Trump promotes a diplomatic path to end the Middle East crisis, calling off planned military action against Iran’s energy facilities. Oil prices fell as markets stabilised. Tehran says no talks have occurred with Washington, while the Pentagon positions additional forces in the region.
Trump has escalated pressure on Tehran, warning of action against energy facilities if traffic through the Strait of Hormuz remains blocked. Tehran threatened reciprocal moves on vital infrastructure, while Israel readies increased operations, heightening LNG supply risks within days.
UK borrowing costs have hit an 18-year high as gilt yields top 5%, prompting banks to pull mortgage deals. Traders bet inflation will prove stickier and rates stay higher for longer, lifting swap costs. The squeeze threatens the housing market and piles pressure on the PM and chancellor.
Global markets slid as investors priced in a prolonged energy shock linked to a geopolitical crisis. Oil and European gas jumped, inflation risks mounted and bond yields rose. Central banks cautioned that price pressures may persist, lifting expectations of faster tightening across the West.
US rates were kept on hold, but the Fed signalled it still aims to cut later this year despite a jump in oil prices. Powell said inflation is easing, though geopolitical risks cloud the outlook. Markets read the guidance as steady progress towards loosening, contingent on data.
The head of the US counterterror centre resigned, revealing splits in Trump’s circle over policy on Iran. He said there was no imminent threat and criticised lobbying influence. The departure raises doubts about strategy and pressures Washington and allies to seek restraint.
Angela Rayner is courting City leaders to calm investors, pledging no lurch to the left. She signals Labour will keep to fiscal rules, maintain a predictable tax and regulatory path, and work with business to spur investment and growth while avoiding market shocks.
India says talks with Tehran secured safe passage for two gas tankers through the Strait of Hormuz, showing diplomacy as the best path to ease shipping risks. The US urged China, the UK and France to provide naval support, while Tehran dismissed claims it was seeking a truce.
Wall Street is concerned as crude tops $100 amid a deepening supply squeeze. Investors fear persistent energy costs will lift inflation, pressure households and complicate central bank plans, heightening recession risk. Energy shares rise while broader indices fall.
Crude above $100 and disruptions near Hormuz are handing about $150m a day in extra revenue to a sanctioned petrostate via surging sales to India and China. The windfall tightens its grip on energy markets and challenges UK and allied policy, spurring calls for tougher enforcement and coordination.