Trump Calls Off Iran Strike, Equities Rally on De-Escalation Optimism

US President Donald Trump announced on Sunday that he called off a planned military strike against Iran, opting for diplomacy instead. This decision sent shockwaves through the markets, leading to a significant drop in crude oil prices and a subsequent rise in equity futures.

The move was seen as a de-escalation of tensions between the US and Iran, with Trump stating that peace talks would resume today. The news also sparked a surge in Japanese yen strength, following a coordinated intervention between the US and Japan to strengthen the currency.

Despite the initial rally, equities took a hit on Monday, with Apple's shares plummeting 7.4% on concerns over chip-related issues. Amazon's strong earnings report was unable to offset the losses, but overall, equity futures pointed higher on Iran deal optimism.

The University of Michigan's Consumer Sentiment Index was revised up to 55.2 in July from 54.0, showing gains across all groups, but still below a year earlier due to concerns over high prices. Year-ahead US inflation expectations fell to 4.2% in July from 4.6% in June, the lowest since March.

The news also had an impact on digital assets, with Bitcoin and Ethereum spot easing modestly in thin trade, while crypto-linked equities bore the brunt of Friday's session, losing around 3%. US spot bitcoin ETFs saw $265 million of net outflows on Friday, underscoring the fragility of the institutional bid.