Yesterday, equity markets were pulled in several directions at once: renewed suspicion towards software stocks, with the Nasdaq 100 down 1.9%; fascination with SpaceX, up 4.8%, enough to overtake Amazon by market capitalisation; and a comeback for several sectors that had spent months out in the cold, including banks, selected tourism-related cyclicals and industrials. Europe edged higher, its fourth gain in a row. Wall Street was split between the Nasdaq 100 and the Dow Jones, which rose 0.6%. Many equity indices are now either close to record territory or already through it.

The main event of the week, however, is the US central bank, which will set the tone for monetary policy this evening. It is all but certain that the Fed will leave its key rate unchanged. What matters is the guidance it gives on the likely path over the coming weeks and months. The institution is now led by Kevin Warsh, who has taken over from Jerome Powell after eight years at the helm. Donald Trump would take issue with the idea that Powell gave "good and loyal service", since he regarded him as neither good nor loyal. He repeatedly called him a complete loser and disloyal. The main thing Powell and Warsh have in common is that both were appointed by Trump. During his first term, the president expected Powell to do his bidding. He did not.

What fate awaits Warsh? That is the question, and nobody has the answer. The new Fed chair is clearly talented and competent. What markets want to know is how political he will be. To get the job, he had to win over the White House, which had other candidates in mind who were more obedient, but also more alarming for the bond market. Warsh is divisive enough to appeal to Trump, having openly criticised the Fed's conduct in recent years. Yet he is also reassuring enough on monetary policy, since he is not expected to act recklessly.

One of the key issues this evening, apart from Kevin Warsh's baptism of fire at the post-decision press conference, will be the degree of unity on the monetary policy committee. Twelve central bankers vote on changes to US interest rates. It is a collective decision, which reduces fears of outright political capture. But views differ. Those differences will be visible in the Fed's updated projections for growth, inflation and the expected path of interest rates.

Those projections, together with the tone of Warsh's remarks, will matter most. Ten days ago, the entire discussion would have centred on the prospect of higher rates because of the closure of the Strait of Hormuz. But since a deal has begun to take shape and oil prices have fallen sharply, the market narrative has shifted. Publicly, investors are worried that the Fed may strike a somewhat hawkish note. Privately, they are hoping for a more business-friendly message than expected, in other words one that puts less emphasis on inflation risks. Should that happen, equities could extend their fine spring run.

Investors are increasingly convinced that the Middle East situation is beginning to resolve itself. The United States, far from the hard line it initially took, has had to soften its stance in order to negotiate with Tehran. Iran could yet wriggle free with promises of massive investment and a fresh round of nuclear talks. Brent crude has fallen below $78 a barrel, its lowest level since early March.

The US monetary policy decision is due this evening, followed by the press conference on the decision and outlook. Kevin Warsh has repeatedly argued that his predecessor and his colleagues talked too much. Will he be more economical with words? We will find out tonight.

In Asia-Pacific this morning, volatility is easing. Japan, South Korea, India and Australia are moderately higher. Mainland China is flat, while Hong Kong is down 0.6%. The MSCI Asia Pacific index is up 0.4%. In Europe, futures are mixed, with a negative bias in autos after BMW's major profit warning.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,328.84
  • Crude Oil (BRENT): US$78.94
  • United States 10 years: 4.43%
  • BITCOIN: US$63,320.1

In corporate news:

  • GSK's Exdensur wins Canadian approval for severe asthma and nasal polyps.
  • Glencore to invest £20 million in Merdeka Gold's Hong Kong IPO.
  • HSBC has signed a multi-year agreement with Google Cloud to strengthen its artificial intelligence capabilities.
  • BMW has revised downwards its forecast for its automotive operating margin in 2026, due to competition in China and the crisis in the Middle East.
  • Volkswagen is cutting production at its Osnabrück plant in Germany.
  • Thyssenkrupp has approved the spin-off of its materials division in response to the crisis.
  • Iberdrola raises €1.50 billion through a green bond issue.
  • Straumann raises its profitability targets for 2026.
  • A group of hackers has claimed responsibility for the theft of confidential data from Novo Nordisk.
  • Nokia is investing $30 million to expand its production capacity for optical networking technologies in the United States.
  • Health Canada has approved GSK’s Exdensur for severe asthma and nasal polyps.
  • Holcim is reportedly opposing Huaxin Cement’s bid for CSN’s cement division.
  • Munters Group is considering the sale of its FoodTech division.
  • Repsol and PDVSA have signed a memorandum of understanding on oil and gas development in Venezuela.
  • Hensoldt is to supply radars to Kyiv.
  • SpaceX slightly surpassed Amazon’s market capitalisation at the close, having risen 49% since its IPO.
  • Oracle has described reports of failed cloud negotiations with Microsoft as inaccurate.
  • Amazon could face sanctions following an FTC complaint regarding its advertising practices, according to Bloomberg.
  • Intel has begun initial production of its new etching technology.
  • Exxon Mobil has signed a preliminary agreement to supply LNG to South Africa.
  • Mastercard is maintaining its quarterly dividend at USD 0.87 per share, payable on 7 August.
  • AT&T has appointed Jennifer Biry as Chief Financial Officer from 2027, following Pascal Desroches’ retirement.
  • Robinhood is cutting 300 jobs, representing 10 per cent of its workforce.
  • Snap is weathering investor pressure by launching its smart glasses.
  • Marathon is restarting the catalytic cracking unit at its Galveston Bay refinery in Texas.
  • SK Hynix denies press reports regarding a shareholder remuneration plan worth 100,000 billion won
  • Tokio Marine is focusing on acquisitions in Australia and Canada to diversify its international revenue streams.
  • BYD is ramping up its battery production in Brazil.

Today's main earnings : JPMorgan European Growth & Income, AO World, PZ Cussons, Castings P.L.C., Hargreave Hale AIM VCT, Speedy Hire.

See more news from UK listed companies here

Analyst Recommendations:

  • Rightmove Plc: UBS maintains its neutral recommendation and reduces the target price from GBX 481 to GBX 480.
  • Wh Smith Plc: JP Morgan maintains its overweight recommendation and reduces the target price from GBP 7 to GBP 5.75.
  • Astrazeneca Plc: Zacks maintains its neutral recommendation and reduces the target price from USD 195 to USD 186.
  • Bmw Ag: Jefferies maintains its hold recommendation and reduces the target price from EUR 92 to EUR 70.
  • Danske Bank A/S: Autonomous Research maintains its outperform recommendation and raises the target price from DKK 415 to DKK 418.
  • Svenska Handelsbanken Ab: Autonomous Research maintains its underperform recommendation and raises the target price from SEK 147 to SEK 148.
  • Aegon N.v.: Oddo BHF maintains its outperform recommendation and raises the target price from EUR 7.80 to EUR 8.50.
  • Kardex Holding Ag:
  • Asml Holding N.v.: Oddo BHF maintains its outperform recommendation and raises the target price from EUR 1600 to EUR 2000.
  • Unicredit S.p.a.: William O'Neil & Co Incorporated initiates coverage with a buy recommendation.
  • Wacker Chemie Ag: Jefferies maintains its hold recommendation and reduces the target price from EUR 96 to EUR 93.