At the start of the week, the dour figures in grey suits, the ones who would like things to improve, but only gradually, had won the first round. From Wednesday onwards, however, the excitable hoodie crowd, which prefers the tempo to quicken, regained the upper hand. The result was that equity indices clawed back part of their recent losses, still gripped by technology fever. Interestingly, as I noted yesterday, Nvidia edged lower after its impressive results, but its numbers sparked buying across the rest of the ecosystem.

All told, US indices extended their rebound, with the Dow Jones even closing at a record high. The S&P 500 and Nasdaq 100 are now moving back towards their own peaks. Europe was more hesitant, held back by declines in Paris and Frankfurt. The Stoxx Europe 600, for its part, managed to hold on to a symbolic gain of 0.04%.

Indices were also supported by rumours of progress towards peace in Iran, even though the various public statements remain as muddled as ever. Investors focused above all on Iran's claim that positions had moved closer together after the latest US proposal. They paid rather less attention to the fact that Iran's Supreme Leader has called for the country to keep its uranium stockpiles, and that Tehran is still working on a toll in the Strait of Hormuz. Oil remains elevated, with Brent trading at around $104 a barrel.

The big story of the second half of the week is the spell AI continues to cast over investors. Several factors have rekindled their enthusiasm, despite the valuation levels already reached by some stocks.

First, there is the media and market frenzy surrounding the giant IPOs now on the horizon. SpaceX comes first, with a stock-market debut expected in the coming weeks and the inevitable barrage of superlatives that will accompany it. Financiers have not forgotten that another Elon Musk company, Tesla, was valued on the strength of its promises and its ability to capture the imagination. OpenAI comes next, even though the timing of its flotation is not yet known. Anthropic could reasonably be expected to follow sooner or later.

Anthropic has also fired up markets with another message, perhaps the most important one of the month: the owner of Claude is said to have generated a positive operating profit in the latest quarter, two years ahead of its own targets. The report, still only a rumour at this stage, changes perceptions of a sector that is currently seen as a bottomless pit. If a company can reach profitability within a visible timeframe despite the colossal sums being invested, the ecosystem may not be built on sand after all, as some fear.

The third point in AI's favour, though perhaps not in humanity's, but that is another story, is that Donald Trump has changed course and cancelled at the last minute the signing of an executive order designed to regulate powerful AI models. Pressure from his adviser David Sacks and several tech bosses appears to have worked. Trump acknowledged that he disliked certain aspects of the text and spoke of a postponement. "I think it gets in the way of… you know, we're ahead of China, we're ahead of everyone, and I didn't want to do anything that could impede that lead," he said. The White House, like financial markets, is drawn irresistibly towards AI, without denying the risks it creates.

The seat of US power will host Kevin Warsh's swearing-in as Fed chair. The venue is symbolic. In 1987, Alan Greenspan was the last head of the US central bank to take the oath of office at the White House. His successors, Ben Bernanke, Janet Yellen and Jerome Powell, settled for the Federal Reserve building. Will Warsh enjoy a Greenspan-like run? Investors adored Greenspan, at least until he stepped down in 2006. The 2008 financial crisis showed that his deregulatory approach had its drawbacks. Even so, he had to navigate the 1987 crash, the LTCM scandal and the period spanning the dotcom bubble and 11 September 2001. Warsh, meanwhile, will start with a bond market rattled by the rapid return of inflation, which is frustrating hopes for rate cuts both on Wall Street and in the White House.

In Asia-Pacific this morning, technology stocks are extending their rebound. They have helped Japan recover 2.8%, Taiwan climb 2.3% and South Korea advance 0.7%. Hong Kong has woken up, gaining 1.2%. Australia and India are rising more modestly. Europe is set to open higher, with US futures firmly in positive territory.

Today's economic highights:

On the agenda today: the monthly and yearly retail sales in the United Kingdom; the GfK consumer confidence and Ifo business climate in Germany; business confidence in France; foreign direct investment in China; final and preliminary monthly retail sales as well as retail sales excluding autos in Canada; in the United States, the final Michigan consumer sentiment index and the Fed Waller speech. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,532.67
  • Crude Oil (BRENT): US$104.67
  • United States 10 years: 4.57%
  • BITCOIN: US$77,436.1

In corporate news:

  • Indian conglomerate Bharti Enterprises is exploring an increase in its stake in BT Group to just below the level that would oblige it to launch a full takeover bid for the British telecoms group, according to Reuters.
  • Deutsche Telekom and SAP have won the bid for Germany's sovereign AI platform.
  • Compagnie Financière Richemont reports a surge in its annual results.
  • Eni signs three long-term supply agreements in Indonesia.
  • Electrolux unveils the terms of its 9 billion krona capital increase.
  • Sandoz asks the EU to investigate Chinese dumping, according to the FT.
  • Mutares finalizes the sale of Terranor Group.
  • Webuild announces that Neom has terminated the contract for the Connector high-speed rail project.
  • Swedish Orphan Biovitrum announces positive preliminary results for the pivotal Phase 3 study of pozdeutinurad in the treatment of gout. 
  • Estée Lauder ends merger talks with Spain's Puig.
  • Anthropic is reportedly in talks to use Microsoft's AI chips, according to The Information.
  • AMD is ramping up capacity in Taiwan amid global CPU market tightness.
  • Workday jumps 11% in after-hours trading following its quarterly results.
  • Take-Two gains 6% in after-hours trading following its quarterly results.
  • Ross Stores gains 5.5% in after-hours trading following its quarterly results.
  • Biogen and Denali abandon their Parkinson's treatment following a clinical failure.
  • Today's key earnings reports: Compagnie Financière Richemont, Frontline…

See more news from UK listed companies here

Analyst Recommendations:

  • Convatec Group Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 3.20 to GBP 3.
  • Easyjet Plc: Bernstein maintains its market perform recommendation and reduces the target price from GBX 425 to GBX 350.
  • Hill & Smith Plc: Peel Hunt maintains its buy recommendation and raises the target price from GBP 28 to GBP 34.
  • Airtel Africa Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 3.75 to GBP 3.70.
  • Auto Trader Group Plc: Barclays maintains its equalweight recommendation and reduces the target price from GBP 6.05 to GBP 5.70.
  • Experian Plc: UBS maintains its buy recommendation and raises the target price from GBX 3700 to GBX 3870.
  • Ibstock Plc: Jefferies maintains its buy recommendation and reduces the target price from GBX 127 to GBX 115.
  • Diploma Plc: BNP Paribas maintains its outperform rating and raises the target price from GBP 81 to GBP 88.
  • Gsk Plc: Zacks maintains its neutral recommendation and reduces the target price from USD 60 to USD 54.
  • Shell Plc: Zacks maintains its outperform recommendation and reduces the target price from USD 108 to USD 102.
  • Unilever Plc: Argus Research Company maintains its buy recommendation and reduces the target price from USD 80 to USD 70.
  • Aj Bell Plc: Keefe Bruyette & Woods maintains its outperform rating and raises the target price from GBX 550 to GBX 680.
  • Cranswick Plc: Deutsche Bank maintains its buy recommendation and raises the target price from GBX 6100 to GBX 6300.