Analysis
The cancellation of military action has provided a much-needed safety net for market bulls, allowing them to regain confidence. Despite ongoing structural macroeconomic concerns, the diplomatic news has sparked a significant relief rally across various asset classes.
Stock Markets
U.S. stock benchmarks saw aggressive buying, reversing earlier intraday losses. The S&P 500's recovery indicates a strong market response to the de-escalation of geopolitical tensions.
Energy Markets
WTI oil prices initially soared but later fell below key moving averages due to increased selling momentum. Key resistance levels for oil are identified at $106.47 and $110, while support levels are noted around $105 and $98 to $100.
Metals Markets
Metals such as copper and silver also showed positive movement, reflecting the overall improved market sentiment, although the reaction remained somewhat contained.
US Dollar
The U.S. Dollar Index faced rejection, failing to maintain levels above its 50-hour moving average, indicating a potential shift in currency dynamics as markets react to the geopolitical developments.
Conclusion
The announcement by President Trump to cancel military actions against Iran has led to a significant rally in stock markets and a complex reaction in energy and metals markets. As investors digest the implications of this geopolitical shift, market dynamics are likely to continue evolving in response to ongoing diplomatic negotiations.