The tone shifted on Wall Street yesterday after April inflation came in higher than expected. In market-narrative terms, the figure matters because it turns fears into hard evidence. In recent months, dire warnings about the impact of tariffs had not really materialised, fostering scepticism towards economists, who are always quick to assume the worst. In other words, most investors felt they could safely ignore these signals, seeing them largely as fodder for column inches.

But annual inflation has risen from 2.4% in January to 3.8% in April. Even stripping out the impact of the surge in oil prices, core inflation has reached 2.8%, up from 2.5% in January. That level is becoming a serious concern for the Fed, whose room for manoeuvre is shrinking should it need to support the US economy. Without going so far as to expect a rate rise in the coming months, investors can at the very least bank on an extended hold, a message the bond market has clearly taken on board.

While the economic cost remains uncertain, the political price is already steep for Donald Trump, as we often discuss in this column. The White House has less than six months to persuade Americans to reassess the President's economic record before the midterm elections. That matters because a number of decisions by the US administration may be driven by short-term political imperatives, with inevitable consequences for financial markets. Kevin Warsh, whose appointment as Fed chair has just been confirmed by the Senate, will have his hands full from his first monetary policy meeting in the role, scheduled for 16 and 17 June.

The inflation release pushed Wall Street lower yesterday, although the indices trimmed their losses into the close. The Dow Jones even finished in positive territory, helped by its old-economy stalwarts. Healthcare, one of the biggest laggards on the stock market in early 2026, was a standout performer. The sector was lifted by the removal of FDA commissioner Marty Makary, whose controversial decisions had angered pharmaceutical companies and some sections of the public. Wall Street was reassured to see that the drug industry still has enough clout to defend its interests against politicians. At the same time, investors lightened up on their favourite trade of the year: buying anything even remotely linked to semiconductors. The Nasdaq 100 accordingly fell 0.9%, with its chip stocks down 3%.

In Europe, Switzerland was the only place to hide from the prevailing gloom. Like the Dow Jones, the SMI was able to lean on old-economy names, Novartis and Nestle, to eke out a 0.1% gain. Elsewhere, the picture was much bleaker. In Paris, the CAC 40 lost 1%, dropping back below the symbolic 8,000-point mark. Local AI names, STMicroelectronics and Schneider, fell sharply, mirroring profit-taking in the US. TotalEnergies gained 1.8%, supported by Brent crude holding at around $105 a barrel. In Germany, the DAX moved further away from 25,000 points, falling a heavy 1.6%. The German index, like its Paris counterpart, is now down 2% in 2026. Europe remains on the front line of the oil-price shock.

The daily update on Iran brings little new: the Americans and Iranians remain at odds over the terms of a lasting peace that would allow the Strait of Hormuz to reopen. In a rather ironic twist, Washington is now lobbying for a UN Security Council draft resolution to pressure Iran into restoring maritime traffic through the strait.

The Middle East will temporarily give up the geopolitical spotlight to the summit between Donald Trump and Xi Jinping in Beijing. According to the latest rumours, the White House intends to prioritise trade talks. But experts believe Iran will also be a sticking point between the two powers. In the UK, Prime Minister Keir Starmer remains in office despite calls for him to resign from within his own party. The cost of British debt has jumped to its highest level since the end of the last century.

Across Asia-Pacific markets, there is no obvious theme. Taiwan is down 0.8% and Australia 0.5%, marking a fourth consecutive decline in Sydney. Other markets are higher. South Korea is rebounding 2.6% after losing as much the previous day. Japan is up 0.8% and India is flat. In China, Hong Kong and Shanghai are posting modest gains. European markets are expected to open higher, while Wall Street futures are pointing up.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,698.48
  • Crude Oil (BRENT): US$106.18
  • United States 10 years: 4.46%
  • BITCOIN: US$81,003

In corporate news:

  • Veterinary group CVS Group targeted by activist investor Converium Capital, according to the FT.
  • Arctial, the Rio Tinto-backed aluminium smelter project in Finland that could help expand European capacity, is aiming to produce its first hot metal in the second half of 2029, chief commercial officer Maxime Vandersmissen told Reuters.
  • Allianz reported operating profit of €4,517 million in the first quarter.
  • Siemens AG announced a decline in net income for the first half of the year despite an increase in revenue.
  • Merck KGaA reported a decline in profit and revenue in the first quarter.
  • ABN Amro exceeded expectations in the first quarter thanks to cost reductions.
  • Adecco beat forecasts, driven by rising revenue.
  • SMA Solar expects to hit the top of its revenue and EBITDA guidance ranges for 2026.
  • InPost beat Q1 operating profit expectations despite Yodel integration costs.
  • Proximus beat expectations in the first quarter thanks to cost cuts and domestic growth.
  • Ceconomy anticipates slight sales growth in 2025/26 and adjusted EBIT of around €500 million.
  • Tele2 announces the departure of its CEO Jean-Marc Harion.
  • Fitch upgrades Raiffeisen's rating to “AA-”.
  • Brown-Forman has rejected Sazerac's takeover bid of $32 per share, following the collapse of its merger with Pernod-Ricard.
  • JPMorgan is set to reshuffle the leadership of its investment bank as part of a broader restructuring, according to the FT.
  • Franco-Nevada reports record results for the first quarter of 2026.
  • Jensen Huang of Nvidia will ultimately join Donald Trump's trip to China.
  • The Wendy's Company surged 17% following rumors of a delisting plan orchestrated by Trian Fund Management.
  • Microsoft has generated more than double its $13 billion investment in OpenAI in revenue, according to The Information.
  • Anthropic is in talks to acquire Stainless, the development tools startup used by OpenAI and Google, The Information reveals. Google is reportedly in talks with SpaceX to launch orbital data centers, according to the WSJ.
  • Samsung Electronics and its union failed to reach a major wage agreement, causing the company's stock price to plummet.
  • Today's key earnings reports: Cisco, Robinhood, Manulife, Siemens AG, Allianz SE, Deutsche Telekom, Zurich Insurance, Merck KGaA, EON, RWE, Nebius, Talanx, ABN Amro, Snam, Verbund, Hapag-Lloyd, Porsche Automobil Holding, Mowi, Brenntag…

See more news from UK listed companies here

Analyst Recommendations:

  • Bytes Technology Group Plc: Berenberg maintains its hold recommendation and reduces the target price from GBX 390 to GBX 360.
  • Wizz Air Holdings Plc: Panmure Liberum maintains its sell recommendation and reduces the target price from GBX 525 to GBX 480.
  • Cohort Plc: Shore Capital initiates a Buy recommendation with a target price of GBX 1350.
  • Astrazeneca Plc: Jefferies maintains its buy recommendation and raises the target price from USD 243 to USD 245.
  • Hsbc Holdings Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from HKD 150.50 to HKD 155.20.
  • Icg Plc: Jefferies maintains its buy recommendation and reduces the target price from GBX 2900 to GBX 2500.
  • Compass Group Plc: Citi maintains its buy recommendation and raises the target price from USD 40.84 to USD 40.90.
  • Lancashire Holdings Limited: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 623 to GBX 612.
  • Standard Chartered Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from HKD 195 to HKD 221.
  • Schindler Holding Ag: BNP Paribas maintains its neutral recommendation and reduces the target price from CHF 284 to CHF 281.
  • Kering: BNP Paribas maintains its neutral recommendation and reduces the target price from EUR 300 to EUR 285.