The Calm Before the Storm?

Geopolitics had slipped somewhat into the background on financial markets, which in recent weeks have been fixated on corporate earnings and fears of disruption from artificial intelligence. Yet tensions between Iran and the United States returned to centre stage yesterday. The backdrop triggered a marked rebound in oil prices, though it did little to derail the advance in equity indices.

On markets, the oil price remains a reliable barometer of the geopolitical climate. Lately, whenever Brent climbs above $70 a barrel, it is a sign that something is afoot. Commodities moved higher again yesterday following a report by the US outlet Axios suggesting that the Trump administration is closer than ever to a major war in the Middle East. The news caught markets somewhat off guard, as the mood at the start of the week had been more conciliatory, with talks between American and Iranian officials in Geneva.

By a quirk of the calendar, this renewed escalation comes as Donald Trump convenes the Peace Council in Washington today. The body, over which he will preside for life, counts among its members several leaders not instinctively associated with matters of peace.

I will not attempt to predict what Donald Trump, the 47th President of the United States, will do with regard to Iran, as such exercises too often end in error. Instead, a few observations are in order. In the column of more worrying signs, the last time the United States struck Iran, the attack on nuclear sites in June, it followed several weeks of negotiations between Washington and Tehran. The Americans had also set a two week deadline for Iran to revise its position. The more reassuring element is that whenever Donald Trump has acted militarily, whether in Iran or Venezuela, he has taken the world by surprise. To my knowledge, no major American media outlet had flagged those moves in advance.

It would appear, moreover, that Donald Trump relishes catching observers off guard. I had begun to feel that he had somewhat receded from view, by his own standards, in recent weeks: fewer trips, fewer public statements, fewer headline grabbing announcements.

Donald Trump had indeed dominated the news flow until mid January, with the operation in Venezuela and threats directed at Greenland. Yet for the past month, since the Davos summit, he has been less prominent. Preparations for a large scale operation against Iran could help to explain this relative absence from the public stage.

A broad attack on Iran would in any case carry greater implications than previous operations. For President Trump, because Americans, particularly those who voted for him in 2024, would prefer to see him devote more attention to domestic issues and are broadly skeptical of foreign interventions. And for markets, because there remains the risk of a closure of the Strait of Hormuz, through which roughly a third of global oil supplies transit.

This renewed tension has not, however, checked the rise in equity markets. In Europe, the Euro Stoxx 50 both reached fresh closing highs, buoyed in particular by defence stocks. Earlier in the day, London's FTSE had set a new record after inflation fell to its lowest level since March 2025. Following Tuesday's employment report, which showed the jobless rate climbing to its highest level since 2015, the path now appears clear for a Bank of England rate cut in March.

On Wall Street, the session ended in positive territory, though the main indices surrendered part of their gains towards the close. The minutes of the Federal Reserve's January meeting appear to have cooled investor enthusiasm. The account revealed divisions over the future path of interest rates, with a greater number of policymakers favouring a cautious approach than those inclined towards swifter cuts.

The debate therefore remains open and will be fuelled today by three appearances from US central bankers, Bostic, Bowman and Kashkari. Weekly jobless claims and US trade balance figures will provide the other focal points on the macroeconomic calendar. On the corporate front, Walmart's results at midday will be closely watched. Before that, a raft of earnings releases is due in Europe, notably in France from Airbus, Pernod Ricard, Accor and Renault.

In Asia Pacific, mainland Chinese markets remain closed and will not reopen until Tuesday 24 February for the Lunar New Year festivities. Hong Kong's stock exchange, by contrast, will resume trading tomorrow.

Today's economic highlights:

Today's agenda includes: full-time employment change, unemployment rate, and employment change in Australia; balance of trade and industrial production in Switzerland; balance of trade in Spain; CBI industrial trends orders in the United Kingdom; in the United States, Fed speeches by Bostic, Bowman, and Kashkari, initial jobless claims, goods trade balance, imports, wholesale inventories, trade balance, retail inventories excluding autos, exports, Philadelphia Fed manufacturing index, pending home sales, and EIA crude oil and gasoline stocks; in Canada, new housing price index and trade balance; consumer confidence in the Euro Area; in Australia, S&P Global services and manufacturing PMIs. See the full calendar here.

• GBP / USD: US$1.35
• Gold: US$5,019.02
• Crude Oil (BRENT): US$70.52
• United States 10 years: 4.08%
• BITCOIN: US$67,184.3

In corporate news:

• Rio Tinto reported a 14% drop in annual net profit for 2025, with underlying earnings remaining flat and full-year dividends unchanged at $4.02 per share.
• Amundi received regulatory approval for a board seat at ICG and will consolidate its stake using the equity method starting March 31, 2026.
• London Stock Exchange Group is under pressure from activist investor Elliott Investment Management to conduct a portfolio review and initiate a £5 billion share buyback.
• Glencore reported a 6% drop in adjusted EBITDA for 2025 to $13.51 billion, attributed to weaker energy and coal trading performance, while announcing $2 billion in shareholder returns.
• BAE Systems posted a 12% rise in operating profit for 2025, driven by strong demand and a record order backlog of £83.6 billion.
• Liberty Global agreed to acquire Vodafone's 50% stake in VodafoneZiggo for €1 billion in cash and a 10% stake in a new Benelux entity.
• Euronext reported a 10% increase in Q4 2025 revenue to €456.4 million, supported by growth in trading volumes and non-volume businesses.
• Spire Healthcare extended the deadline for takeover talks with Bridgepoint and Triton to March 21, 2026.
• Shell partnered with Turkish Petroleum for exploration activities in Bulgaria's Khan Tervel Field.
• Hindustan Unilever, a unit of Unilever, announced plans to invest up to $221 million over two years to expand its premium product segments in India.
• Nestlé reports strong Q4 sales growth and better-than-expected 2025 full-year results.
• Euronext reports a 10% increase in Q4 2025 revenue to €456.4 million and proposes a €321.5 million dividend.
• Zurich Insurance reports a record 2025 net profit and operating profit, exceeding expectations.
• Brunello Cucinelli reports a €142 million net profit for 2025, up 10.5%, and forecasts a 10% revenue growth for 2026.
• Fincantieri completes a €500 million accelerated bookbuild by issuing 32.6 million new shares at €15.32 each.
• Bravida receives multiple target price adjustments and recommendations from various analysts.
• Asmodee reports record Q3 2025 adjusted EBITDA of €114.5 million and Q3 revenue of €524.1 million.
• Tenaris reports 2025 financial results with a 5% decline in net income and a 4% drop in revenues.
• Airbus warns of a production slowdown for A320 jets due to a shortage of Pratt & Whitney engines.
• Amundi SA receives regulatory approval to occupy a board seat at ICG and will consolidate its stake using the equity method starting 31 March 2026.
• Zenith Energy begins construction of three 7-MW solar plants in Apulia, Italy.
• Google's Gemini app now features its advanced music-generation model, Lyria 3.
• Meta Platforms revives its smartwatch initiative, targeting a 2026 release.
• Microsoft and CrowdStrike launch the Falcon platform on Microsoft Marketplace.
• Verizon announces the offering of £600 million in 5.7427% fixed-to-fixed rate junior subordinated notes due in 2056.
• eBay announces it will acquire Depop from Etsy for approximately $1.2 billion in cash.

See more news from UK listed companies here

Analyst Recommendations:

• Haleon Plc: Berenberg maintains its buy recommendation and raises the target price from USD 13.44 to USD 13.86.
• Pan African Resources Plc: Vunani Securities (Pty) Ltd maintains its buy recommendation and raises the target price from ZAR 37.90 to ZAR 38.
• The Weir Group Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 3350 to GBX 4000.
• Glencore Plc: Goldman Sachs maintains its neutral recommendation and raises the target price from GBX 520 to GBX 540.
• Schroders Plc: UBS downgrades to neutral from buy and raises the target price from GBX 480 to GBX 590.
• Intercontinental Hotels Group Plc: Citi maintains its sell recommendation and reduces the target price from USD 108.56 to USD 107.96.
• Conduit Holdings Limited: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 385 to GBX 390.
• Bravida Holding Ab: ABG Sundal Collier maintains its buy recommendation and raises the target price from SEK 110 to SEK 118.
• Amrize Ag: Berenberg maintains its buy recommendation and raises the target price from USD 64 to USD 70.
• Alfen N.v.: Berenberg maintains its hold recommendation and reduces the target price from EUR 11 to EUR 9.50.
• Asr Nederland N.v.: Berenberg maintains its buy recommendation and raises the target price from EUR 66 to EUR 74.
• Sandvik Ab: RBC Capital maintains its outperform recommendation and raises the target price from SEK 360 to SEK 420.