US-Iran peace negotiations have encountered significant delays, with planned talks in Switzerland between Iran and the United States over their efforts to reach a permanent end to war cancelled without explanation on Friday. According to Associated Press, both sides are trying to show some good faith, but even if the water appears calmer, there is still a strong undertow. The agreement remains fragile on multiple fronts. President Trump warned Iran is 'finished' and would 'get no money' out of the newly signed deal, stating 'we'll play out the 60 days. They get no money, not ten cents!' referring to the 60-day period after the agreement was signed overnight Wednesday to negotiate outstanding issues, including the future of Iran's nuclear program. The deal included a commitment from the U.S. to lift sanctions on Iran and unfreeze Iranian assets in foreign accounts in the final agreement, to be made within 60 days. Three unnamed diplomats told The New York Times that Iran backed out because of Israel's continued attacks on Iran-backed Hezbollah militants in Lebanon, highlighting the complex web of regional tensions affecting diplomatic progress.
Israel's ambassador to the United States, Yechiel Leiter, confirmed that his country was 'firmly committed to an immediate cease-fire,'' saying it had 'halted all offensive operations'** this morning. According to Associated Press, Leiter sought to put the onus on Hezbollah to preserve the peace, saying on social media that 'if Hezbollah honors the agreement and ceases its hostilities, they will be met with quiet.' However, U.S. intelligence agencies believe Israel is likely to continue such operations, even if they hinder negotiations between Iran and the United States that are supposed to address elements of Iran's nuclear program and secure a permanent peace deal. The cease-fire deal is deeply unpopular in Israel, where commentators criticize its failure to address Iran's missile program, its requirement that U.S. forces leave the region and, especially, its constraints on Israeli military operations in Lebanon. Israel is not a party to the accord, which was signed this week, but the Israeli ambassador's commitment to an immediate cease-fire represents a significant development in the ongoing negotiations.
Israel and Hezbollah reached a ceasefire agreement Friday morning after Israeli airstrikes killed at least 47 people in Lebanon since midnight, as reported by Reuters, citing the Lebanese health ministry. Israel said four of its soldiers were killed in southern Lebanon during the intense fighting. The deal between the U.S. and Iran required military hostilities between both sides and their allies to cease on all fronts, including Lebanon, though Israeli Prime Minister Benjamin Netanyahu has made clear his country was not involved in the agreement and is not required to adhere to its terms. This development adds another layer of complexity to the regional tensions that have been affecting the broader US-Iran negotiations, with the ceasefire agreement potentially impacting the diplomatic process between Washington and Tehran.
World shares were mixed Friday as optimism over the US-Iran deal to end their war was dimmed by the postponement of high-stakes talks. As reported by Associated Press, Germany's DAX rose 0.2% to 25,079.30, while the CAC 40 in Paris was nearly unchanged at 8,467.75. Britain's FTSE 100 shed 0.2% to 10,376.64, and the futures for the S&P500 and Dow Jones Industrial Average were down 0.2%. Tokyo's Nikkei 225 wavered between gains and losses but closed 0.3% higher at a new record of 71,250.06, while South Korea's Kospi lost 0.1% to 9,052.42, just shy of its record set a day earlier. India's Sensex lost 0.8%, with Australia's S&P/ASX 200 declining 0.9% to 8,828.70.
Higher inflation was a factor driving the Bank of Japan to raise its benchmark interest rate earlier this week to a three-decade high of 1% as it gradually adjusts its policies after years of near-zero or negative rates. According to Associated Press, the government reported that consumer prices excluding volatile fresh foods was unchanged, but analysts said it would likely pick up in coming months despite higher fuel costs. Rising energy costs have been putting more pressure on already hot inflation, with the average price of gasoline in the U.S. having dipped below $4 a gallon, but still 25% higher than a year ago. SpaceX fell for the second straight day since its big debut, with the Elon Musk-led rocket maker down 3.6% following a 4.9% loss Wednesday.
As reported by Investing.com India, the two main market-moving threats are the Federal Reserve and the President, who control monetary and fiscal policy respectively. The Trump administration has demonstrated this power through raised tariffs last year and Iran war actions this year, while the Federal Reserve has historically impacted markets through over-tightening in late 2018 and belated tightening in 2022. The next major market swing is expected to come from the Federal Reserve and its new Chairman, who holds very different ideas about balance sheet management compared to exiting Fed Chair Jerome Powell. Recent market movements show the S&P 500 rose 1.1% and the Dow industrials added 0.1%, while the Nasdaq composite surged 1.9% on Thursday, with technology stocks having some of the biggest gains.
According to Investing.com India analysis, S&P 500 first-quarter earnings per share growth was almost 29%, with Q2 estimates calling for growth of over 21%. Since estimates are typically understated in good economies, they could rise by 25% or more, making it difficult to keep the stock market down despite lopsided earnings growth toward the technology sector due to AI data center spending. The decline on Wednesday was driven by anticipation that the Federal Reserve will likely raise interest rates this year in an effort to fight inflation, though recent gains suggest market optimism remains resilient despite current inflationary pressures and the ongoing diplomatic challenges with Iran.
