While U.S. President Donald Trump says the war in Iran could end "very soon," and as Pakistani mediators in Tehran prepare to meet with officials, another nearby conflict has begun to attract Beijing's attention.

Since late February, fighting between Afghanistan and Pakistan has escalated, with Islamabad declaring an "open war" with its neighbor. The strikes have resulted in the deaths of hundreds of people and the displacement of hundreds of thousands, according to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) in Afghanistan. This conflict has alarmed the international community and disturbed China, which is a partner to both countries and sensitive to violence on its western border.

In this context, Beijing intervened to play a diplomatic role, announcing on April 8 that it hosted talks lasting a week in the city of Urumqi in western China, in an attempt to reach a ceasefire. The stakes involve not only cooling hostilities but also an broader test of China's ability to manage unrest in its surroundings, where it holds deep economic and political ties.

Although all parties announced their support for dialogue, deep-seated differences regarding armed groups and cross-border attacks threaten to derail any real de-escalation. Delegations from the three parties were quick to praise the talks; the Chinese Foreign Ministry described them as "frank and practical," while the Taliban considered them "useful" and stated they took place in a "constructive atmosphere."

However, even as the talks were being held, Afghanistan accused Pakistan of carrying out cross-border shelling, raising questions about China's ability to end the conflict and its willingness to employ its diplomatic weight, especially as it also deals with the war in Iran.

Michael Semple, an expert on Afghan affairs at Queen's University Belfast, said: "Taliban and Pakistani diplomats know how to craft phrases that show China in a good light, and even take limited measures to ease border tensions." He added: "But reaching an agreement regarding Taliban support for the Tehrik-i-Taliban Pakistan (TTP) will remain difficult for the time being."

Pakistan has long accused the Taliban-led Afghanistan of harboring TTP fighters, a militant group that carries out cross-border attacks—accusations the Afghan Taliban deny.

Testing Beijing’s influence

Analysts believe that both Pakistan and the Taliban view China as a strategic partner.

For Islamabad, Beijing represents a counterweight to its traditional rival, India, as well as being a vital source of foreign investment. For the Taliban, China represents a massive nearby market that could support its struggling economy, in addition to being a partner that could help the government gain full international recognition after the movement's takeover of power in 2021.

But despite China's theoretical influence, it remains unclear to what extent it is willing to exert pressure.

Beijing usually takes a limited role in international mediation, focusing its efforts on cases likely to achieve quick results, such as the 2023 agreement between Iran and Saudi Arabia that restored diplomatic relations between the two Middle Eastern rivals.

Amid the war in Iran, China has also largely maintained a public distance, sufficing with receiving foreign delegations and seeking to present itself as an arbiter of international rules. This stands in contrast to the United States, as shown when Chinese President Xi Jinping described the U.S. blockade of Iranian ports as a "return to the law of the jungle" during his reception of Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, on April 14.

Nevertheless, some reports, including statements from Trump himself, indicate that China may have used its position as the largest investor in Iran and a major buyer of its oil to push it toward engaging in ceasefire talks with the United States, and potentially ending the fighting.

A complex conflict between Kabul and Islamabad

Containing the tension between Islamabad and Kabul will not be easy.

Even before the Taliban's return to power in August 2021, the previous Afghan government accused Pakistan of supporting the Taliban on its territory, which Islamabad denied at the time.

Since the end of the Urumqi talks, few official statements regarding their results have been issued. Pakistan is also playing an active diplomatic role by hosting ceasefire talks between the United States and Iran.

Chinese Foreign Ministry spokesperson Mao Ning said: "The three parties agreed to explore a comprehensive solution to issues in Afghanistan-Pakistan relations and identified the core priority issues that must be addressed."

For his part, Omar Samad, a former Afghan diplomat based in the United States, said the China-backed talks created new momentum, but the gap remains wide between the rhetoric and the reality on the ground.

He added: "The talks opened a narrow window, but such windows tend to close quickly when faced with deep-rooted mistrust," noting that China and other mediators need a long-term commitment to address structural issues that are "complex but not insurmountable."

From allies to adversaries

While it was expected that the Taliban government would maintain Pakistan's support after its return to power, relations between the two parties have seen a deterioration, especially due to the TTP file.

Tensions reached a peak in October 2025 during an official week-long visit by Taliban Foreign Minister Amir Khan Muttaqi to India.

On October 9, the first day of the visit, Pakistan launched airstrikes on several Afghan provinces, including the capital, Kabul. Initial reports indicated the attack targeted TTP leader Noor Wali Mehsud, who later posted a video to prove he was still alive.

Following the strikes, Taliban forces launched counter-attacks along the border and said they killed dozens of Pakistani security personnel, which Islamabad denied.

Defense ministers from both sides later traveled to Doha on October 18 for talks mediated by Turkey, which resulted in a temporary ceasefire. Follow-up meetings were also held in Istanbul, followed by additional mediation efforts from Saudi Arabia and the United Arab Emirates, but they failed to achieve a permanent truce.

With the renewal of escalation in February, a major Pakistani strike on March 16 targeted the "Omid" drug rehabilitation center at the former NATO base "Camp Phoenix" east of Kabul.

The Taliban said more than 400 people were killed, while Islamabad maintained it targeted military facilities. The UN later reported 143 fatalities, while Human Rights Watch condemned the attack, considering it an "unlawful attack and potentially a war crime."

Semple said: "It seems the Taliban are ideologically committed to continuing the jihad, and therefore unable to distance themselves from the TTP." He added: "As long as the movement's campaign continues, there is every reason to expect an escalation of the conflict between the Taliban and Pakistan."

The S&P 500 and Nasdaq Composite retreated from record highs on Monday following a strong Wall Street rally last week, as renewed tensions between the United States and Iran threatened to collapse the ceasefire and weighed on investor sentiment.

Iran had reopened the Strait of Hormuz on Friday, sparking a broad market surge that saw both the S&P 500 and Nasdaq Composite record all-time highs for the third consecutive session, marking their largest weekly gains since May.

However, Tehran re-closed the waterway after the United States announced the seizure of an Iranian cargo ship that attempted to break the blockade. Furthermore, the Iranian Foreign Ministry stated on Monday that there are no plans to hold a second round of negotiations with Washington.

Lizzie Galbraith, a senior political economist at abrdn, stated: "One interpretation of this diplomatic volatility is a power vacuum within the Iranian government. It may also be that both sides are seeking to strengthen their negotiating hands ahead of the next round of talks, with the underlying desire for a deal remaining intact."

She added: "Progress toward a permanent ceasefire and the reopening of the Strait of Hormuz continues to follow a pattern of two steps forward and one step back."

Oil prices rose by 5% on Monday, supporting the energy sector within the S&P 500, which climbed approximately 0.9%.

By 10:05 AM ET, the Dow Jones Industrial Average rose by 11.67 points, or 0.01%, to 49,459.10 points, while the S&P 500 declined by 7.29 points, or 0.10%, to 7,118.77 points, and the Nasdaq Composite fell by 59.97 points, or 0.24%, to 24,408.51 points.

Gains in Goldman Sachs and JPMorgan Chase shares helped support the Dow Jones.

In contrast, consumer discretionary and communication services sectors placed the most pressure on the S&P 500, with Amazon shares falling about 1.5% and Meta Platforms shares dropping by a similar percentage.

Technology stocks saw a lackluster performance, with losses partially offset by a 1.4% rise in Apple shares.

Marvell Technology shares rose 4.4% following a report that Alphabet's Google is in talks with the company to develop two new chips to run artificial intelligence models more efficiently.

The Volatility Index (VIX), known as Wall Street's "fear gauge," rose after declining for the previous eight sessions, gaining 1.50 points to 18.98, its highest level in a week.

The Russell 2000 index for small-cap companies remained relatively stable after reaching a record high on Friday.

Market focus on corporate earnings and war impact

Eyes are expected to turn toward quarterly financial results as investors seek to assess the impact of the war with Iran on corporate profits and the broader economy, with results from companies like Lockheed Martin and IBM expected later this week.

Tesla is scheduled to kick off the "Magnificent Seven" earnings season on Wednesday.

LSEG data indicates that first-quarter earnings for S&P 500 companies are expected to grow by 14.4%, compared to 13.7% a year ago.

Other market movements

In other moves, QXO shares fell 7.2% after entering a $17 billion deal to acquire TopBuild, whose shares jumped 16.8%.

Declining stocks outnumbered advancing ones by a 1.05-to-1 ratio on the New York Stock Exchange and by 1.13-to-1 on the Nasdaq.

The S&P 500 recorded 28 new 52-week highs with no new lows, while the Nasdaq Composite recorded 103 new highs and 24 new lows.

Bitcoin fell below the $75,000 level on Monday, retreating from its recent gains as investor caution grew amid escalating tensions between the United States and Iran ahead of the ceasefire expiration.

The world’s largest cryptocurrency was trading down 0.7% at $74,756.6 by 03:09 AM ET (07:09 GMT).

Bitcoin had briefly risen above the $78,000 level last week, driven by hopes for the continuation of the ceasefire and the reopening of shipping routes.

Escalation of U.S.-Iran tensions before the end of the truce

This decline followed a series of geopolitical developments over the weekend, including the United States seizing an Iranian-flagged cargo ship, alongside signals from Tehran of its possible non-participation in a new round of negotiations.

These developments raised fears of a renewed conflict, especially with the continued closure of the Strait of Hormuz, which is a vital artery for global oil transport.

These escalating tensions led to a sharp rise in oil prices and caused a wave of risk aversion in the markets, with U.S. stock futures declining during Asian trading.

Cryptocurrencies typically move in tandem with high-risk assets, which exposed them to selling pressure as investors turned toward traditional safe havens.

Analysts expect volatility levels to remain high in the near term, as the direction of the digital currency market continues to depend heavily on geopolitical developments and oil price movements.

Polymarket seeks to raise $400 million at a $15 billion valuation

In a separate context, a report by The Information on Sunday, citing informed sources, stated that the prediction platform Polymarket is in talks to raise $400 million at a valuation of approximately $15 billion.

This move comes amid growing investor interest in prediction market platforms, which have seen a surge in trading volumes and institutional participation in recent months.

Polymarket is seeking to secure new capital to expand its platform and strengthen its position in the rapidly growing event-based trading market, according to the report.

The potential valuation represents a significant jump compared to previous funding rounds, reflecting strong demand for this type of platform linked to real-world outcomes.

The company did not immediately respond to a request for comment on the report.

Cryptocurrency prices today: Altcoins decline despite relatively positive performance

Most alternative currencies also declined slightly on Monday amid an atmosphere of caution.

Ethereum, the world’s second-largest cryptocurrency, fell 1.3% to $2,285.63.

Meanwhile, Ripple, the third-largest cryptocurrency, declined 0.4% to $1.41.

Oil prices surged by approximately 5% during Monday's trading amid fears of a collapse in the U.S.-Iran ceasefire after Washington seized an Iranian cargo ship, while navigation through the Strait of Hormuz remained nearly halted.

Brent crude contracts rose by $4.37, or 4.8%, to reach $94.75 per barrel by 11:48 GMT, while U.S. West Texas Intermediate (WTI) climbed by $4.76, or 5.7%, to $88.61 per barrel.

Both contracts had declined by 9% on Friday—their largest daily drop since April 18—after Iran announced that passage for all commercial vessels through the Strait of Hormuz was open for the remainder of the ceasefire.

At the same time, U.S. President Donald Trump stated that Iran had agreed not to close the Strait again, a waterway through which approximately one-fifth of global oil supplies flowed before the war broke out nearly two months ago.

Jun Guo, an analyst at Sparta Commodities, said: "Within just 24 hours of the 'full opening' announcement on Friday, there were already tankers coming under fire from the Iranian Revolutionary Guard."

She added: "Market fundamentals are deteriorating, as between 10 to 11 million barrels per day of crude oil remain out of supply," referring to production losses.

The United States stated on Sunday that it had seized an Iranian cargo ship that attempted to break the blockade, while Iran announced it would retaliate, increasing fears of a resumption of hostilities.

Tehran also announced it would not participate in a second round of negotiations that the United States had hoped to launch before the expiration of the two-week ceasefire this week.

Bjarne Schieldrop, an analyst at SEB Research, said: "Financial markets are trading on the basis of negotiation, improvement, and resolution, while at the same time the physical market is deteriorating day by day."

He added: "Physical oil flows remain restricted due to supply disruption, longer voyage times, and high shipping and insurance costs."

Shipping data showed that maritime traffic through the Strait of Hormuz remained nearly at a standstill on Monday, with only three transits recorded during the past 12 hours.

More than 20 vessels had crossed the Strait on Saturday, carrying oil, liquefied petroleum gas (LPG), metals, and fertilizers, according to Kpler data—the highest number of vessels to cross the passage since March 1.

In another context, China is reducing refined fuel exports rather than banning them, as countries like Malaysia and Australia continue to receive supplies, even after Beijing extended the restrictions imposed last month into April, according to shipping data and traders.