US stocks rallied to their best day in two months, and oil prices fell on Thursday after President Donald Trump called off his threat to bomb Iran in the evening. That raised hopes for a potential deal that could get the global flow of oil going again.

The S&P 500 jumped 1.8 per cent, coming off a back-to-back drop that had yanked it back to where it was in early May. The Dow Jones Industrial Average leaped 929 points, or 1.9 per cent, and the Nasdaq composite rallied 2.5 per cent.

Stocks immediately veered higher in midday trading after Trump said on his social media network that "discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved" and that the time and place of a signing will "be announced shortly".