3.27pm: Trump focused on strong-arm tactics rather than diplomacy
Donald Trump floated a new plan to reopen the Strait of Hormuz, reports AP, citing a senior official.
Under the US president’s plan, Washington would continue its Iran blockade, while coordinating with allies to try to stop Iran from blocking energy shipments in the Gulf.
Trump is “weighing multiple diplomatic and policy options” to end Iran’s grip on the Strait of Hormuz, the report said.
2.56pm: Wall Street lopsided
A lopsided start on Wall Street.
The Dow has opened up 0.8% and the Nasdaq down 0.2% with the S&P in the middle, up 0.1%.
Dragging down the Nasdaq are falls of 9.3% for Meta Platforms and 3.8% for Microsoft.
Over on the Dow, just over half the 30 stocks are in green, led by an 8.3% leap for Caterpillar, followed by sub 2% gains for Walmart and Verizon.
2.20pm: US stocks and lessons from the 1979 Iran crisis and war
US stock futures are in green, seemingly buoyed by earnings from three of the four ‘Magnificent Seven’ tech giants that recieved a mixed welcome, overshadowing concerns about a further surge in oil prices.
Dow Jones, S&P 500 and Nasdaq futures are all up around 0.5-0.6%.
The tone is being set by the busy round of after-hours tech earnings, with Apple to come after-hours tonight, along with Wester Digital and SanDisk.
Commenting on the big tech earnings, Kenny Polcari at Slatestone says: “”Mamma mia – oh what a night…. Four of the most valuable companies on the planet all stepping up to the plate—and for the most part? It was OK – it was not the disaster that Berbee tried to make it out to be in Tuesday’s WSJ article.”
Microsoft Azure growth accelerating to 40% is “what the AI bulls needed”, with the stock quoted down 2% after it has rallied 19% since the start of April, so traders are “taking profits”.
Amazon “blew the doors off”, with its cloud arm AWS growing 28%, the fastest in 15 quarters, before the CEO “drops the mic” with the news of massive future AI demand with OpenAI lining up capacity.
Alphabet “lit it up”, with Cloud over $20B growing 63% (“that’s not a typo”) and margins expanding.
With Meta disappointed, Polcari says “three out of four delivered exactly what the market needed to hear: AI demand is real; Cloud growth is accelerating and the spending – while massive – is being justified (for now)”.
Meta “was your reminder, the market will not blindly reward spending without clean execution. So yes, the AI trade is still intact, but the bar is high.”
Polcari notes that “everyone’s staring at oil this morning – and they should be. Because what’s happening right now? It’s not new. It’s a rerun (think history repeats itself) — and if you don’t understand the late 1970’s, you’re gonna miss the message.”
He notes that 1979’s Iranian revolution turned the global oil market “upside down”, with the supply shock seeing prices double, and then it got even worse, with the hostage crisis, massive geopolitical tension as “the world realizes this isn’t a short-term disruption — this is structural instability in the Middle East. Oil doesn’t just rise… it stays bid” and then the Iran-Iraq war breaks out in 1980, with more supply disruption and more uncertainty.
“It fed directly into inflation, double digits. It crushed confidence. It slowed growth. That’s how you got stagflation.”
Back then, the Fed, led by Paul Volcker, whacked rates up to 20% to break inflation, which was running at 13%. “It worked… but it broke the economy in the process. Painful recession. Unemployment north of 10.8% by late 1982.”
1.44pm: Two to three BoE hikes this year ‘seems fair’
The MPC’s guidance and individual comments, for economist Rob Wood at Pantheon Macroeconomics, signal “two-to-three rate hikes this year, dependent on energy prices of course”.
He adds: “Most MPC members were open to hikes if oil prices remain elevated and the MPC’s Scenario B, which a majority of the Committee place most weight on, envisages between two and three rate hikes by year-end.
“Even the most dovish Scenario A has two hikes this year.
“But the market was already pricing nearly three rate hikes before today, and the MPC—with the exception of Huw Pill—failed to guide strongly to a June rate hike.
“Indeed, the Committee suggest they have time to wait given tighter financial conditions. That lack of urgency likely contributes to the market reacting by cutting rate hike expectations.
“Two-to-three hikes this year seems fair to us.”
1pm: Housing market trundling along, HMRC data shows
UK property transactions ticked up in March, with residential deals rising 1% month-on-month to 104,070, the highest level since March last year.
Activity remained sharply lower year-on-year, down 41%, reflecting a surge in transactions ahead of stamp duty changes in April 2025.
Non-residential transactions also improved on the month, up 4% on a seasonally adjusted basis. The data reflects completions agreed several months earlier, meaning it may not fully capture current market conditions.
A small rise in house sales “is a positive sign that activity is holding up despite renewed cost-of-living challenges,” says Nicky Stevenson at estate agent Fine & Country.
“Movers are still progressing this spring, even if many are taking a little longer to commit, expecting greater flexibility on price.”
As these figures reflect completions, the data typically lags agreed sales by two to four months.
“With this in mind, the ongoing headwinds affecting affordability may need a little longer to trickle down to the market,” says Stevenson.
“Overall, the scene is steady and functioning. Buyers are active, but they’re more considered, and transactions will flow best where expectations are realistic, and pricing reflects local conditions.
“With seasonal momentum building and more movers engaging after winter, the underlying picture remains encouraging.”
12.38am: BoE right to wait and see
Some initial reaction to the BoE decison.
As markets had it right, “what is more interesting is the direction of travel,” says Jonathon Marchant, fund manager at Mattioli Woods.
“Unlike the ECB, where a hike is being priced for the next meeting, the Bank of England has somewhat more room to manoeuvre.
“At 3.75%, rates are higher in relative terms, and the argument for cuts — when the time is right — is easier to make in London than in Frankfurt.”
That said, he acknowledges that the UK is clearly not insulated from what is happening in the Middle East, and consumers are already seeing higher prices at the petrol pump, which is reflected in soft retail sales numbers and anaemic GDP growth.
Market analyst Neil Wilson at Saxo, finds the decision “appears justified as no one knows how long the crisis in the Middle East will last nor how long this energy supply shock will feed into durable inflationary pressures”.
He notes that the Bank is mindful of inflation, but with recent labour market data having softened, it does not suggest second-order effects of wage price spirals.
“The Bank of England ought to look through this temporary supply shock and wait a while longer before it thinks about thinks about raising rates. While inflation has ticked up due to motor fuel prices, we need more time to see the impact on broader inflation.”
He says: “Hikes now will guarantee recession, and I don’t think the market is correct to price in hikes this year.
“That doesn’t mean the outlook for gilts is great – political and fiscal risk premia are lurking.”
12.05pm: BoE holds
The Bank of England’s Monetary Policy Committee voted by a majority of 8–1 to keep interest rates unchanged at this motnth’s meeting, with the Bank Rate at 3.75%.
One member, Huw Pill, voted to increase the base rate 0.25 percentage points.
“The conflict in the Middle East means that prospects for global energy prices are highly uncertain,” the MPC says in a statement.
“Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably.
“The policy stance required to achieve this will depend on the scale and duration of the shock, and how it propagates through the economy.”
The MPC also published its April Monetary Policy Report, which it says sets out three scenarios that help to illustrate a range of possible outcomes for the UK economy.
CPI inflation has increased to 3.3% last month and is seen as “likely” to be higher later this year as the effects of higher energy prices pass through.
“There is a risk of material second-round effects in price and wage-setting, which policy would need to lean against. But the labour market continues to loosen, and a weakening economy could contain inflationary pressures. Financial conditions have tightened since the conflict began, which will help to reduce inflation over time,” the statement continued.
“Taking all the risks to the economic outlook into account, the Committee judges that it is appropriate to maintain Bank Rate at this meeting.
“The Committee will continue to monitor closely the situation in the Middle East and how its impact propagates through the economy. The Committee stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.”
11.46am: Ceres supported by deal between partners
Ceres Power shares have risen to a new four-year high this morning, extending a remarkable run that has seen the solid oxide fuel cells (SOFCs) developer’s stock more than double in the past month, valuing the company at £1.24 billion.
Today’s catalyst was the announcement of an infrastructure partnership between two existing partners, Taiwan giant Delta Electronics and British Gas owner Centrica, targeting the data centre market and other energy-intensive industries across the UK and Europe with off-grid energy generation using Ceres SOFCs.
Delta Electronics, an existing Ceres manufacturing licensee, while the collaboration with Centrica is based around accelerating SOFC deployment.
Ceres itself is not a direct contractual party to the Delta-Centrica agreement, and the announcement disclosed no financial terms, volumes, or deployment timelines.
But the partnership supports what Ceres describes as a licensing-led revenue model, under which commercial roll-outs by manufacturing partners generate royalty income for the company rather than requiring direct capital deployment.
Peel Hunt retained a ‘sell’ recommendation, with analyst Sam Wahab saying this is “based on timing and valuation considerations, not a lack of conviction in the underlying technology.
“We believe Ceres remains a high-quality platform with credible partners and a robust IP position. However, the share price increasingly reflects an acceleration in commercial scale, royalty income, and cash generation that, in our view, exceeds near-term execution visibility.”
11.15am: Bank of England and ECB both set to hold rates steady
The Bank of England decision is expected at midday, with the widespread market view being that the monetary policy committee will hold the base rate at 3.75%.
Rather than the unanimous vote last month, some dissenting committee members might be expected to vote for a rise in interest rates back to 4%.
Alongside the MPC decision, the bank will also publish new forecasts.
Economist Jack Meaning at Barclays says: “We think it is highly likely that last month’s uncommon unanimity on the committee is broken, with two dissenters preferring a 25bp hike.”
He sees the forecasts pointing to a significantly higher near-term profile for headline CPI inflation, driven by energy prices, with a peak of 3.5% in the third quarter of this year, before falling back to 2.4% by the first half of 2027.
GDP growth forecast may see a strong print for Q1, with downward revisions to subsequent months stemming from the conflict in the Middle East and the associated terms of trade shock.
“We expect the common guidance from the committee to be focused on second-round effects,” says Meaning, with a stress on risks of more persistent inflation due to a more protracted energy price shock, with structural changes in price and wage setting behaviour, balanced by less persistent inflation due to the backdrop of labour market and broader economic slack.
“Beyond this, we expect the MPC to remain noncommittal about future meetings, highlighting the extent of uncertainty along multiple dimensions, but also stressing that it stands ready to act in coming meetings should it feel the evolving outlook requires it.”
Market analyst Neil Wilson at Saxo agrees there is “likely to see some hawkish dissenting voices calling for a hike” and the MPC to “sound mindful of inflation” but that recent labour market data has softened and does not suggest second-order effects of wage price spirals.
“This is not 2022 – the labour market is in a far worse place, workers lack the bargaining power they had then, rates are already restrictive”, he says, with none of the huge post-pandemic demand impulse that also contributed to prices and inflation expectations four years ago.
“The last meeting indicated that even dovish policymakers were thinking about hikes and there was a hawkish repricing in gilt futures that Andrew Bailey pushed back against.
“I don’t see how all that much has changed – the Bank of England ought to look through this temporary supply shock and wait a while longer before it thinks about thinks about raising rates.”
The European Central Bank is also expected to leave rates on hold today.
10.39am: Brutal stagflation shock in prospect as EU inflation spikes
Eurozone economic growth remained sluggish in the first quarter, with GDP rising just 0.1%, as stronger performances in countries such as Germany and Spain offset flat output in France.
German GDP expanded 0.3%, while Spain grew 0.6% and Ireland shrank sharply.
At the same time, eurozone inflation picked up to 3% in April from 2.6% the month, driven largely by a renewed surge in energy prices, up 10.9% year-on-year.
Core inflation dipped to 2.2% from 2.3%, with both measures in line with consensus forecasts.
Services inflation eased slightly, while food and goods prices showed modest increases, highlighting persistent but uneven price pressures across the bloc.
“These data, combined with this morning’s GDP figures and other releases, suggest that the ECB has shifted from being ‘in a good place’ in early 2026 to facing a brutal stagflation shock,” says Claus Vistesen at Pantheon Macroeconomics.
“It will be difficult for Ms. Lagarde to strike a balance today, but she will defer to the June forecasts as the key pivot for the Bank’s next move.”
He adds: “Faced with a trade-off between the near certainty that inflation will drift further from target in the June forecasts and uncertainty over the hit to growth, we still think the ECB will hike twice over the summer, by 25bp in June and July.”
Policymakers will then hope to wait out the inflation shock, he adds, with his baseline forecasts assuming they will succeed.
“Risks, however, are tilting towards more aggressive near-term tightening, followed by cuts next year to offset an economic slowdown, or potentially a recession.
“At this point, we expect real activity to be squeezed while the nominal side of the economy holds up, favouring a sustained net tightening of monetary policy. Loose fiscal policy is also key, both in preventing a recession and in supporting tighter policy by the ECB.”
10.16am: Endeavour raises returns outlook
Shares in Endeavour Mining are up 4% after the gold miner signalled it could more than double its minimum shareholder returns commitment for 2026.
The operator of a portfolio of mines across West Africa said that at prevailing gold prices, it expects total returns to shareholders to significantly exceed the $1 billion minimum dividend underpinning its 2026-2028 programme, with the potential to more than double it.
Endeavour also reported record adjusted EBITDA of $880 million for the first quarter of 2026, up 29% on the preceding quarter, alongside record free cash flow of $613 million, equivalent to $2,176 per ounce produced.
9.44am: Calm is dissipating
Markets had shown “relative calm” over the Iran war in recent weeks but this has started to dissipate, “with oil prices creeping higher on fears a timely resolution to the conflict is slipping away,” says AJ Bell’s Russ Mould.
The Footsie is being helped oil and gas heavyweights and other strong gainers, but elsewhere in Europe there is some heavy selling, with France’s CAC down 1% and Germany’s DAX dipping 0.2%.
This is likely to reflect the threat of an energy price shock creating wider inflationary pressures around the globe.
With all the other things going on, I’ve not yet mentioned that the US Federal Reserve did not change interest rates at its meeting yesterday.
The final meeting for Jerome Powell as Fed chair “was an eventful one”, says Mould, despite the lack of change on headline interest rates, as Powell insisted he would stay on as a governor until 2028 after surrendering his current role.
Moreover, while President Trump’s appointee, Stephen Miran again voted for a rate cut – three other members objected to language suggesting future cuts.
9.09am: FTSE climbing now
The FTSE 100 is starting to climb now, up 29 points to 10,242.
Water companies are leading the way, with United Utilities surging 11.2% to a new all-time high on its plans to widen investment into housing, data centres and clean energy.
It is dragging Severn Trent along with it, up 5.9%, presumably as investors think it could follow with similar moves.
Analyst Ahmed Farman at Jefferies says today’s £800 million equity raise, circa 9% of market cap, to support a material uplift in investment to £11.5 billion from £9 billion, underpins an upgraded financial framework, with management now targeting 10-11% regulatory returns, around 100 basis points above prior guidance.
“At first glance, we see the higher growth, coming with robust balance sheet as positive for UU and the broader water sector.”
Other utilities are up too
Rolls-Royce is up 4.2% after its quarterly results.
Shell and BP are supporting the wider index too, boosted by the oil price.
8.53am: Whitbread’s new plans
Whitbread shares have fallen 5.6% after the Premier Inn hotel chain owner unveiled a sweeping five-year strategic plan designed to transform the business into a higher-margin, lower capital-intensity operation, following a detailed review prompted by surging employment costs and business rates.
The move comes amid pressure from US activist investor Corvex.
However, says analyst Anna Barnfather at Panmure Liberum, “the key focus today is the FY27E outlook, with high inflation driving further downgrades, and the outcome of the business review”.
The review includes a full exit from branded restaurants, which is expected to reduce revenue by £140-160 million and profit by £40 million during the transition period, resulting in a £185 million impairment.
Management expects these actions to deliver £275 million of incremental PBT by 2031 and generate £2 billion of free cash flow for shareholder returns.
8.33am: Oil surge on reports US eying Iran escalation
Shell and BP shares are up 0.7% and 0.4% after crude oil prices surged to their highest levels since the US and Israel opened war on Iran.
Brent crude front-month futures soared from $110 on Wednesday to above $126 a barrel in the early hours of Thursday, before easing slightly to $122.
This followed reports suggesting the US was planning to extend the blockade on Iran and was considering an escalation in the conflict.
Overnight, Axios reported that President Trump is set to receive a new briefing today on potential plans for further military action, where a “short and powerful” wave of strikes would aim to break the negotiating deadlock.
The ongoing closure of the Strait of Hormuz and potential escalation have fed growing fears about an extended stagflationary shock, said macro analyst Henry Allen at Deutsche Bank.
“The market impact of that is already clear, particularly for sovereign bonds,” he adds, with UK gilt yields hitting a post-2008 high of 5.07% and German’s bunds rising to a post-2011 high of 3.11%.
8.15am: FTSE opens flat as tug-of-war takes place
The FTSE 100 is searching for direction in early trades, oscillating between small gains and losses – currently flat at 10,213.
It is a tug-of-war between gains, led by United Utilities, up 10.5% on the back of a strategic update.
Others on the front foot include Severn Trent, up 4.6%, then Rolls-Royce, precious metals miner Endeavour, housebuilder Persimmon and lender Standard Chartered.
Persimmon rose after a trading update reassured investors with a 7% increase in private forward sales and an unchanged profit guidance.
At the other end, Weir Group is down 8% after announcing succession plans for its CEO and a first-quarter update.
Whitbread is down 6.4% on the back of its own strategic update.
DCC has dropped 5.7% after rejecting a takeover offer.
8am: Unilever gets off to good start
Unilever is launching a €1.5 billion share buyback today as it posted better-than-expected growth for the first quarter of the year, with volume growth driving a rise in underlying sales.
The owner of consumer brands ranging from Cif and Colgate to Hellman’s and Marmite reported 3.8% underlying sales growth in the first three months of 2026, with volumes up 2.9% and pricing contributing 0.9%. Forecasts were for sales growth of 3.65%.
Turnover fell 3.3% to €12.6 billion, reflecting currency headwinds despite positive trading momentum.
For the full year, the company said it expects underlying sales growth at the lower end of its 4% to 6% range and at least 2% volume growth.
7.48am: DCC rejects bid
DCC has rejected the takeover approach from US private equity firms Energy Capital Partners and KKR, which valued the company at 5,800p per share.
The FTSE 100-listed petrol station owner and energy support services group’s board said it had reviewed the approach with advisers and “unanimously and unequivocally” rejected it.
7.32am: Rolls expects to ‘fully mitigate’ Middle East dispruption
Rolls-Royce Holdings says it has made a strong start to 2026 and kept its full-year guidance unchanged thanks to progress with its ongoing transformation plan and “self-help” actions.
Chief executive Tufan Erginbilgic said while the war in the Middle East has created uncertainty for the industry, the group is “taking the necessary actions to support our employees, customers, and suppliers”.
“We expect to fully mitigate the current financial impact of the disruption to our business. We continue to monitor the situation for any future direct and indirect impacts and will take the necessary actions to mitigate them.”
Today is Rolls’s AGM.
7.24am: Big tech earnings ‘good apart from Meta’
Summarising the busy US big tech earnings news flow from last night, market analyst Ipek Ozkardeskaya at Swissquote says Meta Platforms, Microsoft, Amazon and Alphabet’s first-quarter updates after the bell “were overall solid – except for Meta”.
“Microsoft, Amazon and Google posted strong growth in their cloud divisions as they continue to back multiple AI models, effectively diversifying individual risks.
“Amazon, for example, delivered its fastest cloud growth in more than three years, with spending rising above analyst expectations.”
Amazon’s share price fluctuated between gains and losses before bulls took control, driving a 2.7% jump.
Google/Alphabet shares have surged over 7% after it also beat expectations.
Microsoft is up just 0.3% after saying its Azure cloud arm posted 39% growth, which Ozkardeskaya says is “reinforcing the idea that massive AI spending is now translating into revenue.”
Meta slumped 7% after announcing $135-145 billion of spending.
“The issue is positioning,” says Ozkardeskaya, “Meta is essentially a single bet, investing heavily in its own ecosystem, whereas the other three are supplying infrastructure – offering computing power and chips to benefit from the broader expansion of AI. At this stage, Meta looks like a more concentrated and riskier play, especially as competition intensifies.
“Overall, the trend remains positive for AI-exposed stocks. Strong cloud revenue growth continues to validate the AI adoption story, which in turn supports demand for chipmakers.”
Pre-open: FTSE 100 likely to remain in red
The FTSE 100 will probably continue on the back foot on Thursday, amidst continued worries about the impact of higher energy prices as the Bank of England prepares to make its latest policy decision.
Brent crude soared to highs above $120 a barrel overnight, before easing back to $114 this morning (as the futures contract rolls through to the next month), though US WTI crude prices have kept rising, coming close to $110 a barrel this morning – a three-week high.
It comes as Washington insists on maintaining a naval blockade on Iran, which is preventing Tehran from coming to the negotiation table.
Wall Street stocks closed mostly lower, with the Dow Jones pulling back 0.6%, while the S&P 500 and Nasdaq both finished roughly flat.
After the closing bell, Alphabet and Amazon both impressed with their earnings, while Microsoft got a neutral reaction.
Meta slumped 7% after announcing higher spending, now projecting about $135-145 billion.
Asian stocks are mostly lower this morning, with the Hong Kong, Tokyo, Mumbai and Seoul indices all falling more than 1%.
London-listed companies reporting results this morning include Rolls-Royce, Unilever, Whitbread, Persimmon, United Utilities and Evoke.