Let us start with the Fed. Last night played out in two stages. First came the decision at 7pm. Unsurprisingly, the Fed left rates unchanged. The real focus was on the updated economic projections. The central bank raised its growth and inflation forecasts for 2026, yet the median rate path still points to a cut this year, just as it did in December. On the face of it, that was a fairly dovish outcome, tilted towards lower rates, which markets would normally welcome. Even so, the reaction was muted at best.

Things shifted once the chairman took the stage. In his penultimate press conference, Jerome Powell was quintessentially Jerome Powell: purple tie, studied ambiguity about his future, and trademark caution on monetary policy. In the end, his remarks were interpreted as relatively hawkish, suggesting a firmer rates stance and reducing the likelihood of monetary easing. Markets are now no longer pricing in any rate cuts in 2026.

For the first time last night, Powell was willing to say a little more about his future. He said he would remain in post until his successor had been confirmed by the Senate, which is hardly a bombshell. More significantly, he said he would stay on the Fed's board until the Department of Justice investigation concerning him had been fully resolved. That is genuine news. For markets, it means a hawkish voice will remain in place for longer. The irony is that Powell has never really been seen as a hawk. But he is viewed as more orthodox than any replacement appointed by Trump would likely be. The S&P 500 ended the session down 1.4%, while the Dow Jones fell 1.6%. Treasury yields rose by several basis points, with the US 10-year moving close to 4.3%.

Overnight, it was the Bank of Japan's turn to deliver its decision. Unsurprisingly, the BoJ left rates unchanged. Economists had been expecting further rate increases in 2026, but the conflict in the Middle East is complicating the outlook. Japan remains heavily dependent on hydrocarbon imports and could therefore feel the full force of both the inflationary shock and the hit to growth.

Japan and the United States remain at the centre of attention today, with the Japanese prime minister expected at the White House. Sanae Takaichi said she was expecting an "extremely difficult" meeting. The visit comes after Donald Trump appealed over the weekend to several countries, including Japan. The US president had asked for help reopening the Strait of Hormuz. But no country responded positively to the request, prompting irritation from the White House, with Trump later insisting that the United States did not need any help anyway.

In the Middle East, the fighting continues. Yesterday, oil prices pushed higher again after Iran reported US-Israeli strikes on gas facilities. Until now, Iranian energy infrastructure had been relatively spared. Overnight, Iran retaliated by targeting gas and oil fields, with missiles aimed at Qatar and Saudi Arabia. This morning, Brent crude is trading above $110 a barrel. That latest escalation sent European indices sharply lower, leaving markets firmly in the red on Wednesday. The Euro Stoxx 50 closed down 0.6%, while the Dax lost 1%.

Today, the central bank parade continues. The Swiss National Bank and Sweden's central bank will announce their decisions at 9.30am, followed by the Bank of England at 1pm and the ECB at 2.15pm. Markets are expecting four hold decisions. The SNB already has rates at zero, but still faces the same problem: the strength of the Swiss franc. A return to negative rates therefore cannot be ruled out further ahead. At the Bank of England, a rate cut had been expected as early as March. But the conflict in the Middle East may now have ruled out that prospect altogether. As for the ECB, markets are now pricing in two rate increases in 2026, whereas the consensus view at the start of the year was for an extended pause.

So the focus today is squarely on central banks, as it can hardly be otherwise, but also on energy prices. The Israeli strike and the Iranian retaliation on the South Pars-North Dome gas field have sent both oil and gas prices sharply higher. As the damage to production facilities steadily worsens, any return to normal is becoming increasingly difficult. Europe is likely to bear the brunt, because the United States is energy self-sufficient and the White House can move to contain domestic prices without having to worry too much about the state of supply.

Across Asia-Pacific, Japan is down 3.4%, South Korea 2.6%, India 2.2%, Hong Kong 1.8% and Australia 1.7%. Europe is expected to open lower, with volatility picking up again after easing at the start of the week.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,765.58
  • Crude Oil (BRENT): US$113.64
  • United States 10 years: 4.28%
  • BITCOIN: US$69,946.6

In corporate news:

  • Halyk Bank reported a 14.9% increase in 2025 net profit, reaching 1.1 trillion tenge ($2.28 billion).
  • BAE Systems agreed to sell its entire shareholding in Air Astana, consisting of 6.1 million GDRs, at $5.10 per GDR.
  • AstraZeneca announced plans to build a cell therapy manufacturing and supply base and innovation center in Shanghai.
  • Clarkson acquired the US-based crude brokerage firm Link Group for $80 million in an all-cash deal.
  • Oxford Biomedica signed a licensing and option agreement with Australia's Viral Vector Manufacturing Facility for its viral vector platforms.
  • Anglo American priced $2.3 billion in senior notes due 2031, 2033, and 2036 for general corporate purposes. It expects final approval of its merger with Teck Resources toward the end of the year.
  • NatWest Group announced it will redeem £500 million fixed-to-fixed rate notes early on March 28, 2027.
  • Unilever and Kraft Heinz have held talks about merging their food businesses, according to the FT.
  • The CEO of UniCredit has not ruled out improving the terms of his bid for Commerzbank.
  • Iveco is transferring its defense operations to Leonardo.
  • HSBC is reportedly considering cutting 10% of its workforce as part of its transition to AI, according to Bloomberg.
  • Prysmian is considering a new copper plant in Texas and acquisitions, according to Bloomberg.
  • Swissquote reports an increase in net profit and revenue for fiscal year 2025.
  • WISeKey is set to launch the world’s first commercial quantum space cloud.
  • The German government is set to acquire four Meko frigates from TKMS.
  • Banco de Sabadell expects to complete the sale of TSB by the end of April.
  • Micron is down 4.4% in after-hours trading following its quarterly earnings report.
  • SpaceX, xAI, and Tesla plan to continue placing large orders for Nvidia chips.
  • Elliott has reportedly taken a stake in Align, according to several sources.
  • Constellation Energy will sell PJM generation assets to LS Power for $5 billion to finalize the acquisition of Calpine.
  • Walt Disney wants to accelerate synergies between its various divisions, the WSJ reports.
  • A U.S. agency is urging companies to secure Microsoft Intune following the cyberattack on Stryker.

See more news from UK listed companies here

Analyst Recommendations:

  • Diploma Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 6600 to GBX 7500.
  • Jet2 Plc: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 2150 to GBX 2000.
  • Ithaca Energy Plc: Goldman Sachs maintains its neutral recommendation and raises the target price from GBX 210 to GBX 240.
  • Shell Plc: Goldman Sachs maintains its buy recommendation and raises the target price from USD 103 to USD 105.
  • Carnival Corporation & Plc: Morgan Stanley downgrades to overweight from equal weight and reduces the target price from GBX 2450 to GBX 2350.
  • Tesco Plc: Citi maintains its buy recommendation and raises the target price from GBP 5.15 to GBP 5.45.
  • Pan African Resources Plc:
  • Softcat Plc: UBS maintains its neutral recommendation and raises the target price from GBX 1225 to GBX 1350.
  • Informa Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 1240 to GBX 1100.
  • Prudential Plc: UOB Kay Hian maintains its buy recommendation and raises the target price from HKD 138 to HKD 142.
  • Vodafone Group Plc: JP Morgan maintains its underweight recommendation and raises the target price from GBP 0.71 to GBP 0.85.
  • Astrazeneca Plc: Baptista Research maintains its hold recommendation and reduces the target price from USD 104 to USD 102.
  • Legal & General Plc: Goldman Sachs maintains its neutral recommendation and reduces the target price from GBX 263 to GBX 257.