If the Nasdaq is a good indicator of Wall Street trends, and it usually is, its flat finish yesterday suggests a market largely unfazed by the Federal Reserve's decision on interest rates and the comments that came with it. The reality is a touch more nuanced: US indices climbed steadily for much of the day, only to be abruptly checked by the Federal Reserve's remarks.

A useful reminder: investors pretty much always want interest rates to fall, because that makes tomorrow's money cheaper than today's. Sometimes it seems as if they value rate cuts above everything else: a healthy economy, world peace, and even bacon. 

From this perspective, the US central bank's June meeting did not change the game too much: the market still believes there will be two rate cuts in the US this year, with the first coming in September. Yesterday, I wrote, without taking too much of a risk, that the Fed would slightly lower its growth forecasts, slightly raise its inflation concerns, remain cautious about the labor market, and paint an overall positive picture, albeit subject to downside risks. Except that Jerome Powell, the head of the central bank, seemed less concerned about employment and the risks weighing on the economy. At least a little less than at previous meetings. That may sound even better than expected, but in reality, financiers interpreted it as a sign that the scenario of two rate cuts in 2025 is under threat.

I read a note from Bank of America this morning saying that its assumption of no rate cuts this year has been reinforced. Even if the US bank has a slight tendency to take the opposite view of the market, its point of view seems to be echoed by some central bankers. ING, for its part, is not far from sharing this opinion, believing that the September and October meetings are probably coming a little too soon for anything to happen. The Dutch bank is betting on a double rate cut in December.

Overall, the market has a slightly negative reading of the Fed's latest statement, at least as far as interest rate developments are concerned. Donald Trump also has a negative view of the decision, as he has once again fired a few shots at Powell for his refusal to cut rates, notably by suggesting that he should replace him at the helm of the central bank. But the US president probably wouldn't have time to play central banker because he has a lot on his plate elsewhere, particularly in the Middle East, where he's hesitating to commit the US to Israel's war against Iran.

Rumors are rife about Washington's involvement, as many Americans have no desire to get involved in another Iraq or Afghanistan. Last night, the White House reportedly decided to go ahead before canceling an operation at the last minute, according to corroborating sources.

Another potential move would be to supply Israel with an unusually powerful bomb, capable of demolishing deeply buried targets - namely, Iran's purported main military nuclear site. Speculation continues to swirl, from the prospect of harsher strikes against Iran to the regime's possible return to negotiations, driven by a growing fear for its own survival.

Today will also see a decision by the Bank of England on interest rates. It is expected to hold off for now. Economists believe it will act again in August to raise its key rate from 4.25% to 4%. The Footsie is one of the few European indices to be doing well at the moment. The Stoxx Europe 600, meanwhile, lost further ground yesterday. It has risen only once in the last eight sessions. This is starting to add up, even if the magnitude of the declines is relatively limited each time.

In Asia-Pacific, Japan and mainland China are down about 0.7% this morning. Hong Kong is down 1.7% and heading for its worst session in two months. Indices are trading around equilibrium in Australia, India, and South Korea. European leading indicators are fairly uncertain and rather volatile.

Today's economic highlights:

On today's agenda: real export figures in Switzerland; the Swiss National Bank's policy rate decision; in the United Kingdom, the Bank of England's bank rate will be announced. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$3,365.24
  • Crude Oil (BRENT): US$76.78
  • United States 10 years: 4.4%
  • BITCOIN: US$104,852

In corporate news:

  •  Macquarie Group acquired stakes in UK airports and closed a fund with over $8 billion in commitments.
  •  Lockheed Martin offered to assist the UK government in developing a new missile defense system.
  •  NatWest decided not to bid for TSB Banking Group PLC.
  •  AO World CEO warned about possible closure of its contract mobile phone business.
  •  Unilever is seeking buyers for its healthy snack brand, Graze.
  •  Glazer Capital raised its ownership in Urban Logistics REIT to 10.07%.
  •  Nestlé announced Chairman Paul Bulcke will step down in April, with Pablo Isla proposed as successor.
  •  Hansa Biopharma raised 232 million SEK and plans to issue 10 million new shares. 
  •  UniCredit BPM merger approved by European authorities. 
  •  Saab signed an agreement with France to sell four GlobalEye military aircraft.
  •  SkiStar AB reported a decrease in Q3 2024/2025 revenue and operating profit.
  •  Pictet reported a data leak from a cyber attack, though client data remained secure.
  •  Microsoft is considering ending negotiations with OpenAI and plans to reduce sales jobs. 
  •  Meta negotiating with former GitHub CEO to bolster AI team. 
  •  Gilead Sciences received FDA approval for its injectable HIVprevention drug, Yeztugo.

See more news from UK listed companies here

Analyst Recommendations:

  • Breedon Group: Investec maintains its buy recommendation with a price target reduced from 545 to GBX 530.
  • Ocado Group Plc: Barclays maintains its underweight recommendation with a target price reduced from 2.60 to GBP 2.30.
  • Pan African Resources Plc: Peel Hunt maintains its buy recommendation with a price target raised from GBX 52 to GBX 61.
  • Informa Plc: Barclays maintains its overweight recommendation and raises the target price from 8.65 to GBP 9.
  • Johnson Matthey Plc: JP Morgan maintains its neutral recommendation with a target price raised from 16 to GBP 18.60.
  • Shell Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from 90 to USD 88.
  • Autohellas S.a.: Euroxx Securities maintains its overweight recommendation and reduces the target price from 18.20 to EUR 17.50.
  • Grenergy Renovables, S.a.: Renta SAB 4 downgrades to underperform from market perform with a price target raised from EUR 41 to EUR 55.
  • Mtu Aero Engines Ag: Deutsche Bank upgrades to buy from hold with a price target raised from EUR 356 to EUR 425.
  • Siemens Energy Ag: Grupo Santander maintains its outperform recommendation and raises the target price from 75 to EUR 99.