Equity indices are on course to reclaim their peaks, where they have not already done so. In Europe, Milan, Amsterdam, Madrid and Warsaw all set records yesterday. The continent's major markets, London, Frankfurt, Paris and Zurich, are lagging somewhat, but remain within range. In the US, the venerable Dow Jones led the way, flirting with the uncharted territory of 52,000 points. The S&P 500 and the Nasdaq 100, having almost fully recovered from the semiconductor wobble at the start of June, are also within a whisker of record territory.

In other words, everything is rosy in the garden. Markets are shrugging off bad news and seizing on the good. The probable reopening of the Strait of Hormuz in the coming days has, with apologies for the pun, added fresh fuel to the rally. The enthusiasm surrounding SpaceX's stock-market debut is giving sentiment an extra lift. The deal captures the spirit of the times: everyone thinks it looks a little excessive, but everyone wanted in. Shares in the space group rose 20% yesterday in their second session, after gaining 19% on their first. Its market capitalisation is already approaching Amazon's, a fact unlikely to displease Elon Musk. His rivalry with Jeff Bezos in space is well established.

In the background, the promise of artificial intelligence continues to electrify equity markets. “Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria,” runs John Templeton's famous aphorism. Investors are trying to convince themselves that the optimism phase is not over, and that the AI investment super-cycle will be followed by an AI earnings super-cycle.

On the macroeconomic front, the central-bank parade began overnight. The Bank of Japan raised its main policy rate from 0.75% to 1%, as expected. Japanese rates have not been this high since 1995. And yes, 1% is high for Japan. The country took three decades to emerge from deflation, leaving the Nikkei 225 to wait 35 years before returning to its 1989 level.

The Reserve Bank of Australia, meanwhile, left rates unchanged at 4.35%, in line with forecasts. This is what market-watchers call a hawkish hold. In plain English, the RBA did not move, but struck a firm tone because inflation remains a threat. Its position is awkward because, at the same time, the economy is hardly firing on all cylinders and could do with some monetary support, in other words, a rate cut.

After those two decisions, both in line with expectations, attention now turns to the Fed, which will announce its decision tomorrow evening, against a less tense backdrop now that the US and Iran appear to have reached a compromise. To back words with action, the White House said Donald Trump and JD Vance had signed an electronic copy of a memorandum of understanding with Iran. Speaking from Evian, the US president said Hormuz “is already partially open” and “will be fully open” on Friday.

The Asia-Pacific equity session is a little less euphoric than yesterday's. Japan and Australia are giving up a little ground. South Korea remains supported by chip stocks, up 1.7%. Hong Kong is struggling to regain momentum, with the Hang Seng down 1.6% after a batch of underwhelming Chinese figures on investment, consumption and property prices. Western markets are expected to open on a hesitant note.

Today's economic highlights:

Today's agenda includes: in China, the House Price Index, Retail Sales, Fixed Asset Investment, and Industrial Production will be released; in Japan, the BoJ Interest Rate Decision; in Australia, the RBA Interest Rate Decision followed by its press conference; in Germany and the Euro Area, the ZEW Economic Sentiment Index; in the United States, preliminary Building Permits, Housing Starts, Import and Export Prices, and the API Crude Oil Stock Change. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,319.19
  • Crude Oil (BRENT): US$82.71
  • United States 10 years: 4.47%
  • BITCOIN: US$66,068

In corporate news:

  • Rolls-Royce has secured a multi-billion-pound contract for modular gas turbines with the Swedish firm Videberg Kraft.
  • Standard Life is redeeming £250 million of Tier 3 subordinated debt.
  • Aviva shareholders raise concerns over CEO Amanda Blanc's board role at BP.
  • The German authorities are investigating the stock market battle between Unicredit and Commerzbank.
  • Securitas is targeting 10% annual growth in EPS by 2030.
  • Intesa Sanpaolo has placed a €1.25 billion senior green bond.
  • Anheuser-Busch InBev is investing $20 million in its operations in Missouri.
  • Shareholders of Aviva are concerned about its chief executive’s dual role on the board of BP Plc.
  • Wolters Kluwer is raising funds through a €500 million Eurobond issue.
  • Bankinter is acquiring a Dutch mortgage financing and brokerage platform.
  • EQT is set to sell 31 million Class B shares in Beijer.
  • Telecom Italia is finalising a 1-for-10 share consolidation.
  • Snam is raising €1.5 billion via a two-tranche bond issue.
  • Banco Comercial Português has set the terms of its €500 million Tier 2 capital issue.
  • SpaceX gains a further 20% on its second day of trading, with the share price rising to USD 192.50 for a market capitalisation of USD 2.52 trillion, very close to that of Amazon (USD 2.646 trillion).
  • Microsoft is closing several studios within its Xbox division. The group is also facing a class-action lawsuit from shareholders regarding investments in AI and the growth of Azure.
  • Exxon Mobil is seeking an environmental permit for offshore exploration in Guyana.
  • Applied Materials is launching two new systems for 3D chip assembly.
  • BlackRock is continuing its staff cuts.
  • GE Vernova has signed a cooperation agreement with Venezuela on electricity supply.
  • Dell Technologies has secured a $1.44 billion contract with the US Air Force.
  • Qualcomm is in talks to acquire Tenstorrent, according to The Information.
  • Gilead Sciences has received FDA approval for the additional indication of Yeztugo in HIV prevention.
  • ConocoPhillips is set to sign an agreement with Syria to restart gas production, according to the Financial Times.
  • The CFO of SoftBank’s Vision Fund is leaving the company.
  • The chairman of Fujitsu has resigned over “inappropriate conduct”, according to the company.
  • Main earnings reports today : MHP, Tatton Asset Management, SThree, Accsys Technologies, IG Design.

See more news from UK listed companies here

Analyst Recommendations:

  • Rentokil Initial Plc: Bernstein maintains its outperform rating and reduces the target price from GBX 576 to GBX 565.
  • Frasers Group Plc: RBC Capital downgrades to underperform from sector perform with a price target raised from GBX 720 to GBX 750.
  • Associated British Foods Plc: Citi maintains its sell recommendation and reduces the target price from GBP 14.50 to GBP 14.10.
  • Anglo American Plc: Bernstein maintains its market perform recommendation and raises the target price from GBX 2350 to GBX 2650.
  • Antofagasta Plc: Bernstein maintains its market perform recommendation and raises the target price from GBX 2600 to GBX 2800.
  • Baltic Classifieds Group Plc: JP Morgan maintains its underweight recommendation and reduces the target price from GBP 1.78 to GBP 1.77.
  • Rightmove Plc: JP Morgan maintains its underweight recommendation and reduces the target price from GBP 4.89 to GBP 4.04.
  • Intercontinental Hotels Group Plc: Baptista Research initiates an underperform recommendation with a target price of USD 136.60.
  • Redcare Pharmacy Nv: Oddo BHF maintains its neutral recommendation and raises the target price from EUR 54 to EUR 55.
  • Hemnet Group Ab: Nordea Bank maintains its sell recommendation and reduces the target price from SEK 83 to SEK 70.
  • Lindab International Ab: Nordea Bank maintains its buy recommendation and reduces the target price from SEK 217 to SEK 208.