Despite the din of economic data and corporate earnings, three dominant themes are preoccupying markets this morning. Chief among them: renewed fears of Israeli military action against Iran's nuclear facilities. Even unconfirmed, these reports have jolted oil traders into action, sending crude prices climbing back to $66.50 per barrel - a level not seen since last week, but still notably shy of the $80 peak reached on January 15. The revival in oil prices underscores how geopolitical risk, long dormant, is beginning to reassert itself in energy markets. Central to the uncertainty is the delicate dance between Washington and Tel Aviv. The Biden administration is reportedly engaged in backchannel diplomacy with Tehran, aiming to defuse tensions and rein in Iran's nuclear ambitions. Yet the spectre of unilateral Israeli action, potentially undermining US negotiations, looms large. Overlaying all of this is Donald Trump's unmistakable strategic priority: to drive oil prices lower. Crude, after all, acts as a release valve for his broader economic agenda - particularly his penchant for using tariffs as both economic cudgel and diplomatic leverage. His recent visit to Saudi Arabia, where he offered a windfall of arms contracts in return for increased oil output, exemplifies this transactional approach. The alleged reward? Not just promises of greater supply, but, if reports are to be believed, a private jet gifted by Qatar - neighbourly diplomacy, Gulf-style.

The second topic of the day is economic and political and concerns the US budget. Trump's tax plan is highly controversial - to say the least - within his own camp. The ultra-conservative fringe wants to go further because the current proposal is likely to increase the deficit. Moderate Republicans are seeking to save certain measures because they know they will have to answer to their constituents, which is making the president quite angry, and he is responding with heavy threats. It must be said that time is against him: the closer the midterm elections get, the harder it will be to push through radical reforms and sell the “suffer now, reap the benefits later” message. This situation is weighing on the dollar, which has fallen sharply in recent days. It's also naturally reinforcing bets on higher long-term rates. As a result, the bond market remains high. The 10-year yield is at 4.50% and the 30-year yield is at 5%. Like meerkats, the guardians of the bond temple are signaling to the equity markets that they are under stress due to the risks of a budget impasse in the United States and global trade disruption. 

Finally, on a more anecdotal note, the New York stock market ended yesterday with a moderate decline after six sessions in the green. Eight of the ten largest market capitalizations fell, particularly the tech sextet of Microsoft, Nvidia, Apple, Amazon, Alphabet, and Meta. Europe regained ground against Wall Street yesterday. The Stoxx Europe 600 gained 0.7% and is now up 9% in 2025, compared with 1% for the S&P 500. Since its low on April 9, the broad European index has fallen only five times in 27 sessions. Yesterday, it benefited mainly from investors shifting to defensive sectors. When tobacco, utilities, and telecoms stocks start to top the charts, it means that financiers are not entirely comfortable with the situation.

In Asia-Pacific, all markets are trading in positive territory, except for Japan, where the Nikkei 225 lost 0.3% at the close. India, Taiwan, and South Korea even gained 1%. Australia and Hong Kong are up around 0.6%. European leading indicators are slightly bearish.

Today's economic highlights:

On today's agenda: in the United Kingdom, the CPI GM and the CPIH GA; in the United States, the DOE crude oil inventories; in Japan, the adjusted trade balance. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$3,315.78
  • Crude Oil (BRENT): US$66.32
  • United States 10 years: 4.51%
  • BITCOIN: US$107,465

In corporate news:

  • Drax Group PLC confirmed its final bid for Harmony Energy Income Trust at 88p per share, with no increase.
  • Transense Technologies PLC entered into a licensing supply agreement with ISI Interconnect Systems.
  • Panther Securities PLC reduced its dividend despite increased earnings.
  • Diageo decided not to sell its stake in Moet Hennessy.
  • Poolbeg Pharma PLC raised GBP4.7 million through an oversubscribed placing.
  • Saint-Gobain plans to open a new plant in the UK for low-carbon insulation materials.
  • Rio Tinto received approval for a $2.5 billion lithium mining project in Argentina.
  • Wizz Air became the first airline to operate the Airbus A321XLR jet.
  • Nostrum Oil & Gas PLC announced a 41% production increase in Q1 2025 results.
  • Prosafe SE announced Q1 revenue and EBITDA, with future North Sea campaign plans.
  • Julius Baer announced a $156 million credit portfolio charge and a new chief risk officer.
  • Banco BPM issued an Additional Tier 1 bond for EUR 400 million amid strong demand.
  • Roche Holding AG received an FDA update for Columvi and plans a 4 billion pesos investment in Mexico.
  • Tesla plans a robotaxi trial in Austin, Texas, by the end of June.
  • Google is intensifying its AI focus with new launches and partnerships.
  • Super Micro Computer is expanding its U.S. server production.
  • Nvidia partnered with Foxconn for a 100 MW AI data center in Taiwan.
  • Epic Games' Fortnite returned to Apple's App Store in the US.
  • Home Depot maintains its pricing strategy and reaffirms fiscal 2025 guidance.

See more news from UK listed companies here

Analyst Recommendations:

  • Victrex Plc: Berenberg maintains its hold recommendation and reduces the target price from 1170 to GBX 990.
  • Experian Plc: Redburn Atlantic maintains its buy recommendation and raises the target price from 3982 to GBX 4414.
  • Lloyds Banking Group Plc: Morgan Stanley maintains its overweight rating with a price target raised from GBX 90 to GBX 95.
  • Hsbc Holdings Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from 83 to HKD 90.
  • Standard Chartered Plc: Morgan Stanley maintains its overweight rating and raises the target price from 113.10 to HKD 121.50.
  • Barclays Plc: Morgan Stanley maintains its overweight rating with a target price raised from GBX 360 to GBX 385.
  • Smiths Group Plc: BNP Paribas Exane maintains a neutral recommendation with a price target raised from GBX 2000 to GBX 2150.
  • Diploma Plc: HSBC maintains its buy recommendation with a price target raised from 50 to GBP 53.50.
  • Diageo Plc: Goldman Sachs maintains its sell recommendation with a price target raised from 109 to USD 113.
  • Babcock International Group Plc: JP Morgan maintains its overweight recommendation and raises the target price from 10 to GBP 11.
  • Astrazeneca Plc: Zacks maintains a neutral recommendation with a price target raised from 68 to USD 73.
  • Shell Plc: Zacks maintains its neutral recommendation with a price target raised from 68 to USD 72.
  • Cranswick Plc: Deutsche Bank maintains its buy recommendation and raises the target price from 5250 to GBX 6000.
  • Admiral Group Plc: Keefe Bruyette & Woods maintains its outperform rating and raises the target price from GBX 3000 to GBX 3500.