No substantial progress in US-Iran negotiations—why is the stock market booming again?

US-Iran negotiations suffered successive setbacks over the past week, but an Iranian proposal widely seen by analysts as difficult to implement still propelled stock index futures to record highs during Monday's Asian trading session. This market reaction has once again raised concerns about investor complacency.

According to CCTV News, Iran submitted a new proposal to the US through a Pakistani intermediary, with the core idea being to "decouple" the reopening of the Strait of Hormuz from nuclear negotiations—prioritizing the resolution of the Strait blockade crisis and leaving the nuclear issue for later stages.

However, this plan directly contradicts the preconditions repeatedly stated by Trump: If the blockade is lifted first, the US will lose its main leverage on Tehran, while forcing Iran to abandon its stockpile of enriched uranium and commit to suspending uranium enrichment for at least ten years is precisely Trump's core goal in this conflict.

After the news was released, Asian stock markets rose more than 1%, the MSCI Emerging Markets Index hit a historic high, US stock index futures erased early losses to turn slightly positive, and the Brent crude oil rally clearly narrowed.

Overall, not only has the US and Iran failed to reach any substantive agreement on a ceasefire or lifting the blockade, but the negotiation channels themselves have shown clear cracks. Nevertheless, in the run-up to the heavy release of tech giants’ earnings this week, the market still tends to selectively interpret any positive signals.

Trump Cancels Trip to Pakistan, Negotiation Channels Narrow Abruptly

According to Xinhua News Agency, on April 25 Trump announced on social media the cancellation of the US delegation’s trip to Islamabad for talks with Iran, saying the trip "wastes too much time traveling," criticizing Iran’s leadership for "internal disputes and chaos," and stating the US "holds all the cards," and if Iran wants to negotiate it should "just call directly." Trump later confirmed that his envoy Steve Witkoff and son-in-law Jared Kushner’s trip to Pakistan was also canceled, saying, "I've told both of them no need to fly 18 hours for pointless talks."

Iran’s attitude has also toughened. According to Xinhua citing Pakistani officials, Iran's stance was noticeably tougher than in the first round of talks, emphasizing that any plan to end the war must be advanced under Iranian conditions, not under conditions proposed by Trump.

According to Xinhua, after arriving in Islamabad, Iranian Foreign Minister Aragchi only held talks with Pakistani Prime Minister Shehbaz, outlining Iran’s principled position on a ceasefire and an end to hostilities, with no direct contacts with the US at all.

So far, the two sides have not officially confirmed the time or location of a second round of talks. According to Iranian diplomats quoted by CCTV News, if the US softens its stance and reduces threatening statements, the second round of talks might take place in the next few days, but whether negotiations can resume largely depends on whether both sides can find mutually acceptable positions in their public statements.

Fundamental Flaw of Iran's New Proposal: Surrender Leverage Before Discussing Nukes

According to Axios, the Iranian proposal aims to bypass internal disagreements over nuclear concessions and break the negotiating deadlock by prioritizing resolution of the Strait crisis.

CCTV quoted Iranian officials as saying the proposal consists of three stages: The first stage is to completely end the war and obtain security guarantees; the second stage is to discuss the management mechanism of the Strait of Hormuz; only in the third stage would nuclear issues be involved, and Iran insists it will not participate in nuclear talks until agreements are reached in the first two stages.

However, Axios also acknowledges in its report, if the US lifts the maritime blockade against Iran first, Trump will lose substantive leverage in forcing Tehran to surrender its enriched uranium stockpiles and commit to suspending uranium enrichment for at least ten years—these two points are central US objectives in this conflict. White House spokesperson Olivia Wales said the US "will only agree to deals that put the interests of the American people first and never allow Iran to have a nuclear weapon."

Meanwhile, the stance of Iranian hardliners has further squeezed the negotiation space.

According to Xinhua, Iranian Deputy Speaker Nikzad said on the 26th that Supreme Leader Mojtaba Khamenei has explicitly ordered that the Strait of Hormuz must not return to prewar conditions. This statement adds new variables to the prospects for negotiation and injects ongoing risk premium into global energy markets.

Analyst Warning: Market Complacency, Potential Impact Underestimated

Despite no breakthrough in the negotiation deadlock, the stock market continues to hover near historic highs, causing considerable concern among some institutional analysts.

Mark Dowding, Chief Investment Officer for Fixed Income at RBC BlueBay Asset Management, said in a Bloomberg TV interview, the market’s complacency about the economic impact of the Iran war is troubling. "This reminds me of the situation before the COVID pandemic," he said. "Only when it truly disrupted our lives did the market see bigger shocks. I worry it could be the same this time."

Data also shows internal concerns within the market’s performance. Although the S&P 500 closed at a new high last Friday, 324 constituent stocks declined that day, making it the second-worst 'negative breadth new high' in history, second only to October 28, 2025, when 80% of constituents fell in an extreme situation.

Indosuez Wealth strategist Francis Tan commented that investors are still supported by strong corporate earnings and the AI boom, "but the market is currently moving at 120 kilometers per hour; when it really needs to change lanes, response time may already be seriously lacking."

Trading desks at Goldman Sachs and Bank of America are advising investors to hedge exposure to small-cap stocks, regional banks, and other rate-sensitive areas. Bannockburn Capital Markets Chief Market Strategist Marc Chandler warned that April inflation data is unlikely to bring relief, spillover effects from core inflation are becoming more evident, "the market is already being forced to acknowledge that the inflation threat is not gone."

Earnings Season Takes Over, the Real Test for Markets This Week

In the short-term market logic, geopolitics have largely been sidelined by investors; this week’s core driver will be tech giants’ earnings reports. Alphabet, Microsoft, Amazon, and Meta will release earnings together on Wednesday, with Apple to follow soon after. The combined market value of these five companies is nearly $16 trillion, roughly a quarter of the S&P 500’s total value.

"This will be a critical week," says Keith Lerner, Truist Advisory Services Chief Investment Officer, "earnings must validate the recent rally."

Meanwhile, the Federal Reserve and Bank of Japan will both announce rate decisions this week, with both expected to stand pat. But against the backdrop of historic disruption to global oil supplies, any signs of concern about the inflation outlook from officials could add extra pressure to the bond market.

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