The markets don't care about Israel and Iran
The oil price is spiralling out of control. Equities are slumping, currencies are in turmoil, gold is hitting all time highs and economists are on our television screens predicting a deep recession. With missiles flying across the Middle East as Israel and Iran embark on what could well be a major regional conflict, we might expect turmoil in the financial markets. After all, if the start of a third world war doesn't knock a few dollars off the Apple share price it is hard to know what would. But it turns out that investors appear indifferent.
Looking at a trading screen this morning (Monday) you would probably think not much was going on in the world. The FTSE100 was up 30 points. Overnight, the Nikkei was up by 1.2 per cent, and when Wall Street opens it is expected to be up by a few points as well. Gold was down by 0.4 per cent, and oil by slightly under 1 per cent. It is all very meh. Anyone who thought a major conflict in the Middle East would throw the global economy into chaos will clearly be disappointed. It does not look like it is going to happen.
Of course, investors might just be incredibly complacent. And yet, there are two reasons for thinking they may well be right to tune out the news bulletins from Tehran and Tel Aviv. To start with, they are assuming that Israel has already won. As so often before, the Israel military has proved its mastery of tactics, surprise, and special operations, and its defensive shield largely protects it from retaliation. Investors are betting that Benjamin Netanyahu would not have started the conflict unless he was sure he could win it.
Next, the energy market has changed. Fracking has turned the United States into the largest oil and gas producer in the world, and there is plenty more to be developed. Even the Canadian Prime Minister Mark Carney, a fierce opponent of fossil fuels when he ran the Bank of England, is increasing production. At the same time, green energy may be more expensive than its champions predicted, and may require bigger subsidies, but there is starting to be a lot of it. The wind turbines in the North Sea generate 30 per cent of the UK's electricity, and in Spain solar contributes 20 per centof the total, while wind contributes another 20 per cent. The result? We rely far less on Middle Eastern oil and gas than we used to. In reality, the war may be a huge event for diplomats, for military strategists, and for the fate of the region. To the markets, however, it does not matter very much – and investors have other things to worry about.
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The Guardian
an hour ago
- The Guardian
When Starmer speaks, the world listens – or so Labour imagines
It was late into the night. The phone rang in the prime minister's residence in Jerusalem. Benjamin Netanyahu stretched out an arm to take the call. 'Yes.' 'Hi Bibi, it's Ali.' 'Ali who?' 'Ayatollah Ali Khamenei … I just wondered whether you had heard the latest - Keir Starmer has made an intervention.' 'Not THE Keir Starmer?' 'The very same. The prime minister of the United Kingdom. He has called on both of us to de-escalate hostilities. To look for a diplomatic solution. Not just that, but the British foreign secretary will be making a statement to the British parliament later on today to demand restraint. To bring the Middle-East back from the edge.' 'Wow,' said Bibi. 'That rather changes everything. When Keir speaks the world listens.' Or maybe that's not quite the way international diplomacy works in the Middle-East. Right now, it doesn't appear that Israel or Iran are listening to anyone. Not even the US. Then again, it's quite hard to follow what Donald Trump has to say about the conflict as he regularly contradicts himself. Yet Starmer continues to call for de-escalation. Mainly to make himself feel better. We all know that the UK has no real influence, but Keir feels he has to say something and he can't very well say he's not that bothered. A prime minister has to be prime ministerial. A united front and all that. Besides, if Israel and Iran do take a step back, he can always claim that his intervention was the one that made the difference. And maybe it might have been. Still. One person to whom Netanyahu and Khamenei most definitely won't be listening is Emma Reynolds, the economic secretary to the Treasury, who was sent out by the government on the morning media round. Which is just as well for Emma and the UK because, fair to say, she took the word useless to dizzying new heights during her interview with Nick Ferrari on LBC. On this performance, you wouldn't have trusted her to locate Israel or Iran on a map. Emma's solution to the conflict was to hope for the best. Which was the same approach she took to her own performance. Only it didn't pay off. Ferrari appeared to confuse her by asking about the thing – strengthening 3,000 bridges – that she had been sent out to talk about. I guess she hadn't seen that one coming. She began by talking about the Dartmouth Tunnel. Thereby locating the Thames somewhere on the south Devon coast. Suspecting he might be dealing with a halfwit, Ferrari checked if she knew where the new crossing near Dartford might be. Emma hadn't a clue. Nick filled her in: Gravesend and Tilbury. OK, he said. Do you know how much this was going to cost? Still no clue. By now Emma was getting panicky – £3bn? Er, no, said Ferrari. It's £10bn. It said so in her own department's press release, which she hadn't read. Let's move on to Hammersmith Bridge. Let's not, sobbed Emma. She didn't know anything about that bridge either. Two down, 2,998 to go. Over in the Commons, Yvette Cooper was giving a statement on the publication of Lady Casey's report into grooming gangs. No one came out of it well. Not the Tories, not Labour, not the police, not the local authorities. The girls had been let down by everyone. The home secretary at least tried to take some responsibility. Some. She laid out a clear trail of failure and neglect over the past 15 years. Abusers operating in plain sight. Seemingly given a free pass. She made an apology on behalf of the British state to all the victims. What she couldn't bring herself to do was to admit the government could have established a national statutory inquiry six months ago. Yet again, a minister failing to say sorry for something she could have done better. Instead she tried to claim that the new inquiry was just a seamless continuation of the last one. Normally it would have been Chris Philp to reply for the opposition. Instead we got Kemi Badenoch. Whether the Philpster would have been any better is open to question, but he couldn't have been any worse. Kemi's response was one of the most shabby and ill-judged I can remember. This was all about her, not the victims. Turning a national scandal into party politics. Claiming that everything had been just fine under the 14 years of the Tories and that the greatest injustice had been Labour's failure to implement an inquiry sooner. Failing to acknowledge that she had been in a position to act as minister for children. Failing to pay attention to Casey's comments that successive governments had failed to keep children safe for 15 years. Failure even to say sorry on behalf of her party to the victims. She couldn't even manage that. A grim afternoon in Westminster had just got a shade grimmer.
The Independent
an hour ago
- The Independent
Stocks up on hopes of thaw to Middle East tension
The FTSE 100 ended higher on Monday, just shy of a record closing high, on reports Iran is willing to resume nuclear talks with the US. The FTSE 100 index closed up 24.59 points, 0.3%, at 8,875.22, just shy of its record closing peak of 8,884.92 posted last Thursday and the all-time high of 8,908.82, recorded in March. The FTSE 250 ended 110.69 points higher, 0.5%, at 21,284.02, and the AIM All-Share rose 2.71 points, 0.4%, at 764.14. In European equities on Monday, the CAC 40 in Paris closed down 0.8%, as did the DAX 40 in Frankfurt. Stocks in New York were higher at the time of the London close. The Dow Jones Industrial Average was up 0.9%, the S&P 500 index was 1.1% higher, and the Nasdaq Composite climbed 1.5%. 'Despite a weekend of violence between (Israel and Iran), investors showed no signs of panicking,' observed Russ Mould at AJ Bell. The conflict between Israel and Iran has entered its fourth day as Israel's military warned that it had detected a new missile threat, saying its defensive systems were working. The two countries have been exchanging fire since the Israeli military began striking military and nuclear targets in Iran on Friday. But a report in the Wall Street Journal offered some hope. It said Tehran is signalling it wants to de-escalate hostilities with Israel and is willing to resume nuclear talks with the US as long as Washington does not join the Israeli attacks. A similar report by Reuters said Iran conveyed the message through Qatar, Saudi Arabia and Oman. The price of Brent oil gave back some of Friday's heavy gains, trading lower at 72.79 dollars a barrel late on Monday from 73.61 dollars on Friday. Despite the calmer mood, Mr Mould cautioned: 'The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.' The pound was quoted slightly higher at 1.3594 dollars at the time of the London equities close on Monday, compared to 1.3591 dollars on Friday. The euro stood higher at 1.1591 dollars against 1.1560 dollars Against the yen, the dollar was trading at 144.09 yen, up compared to 144.01 yen. The yield on the US 10-year Treasury was quoted at 4.43%, widened from 4.42%. The yield on the US 30-year Treasury was quoted at 4.92%, stretching from 4.90%. This week sees interest rate decisions in the US, UK, Japan, Switzerland, Sweden and Norway. The Federal Reserve, Bank of Japan and Bank of England are all expected to leave interest rates unchanged. Bank of America thinks the Fed's main message on Wednesday at the June meeting will be that it remains 'comfortably in wait-and-see mode'. BofA expects the summary of economic projections to show just one cut this year and 75 basis points in 2026. 'For 2025, we think growth will likely be marked down and inflation will likely be revised up. Given elevated uncertainty, we don't expect forecast changes for 2026 and beyond,' the broker adds. 'Investors should focus on Powell's take on the softening labour data, the recent benign inflation prints and the risks of persistent tariff-driven inflation.' In the UK, the BoE's Monetary Policy Committee is also likely to leave rates on hold despite recent weak economic figures. 'Soft data flow will likely not be enough to tip the majority of the MPC to a cut at this meeting, but should allow for three dissenters and a change in tone around the balance of risks,' Barclays said. The broker pencils in a 6-3 vote in favour of the status quo with arch-dove Swati Dhingra, Alan Taylor and BoE Deputy Governor Dave Ramsden preferring a 25bps cut. Deutsche, ING and BofA look for a 7-2 vote split but do not rule out a more dovish rate make-up. Deutsche expects the MPC to 'open the door' to an August rate cut. On the FTSE 100, Entain jumped 15% after BetMGM, its US joint-venture, said earnings for the full-year are now expected to be stronger than previously forecast. BetMGM is expected to achieve earnings before interest, tax, depreciation, and amortisation of at least 100 million dollars in 2025, the Ladbrokes owner said. Net revenue of at least 2.6 billion dollars is now expected. BetMGM's net revenue in 2024 amounted to 2.10 billion dollars It suffered an Ebitda loss of 244 million dollars. The gambling firm noted the previous guidance was for BetMGM to be 'Ebitda positive' this year, and for it to achieve revenue between 2.4 billion dollars and 2.5 billion dollars. Irish broker Davy had forecast an Ebitda of 12 million dollars. 'This is an encouraging update, particularly in the context of more visibility of an inflection into profitability,' Davy said. 'Speaking to the company, it noted that the better performance has been driven by a wide range of product improvements and that this has also facilitated more efficient generosity spend. 'The strong net revenue growth has been due to both iGaming and online sports, which has been driven by handle growth. The company clarified that this is not win margin-driven.' M&G gained 2.0% as Barclays upgraded to 'overweight' from 'equal weight' while Aviva ended flat as the broker moved the insurer the other way. 'In our view, M&G's growth potential is not reflected in its current share price, while Aviva's share price exceeds our price target that includes the potential impact of Direct Line' Barclays said in a research note. Costain rose 7.3% as it announced a £10 million share buyback after reporting its defined benefit-pension scheme was in surplus for the second consecutive year. The first £5 million tranche will be run by Investec and the second by Panmure Liberum. The first tranche will commence immediately, with the second tranche anticipated to end no later than December 23 2025. Gold was quoted lower at 3,403.81 dollars an ounce against 3,427.50 dollars. The biggest risers on the FTSE 100 were Entain, up 114.6 pence at 866p, IAG, up 10.6p at 327.3p, Informa, up 23.6p at 799.8p, Standard Chartered, up 34.5p at 1,180.0p, and Ashtead, up 115.0p at 4,382.0p. The biggest fallers on the FTSE 100 were Endeavour Mining, down 78.0p at 2,322.0p, Diageo, down 44.0p at 1,906.0p, Fresnillo, down 28.0p at 1,417.0p, GSK, down 26.0p at 1,485.5p, and AstraZeneca, down 168.0p at 10,818.0p. Tuesday's global economic calendar has the Bank of Japan interest rate decision overnight, US retail sales, export and import prices and industrial production figures. The domestic corporate calendar on Tuesday sees full-year results from industrial equipment hire firm, Ashtead and a trading statement from outsourcer Capita.
The Independent
2 hours ago
- The Independent
Trump claims it ‘was a mistake' to remove Putin from G7
At the G7 summit, Donald Trump falsely accused Justin Trudeau of ousting Russia from the G8 in 2014, despite Trudeau not becoming Canada's Prime Minister until November 2015. Trump claimed that Russia's exclusion from the G8, which he attributed to Barack Obama and Trudeau, was a mistake that contributed to the current war, and that if he were president four years ago, the war wouldn't be happening. The decision to suspend Russia's membership from the G8 was a collective decision by the other G7 members in response to Russia's invasion and annexation of Crimea in March 2014. Trump insisted that Putin was "very insulted" by his ouster from the G8 and now only wants to speak with him. Canadian Prime Minister Mark Carney, who took office in March following Trudeau's resignation, intervened to end the press session and begin the meeting to address critical issues.
