US markets were deep in the red as I set the blog up near midnight last night.

All three indices were -1% or -2% in trading. But when I woke, a sea of green.

Here’s Daniela Hathorn, senior market analyst at capital.com about what happened while most Australians were sleeping.

“The latest market moves perfectly capture just how fragile and headline-driven this environment has become. President Trump’s post suggesting “productive conversations” with Iran and a postponement of strikes triggered an immediate and aggressive risk-on reaction — equities surged, bond prices rallied, the dollar weakened, and oil prices dropped sharply as the perceived probability of a major escalation fell. At the same time, crude prices saw one of their sharpest reversals, dropping double digits intraday as traders rapidly unwound the geopolitical risk premium that had been building into energy markets.

“However, the equally swift denial from Iran that such constructive talks had taken place underscores the core issue: markets are trading narrative, not certainty. The initial move reflects positioning with investors heavily hedged for escalation quickly pivoted toward relief, triggering a violent unwind. But the fact that the move was partially reversed highlights how little conviction there is in any single outcome. This is not a market that believes a resolution is imminent; it is a market reacting to any sign of an off-ramp, however fragile.

“From a market structure perspective, this looks very much like a classic “TACO” dynamic with Trump signalling escalation, then stepping back when faced with the economic consequences. That reinforces the idea that the US administration is actively seeking an exit, even if the path to get there remains unclear. It also explains why the reaction is asymmetric: markets are far more sensitive to signs of de-escalation because positioning had already skewed heavily toward downside risk.

“In the near term, this does open the door for a relief rally  as immediate tail risks are repriced lower. That would typically mean equities pushing higher, yields falling, the dollar softening and oil retracing. But the broader takeaway is that volatility is far from over. The underlying conflict remains unresolved, and until there is a credible, sustained de-escalation, markets will continue to swing aggressively between fear and relief on each new headline.”

If you want to get a sense of the turmoil, here’s a 5-minute chart of Brent oil. Wild.