The two-week ceasefire between the United States and Iran expired Tuesday, with President Donald Trump warning of overwhelming military force if no agreement is reached. "Lots of bombs [will] start going off," Trump said in a phone call with a PBS News reporter on Monday. He told Bloomberg the truce would end "Wednesday evening Washington time," adding a day of ambiguity to an already fragile situation.
Iran's parliament speaker Mohammad Bagher Ghalibaf, who also serves as Tehran's top negotiator, pushed back sharply. "We do not accept negotiations under the shadow of threats," he wrote on X, accusing Trump of trying to turn the negotiating table into "a table of surrender." Ghalibaf added that Iran had "prepared to reveal new cards on the battlefield" during the ceasefire period.
Despite the rhetoric, a U.S. delegation was preparing to return to Pakistan for a potential second round of peace talks. Pakistan is positioning itself as a mediator between Washington and Tehran, with officials in Islamabad readying to host further negotiations. Sherry Rehman, former Pakistani ambassador to the United States, described the diplomatic effort as significant but noted the challenges ahead.
Markets absorbed the uncertainty with relative calm. European stocks opened slightly higher Tuesday, with the pan-European Stoxx 600 gaining 0.1% by mid-morning in London, according to CNBC. The bigger move came in Asia, where South Korea's Kospi closed up 2.72% at 6,388.47, a record high, driven by gains in tech stocks. Samsung Electronics rose 2.1% and SK Hynix gained nearly 5%. Japan's Nikkei 225 added 0.89%.
Oil prices slipped modestly. West Texas Intermediate futures fell 0.55% to $89.12 per barrel, while Brent crude dropped 0.39% to $95.11, as investors priced in some possibility of a diplomatic resolution. Wells Fargo chief equity strategist Ohsung Kwon told CNBC he remained broadly optimistic. "I think the economy is going to be fine for the next three months," he said.
The next concrete test comes with the ceasefire's formal expiration and whether the Pakistan-hosted talks produce any new framework before either side moves toward escalation.
