Trump's Iran Decision Sparks Global Market Rally

Global markets breathed a collective sigh of relief on Monday following President Trump's decision to call off the planned attack on Iran. The move calmed investors' nerves after weeks of escalating tensions in the Middle East, leading to a 'risk-on' pattern with shares rising and oil prices falling sharply.

The cancellation of the attack also eased concerns over shipping disruptions in the Strait of Hormuz, as Trump reaffirmed the US Navy's control over the waterway. Analysts at Fitch Solutions warn that despite diplomatic progress, the risk of further escalation remains high, with a 35% probability of recurring military incidents.

The strong ISM Manufacturing PMI reading for July, which stood at 55.6 points, contributed to the positive sentiment. The manufacturing employment index returned to expansionary territory for the first time in over two years, while production recorded its fastest growth in nearly five years.