Everything Changed After 3:00 AM

Source: Wall Street Intelligence Circle

The market has shifted from "war pricing" to "negotiation pricing."

At 3:00 a.m. Beijing time, a piece of news changed the direction of the global markets.

Pakistan's Prime Minister Shehbaz Sharif posted on X, sincerely requesting U.S. President Trump to extend the final deadline by two weeks to allow diplomatic efforts to proceed. He also asked Iran, "as a gesture of goodwill, to reopen the Strait of Hormuz during the corresponding two-week period."

Pakistan's "dual request" was very clever, as it not only "requested" Trump to extend the deadline, but also "requested" Iran to open the strait for two weeks in reciprocity, giving both sides "face" and "a way out." It did not ask Trump to unconditionally withdraw the threat, but instead used "diplomatic efforts need time" as an excuse. At the same time, it gave Iran a reciprocal condition—to reopen the strait, which is exactly Trump's core demand. If Iran agrees, Trump can declare that his "maximum pressure" strategy worked, thus postponing the strike in a dignified way.

Before this message appeared, there was no sign of any de-escalation from Trump's remarks; he even posted that "a civilization would be completely wiped out, never to return." Iran, in response to Trump's threats, had cut off direct communication with the U.S. Who would have thought the turning point would come from a third party. The market instantly slashed the probability of an "explosive event" from very high down by a significant margin.

Judging from the timing, it seemed more like coordination with Trump, since it saved the U.S. stock market.

Just half an hour later, the White House responded, saying that Trump had been informed of Pakistan's suggestion to extend the deadline for Iran by two weeks and would respond accordingly.

This news rewrote the market trend, resulting in a textbook reversal:

- U.S. stocks recovered most of their intraday losses, gold and U.S. Treasuries also rose together.

- Oil prices plunged, with U.S. crude falling below $110.

- The U.S. dollar and Treasury yields both declined.

Due to fear of the worst-case scenario, the market tends to overreact to any minor positive development.

Three hours later (6:00 a.m. Beijing time), Trump posted: I agree to suspend bombing and attacks on Iran for two weeks; this will be a bilateral ceasefire agreement. We have received a ten-point proposal from Iran, which we believe is a feasible basis for negotiation.

After this information, oil prices fell further, with U.S. crude at one point dropping to $100.

Although this news did not bring a new trend, it created a "trading window"—reducing market pricing for short-term loss of control. At least, "there's no need to make a decision today, for now."

However, beware that if negotiations hit a deadlock within the next two weeks, the market may suffer an even more severe double whammy than during the early hours of this morning due to "the higher the hope, the greater the disappointment."