Closing post
Time for a recap.
Donald Trump has turned up the temperature in his trade war, by criticizing the European Union and claiming Japan was being “tough” in negotiations.
Trump claimed that the EU was failing to offer the US a favourable deal, telling reporters:
“We’re talking, but I don’t feel that they’re offering a fair deal yet.
They’re either going to make a good deal, or they’ll just pay whatever we say they have to pay.”
Speaking after leading the G7 leaders’ meeting early, Trump also indicated talks with Tokyo were challenging, saying:
“They’re tough, the Japanese are tough, but ultimately you have to understand we’re just going to send a letter saying ‘this is what you’re going to pay, otherwise you don’t have to do business with us’. But there’s a chance.”
The White House has until 8 July to reach trade deals before its 90-day tariff pause ends.
Trade data from Ireland has shown how pharmaceuticals exports surged this year, in an attempt to front-run new tariffs.
While US retail sales fell in May.
Rachel Reeves has argued that the UK is an “oasis of stability” at a time of global political and economic turmoil.
“In the age of insecurity we live in today, I hope that people are increasingly looking at Britain and seeing an oasis of stability where we have a sustainable politics, a stable economy and also tough, robust fiscal rules.”
She was speaking just hours after Keir Starmer and president Trump signed off a UK-US trade deal at the G7 summit in Canada.
The Israel-Iran crisis has gripped markets again today.
Shares fell across Europe, and on Wall Street, while the oil price is now up almost 3% today.
The cost of shipping oil from the Middle East to Asia has jumped in recent days….
…as has the cost of insuring shipping in the region.
Raphael Olszyna-Marzys, international economist at J. Safra Sarasin Sustainable Asset Management, says:
The Israel-Iran military conflict has pushed oil prices higher, though markets doubt that it will spark a global economic shock. The main risk for the world economy lies in a potential oil supply disruption that could drive prices sharply higher.
Yet the oil market is currently not tight. A severe escalation, such as Iran targeting Gulf infrastructure or blocking the Strait of Hormuz, remains unlikely at this stage. Still, geopolitical uncertainty is likely to keep a risk premium embedded in oil prices, particularly as Israel appears set on inflicting long-lasting damage on Iran’s nuclear programme, a move that may not be feasible without America’s backing.
And.. the UK government will not be recommended to turn water companies into not-for-profit companies under its “root and branch review” of the sector, review author Sir Jon Cunliffe has said, disappointing campaigners.
Updated
It was also a day of losses on other European exchange.
Germany’s DAX fell by 1%, France’s CAC lost 0.75%, Italy’s FTSE MIB shed 1.36% and Spain’s IBEX closed 1.4% lower.
The Israel-Iran conflict continues to occupy investors’ minds, but hasn’t (yet) provoked a severe reaction.
City consultancy Capital Economics say:
Despite the further escalation in the Israel-Iran conflict over the weekend, the impact on major financial markets has remained relatively limited. Unless there is actual (not just feared) disruption to energy export infrastructure, the economic and financial impact of the conflict globally will probably remain limited.
FTSE 100 ends at one-week low
The London stock market has closed at its lowest level in over a week.
The FTSE 1000 share index has ended the day down 41 points, or 0.46%, at 8834 points – its lowest close since 9 June.
The rise in the oil price hit shares in airline operators IAG (-4.4%) and easyJet (-2.7%), but lifted BP (+1.65%) and Shell (+1.4%).
Oil has continued to climb, putting Brent crude on track for its highest close in four months.
Brent is now up almost 3%, at $75.48 per barrel; it hasn’t ended a session that high since 20 February (however, it was higher during trading on Monday, and last Friday).
Fawad Razaqzada, market analyst at City Index, says:
Markets were slightly rattled after Trump called for the evacuation of the Iranian capital—remarks that injected a measure of alarm into an already volatile geopolitical situation.
Oil prices rose again and down went stocks and future. Meanwhile, Israel pressed on with its bombardment of Iran, prompting a forceful response from Tehran in the form of missile and drone strikes.
Israel war risk ship insurance costs soar after Iranian attacks
War risk insurance premiums for shipments to Israel are as much as three time higher than a week ago as the war between Israel and Iran entered its fifth day, industry sources have told Reuters.
The cost of a seven-day voyage to Israeli ports was quoted between 0.7% to 1.0% of the value of a ship versus around 0.2% a week ago, they said.
Individual underwriters will price risk differently, but this will add tens of thousands of dollars per day for every voyage.
The genetic testing company 23andMe has been fined more than £2.3m for failing to protect the personal information of more than 150,000 UK residents after a large-scale cyberattack in 2023.
Family trees, health reports, names and postcodes were among the sensitive data hacked from the California-based company. It only confirmed the breach months after the infiltration started and once an employee saw the stolen data advertised for sale on the social media platform Reddit, according to the UK Information Commissioner’s Office – which levied the fine.
The information commissioner, John Edwards, called the months-long incident across the summer of 2023 a “profoundly damaging breach”. The compromise of UK data was just a fraction of the wider losses, with the data of 7 million people affected.
Key event
Today’s US retail sales report also shows that spending at restaurants and bars slumped in May by the most in more than two years.
Sales at food services & drinking places fell by 0.9% last month, the report shows, the most since February 2023.
That, as Bloomberg points out, indicates tariffs and geopolitical tensions are making consumers nervous about their finances.
The recent increases in the oil price are starting to be felt by UK motoriests.
Pump prices have increased marginally today, now averaging 132.2p for petrol and 138.3p for diesel, the AA reports. Both are up 0.2p from their low-points last week.
Wholesale costs for both are largely static today, reports the AA, which suspects some retailers will raise their prices sooner than others.
Wall Street has opened lower, as the Israel-Iran conflict weighs on markets.
The Dow Jones industrial average, which tracks 30 large US companies, is down 129 points in early trading, a drop of 0.3%, at 42,385.
The broader S&P 500 index is down 0.35%.
S&P 500 DOWN 19.47 POINTS, OR 0.32 PERCENT, AT 6,013.64 AFTER MARKET OPEN
— First Squawk (@FirstSquawk) June 17, 2025
DOW JONES DOWN 163.34 POINTS, OR 0.38 PERCENT, AT 42,351.75 AFTER MARKET OPEN
NASDAQ DOWN 72.90 POINTS, OR 0.37 PERCENT, AT 19,628.32 AFTER MARKET OPEN
In another sign that the US economy is slowing, industrial production fell 0.2% in May, the Federal Reserve has reported.
That’s the second decline in three months, and a sign that the burst of activity in the first quarter of 2025 has cooled.
The drop was slightly steeper than the 0.1% drop forecast by economists.
Meanwhile in UK retail, Poundland is to shut 68 shops and two distribution centres and aims to close at least 80 more stores, putting more than 2,000 jobs at risk.
The British company, which was sold last week to the US investment group Gordon Brothers for £1, has more than 800 outlets in the UK and the Republic of Ireland employing about 16,000 people. It said it planned to reduce this estate eventually to no more than 650 outlets.
It also wants landlords to cut rents to zero on up to 180 stores – putting the future of those outlets in doubt – while also seeking rent reductions of between 15% and 75% on dozens more stores as part of a restructuring process that it will put to creditors in August.
Poundland is also stopping selling online, ditching its Perks loyalty app, ceasing to sell frozen foods and reducing its range of chilled foods to those elements that make up its £3 meal deals – such as sandwiches – and essentials including milk.
This will lead to the closure of Poundland’s frozen and digital distribution centre at Darton, South Yorkshire, later this year and its national distribution centre at Springvale in Bilston, West Midlands, in early 2026. Two other existing distribution centres in Wigan and Harlow will continue to operate.
More here:
The drop in US retail sales in May could be due to consumers having rushed to buy items earlier in the year, to avoid Donald Trump’s new tariffs on imports.
Here’s Patrick O’Donnell, chief investment strategist at Omnis Investments, explains:
The headline measure of retail sales came in below expectations in May. This was likely driven by the unwind of frontloaded purchases of autos and durable goods ahead of tariffs.
Further weakness is probably in order as more of the tariff-related increase in costs are duly passed onto consumers, weighing on real incomes. However other measures of consumption have been holding up ok. As a result, the FOMC will need to see a steady trend of weaker data before there is any change to their communication, which amounts to a strategy of wait-and-see.
Kathleen Brooks, research director at XTB, says:
The interest rate futures market still see a Sept rate cut from the Fed, so this data may not spur an immediate reaction from the Fed.
— kathleen brooks (@KATHLEENBROOKS) June 17, 2025
After a spate of weaker us econ data recently, if the Fed is not dovish tomorrow we could see a turnaround in bond yields and a boost to the $
US retail sales fall
Newsflash: US retail sales fell last month, and by more than expected, in a sign that consumers may be cutting back.
Retail trade sales were down 0.9% month-on-month in May, new data from the US Census Bureau shows.
Sales at motor vehicle & parts dealers fell by 3.5% in May, the report shows, while takings at building material & garden equipment & supplies dealers were down 2.7%.
🇺🇸 Morning Economic Data:
— Jesse Cohen (@JesseCohenInv) June 17, 2025
*Retail Sales: Big Miss 🔴
*Core Retail Sales: Big Miss 🔴
*Export Price Index: Big Miss 🔴
*Import Price Index: Beat 🟢
US consumer spending is starting to show signs of slowing down. $SPY pic.twitter.com/KcCIe1oiKB
*US MAY RETAIL SALES -0.9% M/M vs. -0.6% M/M est.
— Gordon Johnson (@GordonJohnson19) June 17, 2025
*US MAY RETAIL SALES (Ex. AUTO) -0.1% M/M vs. +0.3% M/M est.
But... the economy is strong, and the hard data is not deteriorating... correct bulls? pic.twitter.com/16FzH8hpFh
Water industry review won't recommend changes to ownership model, despite crisis
The government will not be recommended to turn water companies into not-for-profit companies under its “root and branch review” of the sector, review author Sir Jon Cunliffe has said.
At the launch of the Cunliffe review, the Department for Environment Food and Rural Affairs said that all options - except nationalisation - were on the table, and that a non-profit model such as that used in Wales was being considered.
But Cunliffe has now said the ownership structure is not the problem causing sewage spills, financial mismanagement and water shortages created by a lack of investment, my colleague Helena Horton reports.
He told parliament’s Environment, Food and Rural Affairs committee in Parliament today that the review will not be recommending one ownership structure for the industry.
Cunliffe said:
“If the question is whether we will recommend a wholesale transfer to another [ownership] model, what we won’t do is say we will move the whole sector to a different model. I’m not sure how you get there without spending a very large amount of public money to buy the assets and that’s outside my terms of reference”.
Feargal Sharkey, former Undertones frontman turned water campaigner, said in response:
“I had absolutely no expectations for this commission whatsoever and so far I am yet to be disappointed.
“I fail to comprehend how the interpretation of a root and branch review of the water industry is to completely exclude the issue at the heart of the industry which is ownership of the industry and the financial abuse of the water companies.
“Sir John is refusing to look at this because the government has told him not to.”
When asked by MPs if his report was going to be “tinkering” if it was not recommending an overhaul of how water companies are owned, Cunliffe said: “It’s not tinkering, it’s trying to be evidence based. I don’t think looking at the models, the evidence we have, it’s not a big data set but I don’t think the conclusive evidence is there to make a big change like that.”
He added that the terms of reference set by Defra secretary Steve Reed rule out using public money to nationalise water companies.
Cunliffe said that in the review he will “think about the investors, how they want to take their money out, are they prepared to put more equity in as investment goes up, are they looking for capital gain, are they looking for a stream of dividends over time?” and added he will “look at how do we set rules around that”, adding “it looks maybe weak but I don’t think it is.”
The review will also not make any recommendations on large bonuses and renumeration for water company CEOs:
“I don’t have a problem with there being bonuses for the financial performance provided they are not at the expense of the public good. We are not going to make recommendations on particular renumeration packages for chief executives.
There is a tension here between people taking pay packages they don’t deserve and recruiting and retaining. These are pretty big companies, the penalties for failure are pretty enormous. What we won’t get into is whether this [pay] is excessive.”
Updated
The US stock market is set to fall when trading begins in under two hours.
The main three stock indices are all in the red in the futures markets, as Reuters reports:
At 7:04 a.m. ET (12.04pm BST), Dow E-minis were down 221 points, or 0.52%, S&P 500 E-minis were down 30.75 points, or 0.51%, and Nasdaq 100 E-minis were down 120 points, or 0.55%.
Brad Bechtel of investment bank Jefferies explains that the Middle East crisis is dominating investors’ attention:
The overnight news flow remains robust with plenty of headlines on Iran / Israel, the G7 meeting, which Trump exited early, and other events like the BoJ [it left Japan’s interest rates on hold].
The G7 statement contains a call for peace in the Middle East along with a clarifying statement indicating the G7 agrees that Iran should never have a nuclear weapon. Trump exited the G7 meeting rather quickly as he felt compelled to return to Washington as quickly as possible. The situation in Iran is still quite fluid with both sides still lobbing attacks but Israel claiming aerial superiority.
The question on the media’s mind is around whether the US will provide bunker busters to target the nuclear facilities more aggressively, seemingly a red line for Iran with regard to negotiations. So far the view is that this attack by Israel will be a quick ‘operation’ but we heard the same on Gaza and Ukraine. Iran by far the toughest opponent in the Middle East, so we will see.
Reeves pitches UK as 'oasis of stability'
Rachel Reeves has said she hopes global investors will see Britain as an “oasis of stability,” in an unstable world.
Speaking at the FT Global Borrowers and Bond Investors Forum in London, the chancellor said she hoped her “non-negotiable” fiscal rules, had helped create confidence.
Reeves said:
“In a very uncertain world, the sort of age of insecurity we live in today, I hope that people are increasingly looking at Britain and seeing a sort of oasis of stability, where we have stable politics, a stable economy, and also tough, robust fiscal rules which this government is determined to stick to, as well as a government that’s squarely focused on growing the economy.”
Being interviewed by the FT’s Chris Giles, the chancellor also made clear she hopes the independent Office for Budget Responsibility (OBR) will give the government credit for some of its pro-growth policies, when it makes its autumn budget forecasts.
The OBR is widely expected to revise down its GDP forecasts, given that it is currently more optimistic than almost every other forecaster on productivity.
But Reeves pointed to pro-growth factors. Reminding the audience that the OBR increased its GDP forecast by £6.8bn as a result of the government’s planning changes, she said more was to come, including the government’s planning and infrastructure bill, now going through parliament.
“We are hopeful that will have a bigger impact on the ability to get stuff built in Britain,” she said. She also pointed to the government’s recent trade deals with the US and with India, and the controversial welfare reforms announced in the Spring statement. “We’ll work with the OBR over the summer, but I think there are things in both directions,” she said.
Reeves also defended the government’s decision to cut the aid budget to fund defence - but appeared to suggest that decisions about higher defence spending would be for the next parliament.
Updated
The new Irish pharma export data (see previous post) will add to Trump’s concerns about the trading imbalance with Ireland fuelled by big pharma which last year exported €72bn (£60bn) to the US, with taxes paid in Ireland on drugs consumed in the US.
“The Irish are smart, yes, smart people,” Trump told the taoiseach Micheál Martin in the Oval Office in March, adding:
“You took our pharmaceutical companies and other companies … This beautiful island of 5 million people has got the entire US pharmaceutical industry in its grasps.”
While pharma exports to the US rocketed, today’s Central Statistics Office data shows that overall imports from the US fell 33% in April compared to March and by a similar level, 32%, year on year representing a drop in value of US goods brought into Ireland of €574bn year on year.
Ireland's pharma exports surged in rush to beat Trump tariffs
Ireland’s pharmaceutical industry’s exports to the US rocketed in the first four months of the year as multinationals from Pfizer to Johnson & Johnson rushed to beat Donald Trump’s threatened tariffs.
New data published by the government agency, the Central Statistics Office, this morning showed that exports of medical and pharmaceutical products represented more than 60% of all exports from the country.
They also show that the big push to get medicines across the Atlantic peaked in March, my colleague Lisa O’Carroll in Dublin writes.
CSO statistician Jane Burmanje said the overall increase in exports of pharma for the first four months of the year was more than double the value of exports for the same period of 2024, up from €30.8bn (£26.3) in January-April 2024 to €66.9bn in the first four months of this year.
Exports of pharmaceuticals were down 54% in April compared to March but they were still much higher than in 2024, suggesting continuing efforts to escape import duties which Trump has repeatedly threatened.
Between March and April this year, pharma exports were down €12.8bn (£10.92bn) or by 54% but exports overall were still up €2.1bn (23.6%) to €10.9bn in April 2025 compared to €8.8bn in 2024.
The figures seem to confirm that efforts to beat tariffs were the root cause of a huge spike in Ireland’s economic output data for the first three months of the year.
CSO data earlier this month showed gross domestic product soared by 9.7% as exports to the US ramped up.
Trump has already imposed a 10% tariff on all exports from the EU to the US but the pharma industry is bracing itself for a further stacking of import duties with sectoral taxes threatened on medicines.
As we reported at 10.42am, Trump says those pharmaceutical tariffs are coming “very soon”.
He said:
“We’re going to be doing pharmaceuticals very soon. That’s going to bring all the companies back into America.
It’s going to bring most of them back into, at least partially back in.”
Updated
The Iran-Israel conflict has hit risk sentiment yet again today, report Kathleen Brooks, research director at XTB.
It is difficult to sum up the general mood in the markets on Tuesday. European stocks are extending losses as we move through the European morning session, and US equity market futures also point to a lower open. The oil price is also extending gains towards $74.50, as risk aversion takes hold once more. However, the gold price is only moderately higher. Headline risk from the Iran/ Israel conflict is once again impacting financial markets, after taking a reprieve on Monday.
Stocks are lower after Donald Trump’s abrupt departure from the G7 to monitor events in the Middle East from the White House. This suggests that things could be about escalate in this conflict.
The French President initially said that President Trump was leaving due to a ceasefire between Iran and Israel, but that was rebuffed by President Trump. This has spooked financial markets on Tuesday morning.
European fund managers bullish on Europe
Despite trade war uncertainty, global growth pessimism is fading, according to the latest European Fund Manager Survey from Bank of America.
A net 46% of survey participants think that the global economy is set to weaken over the coming year, down from 59% last month and a record 82% in April, on the back of “a fading tariff threat”, BofA reports.
A soft landing for the global economy is once more becoming consensus, with 66% of investors believing this is the most likely outcome, up from 37% in April.
Investors regard a strong US consumer as the biggest upside risk for global growth, while the Trump policy mix is seen as the largest downside risk.
A trade war that triggers a global recession is considered the biggest tail-risk by around half of the respondents and close to two-thirds think only very little of the tariff shock is already in the price, BofA adds.
On the issue of pharmacautical tariffs, Trump told reporters:
“We’re going to be doing pharmaceuticals very soon. That’s going to bring all the companies back into America.
It’s going to bring most of them back into, at least partially back in.”
Trump: EU not yet offering a fair trade deal
US president Donald Trump has said the European Union was not yet offering a fair deal in trade talks between the United States and the 27-nation bloc.
Seaking to reporters on Air Force One, as he returned early from the G7 summit, Trump explained:
“We’re talking, but I don’t feel that they’re offering a fair deal yet. They’re either going to make a good deal or they’ll just pay whatever we say they have to pay.”
Trump also said there was a chance of a trade deal with Japan, but said Tokyo was being “tough”, Reuters reports.
TRUMP SAYS EU NOT YET OFFERING A FAIR DEAL
— CGTN Europe (@CGTNEurope) June 17, 2025
Trump added that pharmaceutical tariffs were coming very soon and noted that Canada would pay to be part of his “golden dome” project.
Trump has also told reporters on the flight that he wants “a real end” to the nuclear problem with Iran.
White House Press Secretary Karoline Leavitt has posted that the briefing is a sign that Trump is the “most transparent President in history”:
President Trump gaggled with the media aboard Air Force One at 1AM ET. Most transparent President in history.👇 https://t.co/UkUHSXsKCS
— Karoline Leavitt (@PressSec) June 17, 2025
Reminder: The 90-day pause on new tariffs, which Trump announced in April after the markets slumped, ends on 8 July – giving the White House less than a month to strike scores of trade deals.
Europe has been taking a relatively hardball strategy to secure a US trade deal – pitching itself between ‘rollover UK’ (who secured an early deal with the US) and ‘retaliatory China’ (who ended up in a full-blown tit-for-tat tariff war before a peace deal was agreed).
Updated
German investor morale rose more than expected in June, according to new data from the ZEW economic research institute.
ZEW’s economic sentiment index has jumped to 47.5 points, up from from 25.2 points in May, a larger rise than expected.
The survey was conducted between 6 and 16 July (ie yesterday), so it covered the period when the US and China were striking a trade deal in London, as well as the Israel-Iran crisis, and began just after the European Central Bank cut interest rates on 5 June.
ZEW president Achim Wambach says:
“Confidence is picking up.”
Sabadell gets expressions of interest for UK's TSB
In the banking world, Spain’s Sabadell has said it has received interest from prospective buyers of its UK division TSB, and said it would assess any firm offers it may receive.
Sabadell wants to sell TSB as it battles to fend off an €11bn (£9.4bn) hostile approach from its Spanish rival BBVA.
The Catalonia-based lender said it had received “preliminary non-binding expressions of interest” for TSB from unnamed bidders, and would examine any potential binding offer.
TSB, which has 175 branches in the UK, has more than 5 million customers and 5,000 staff.
UAE evacuates 24 people from oil tanker after collision near Hormuz Strait
Two tankers have collided in waters off the United Arab Emirates and caught fire in the early hours this morning.
The United Arab Emirates coast guard says it evacuated 24 people from oil tanker ADALYNN following a collision between two ships in the Gulf of Oman, near the Strait of Hormuz.
National Guard Executes Evacuation of 24 People from Oil Tanker Following Collision Between Two Ships in the sea of Oman
— الحرس الوطني (@Uaengc) June 17, 2025
The Coast Guard of the National Guard carried out today, Tuesday, June 17, 2025, an evacuation mission involving 24 crew members of the oil tanker ADALYNN,…
British maritime security firm Ambrey has said the cause of the incident was not security-related.
Daniel Smith, an analyst at Ambrey, said (via Bloomberg):
“At the time of writing, we can only confirm that it is not a security incident. We continue to investigate the cause.”
IEA: World oil supply to outpace demand growth
Global oil supply is set to increase “far” faster than demand in the coming years, the International Energy Agency has predicted.
In a new report, the IEA argues that oil markets are undergoing structural changes as the key drivers of supply and demand growth of the past 15 years start to fade.
The IEA estimates that global oil demand is forecast to increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, reaching a plateau of around 105.5 mb/d by the end of the decade.
At the same time, global oil production capacity is forecast to rise by more than 5 mb/d to 114.7 mb/d by 2030, due to increased output from the US, Canada, Brazil, Guyana and Argentina, and the unwinding of production cuts by the Opec+ group.
The IEA says:
This growth is set to be dominated by robust gains in natural gas liquids (NGLs) and other non-crude liquids. The strategic shift towards higher non-crude capacity is driven by strong global demand for petrochemical feedstocks and the development of liquid‑rich gas resources.
Saxo: Stocks lurch lower on Israel-Iran escalation fears
Anxiety that the Israel-Iran crisis could escalate is pushing European markets down, and the oil price up (see 8.56am), analysts say.
Shares in oil producers such as BP (+1.5%) and Shell (+0.7%) are rising again today, while airlines such as IAG (-2.1%) are falling.
Here’s the situation:
UK’s FTSE 100: -46 points or -0.5% at 8828 points
German DAX: down 267 points or -1.1% at 23,430 points
French CAC: down 61 points or -0.8% at 7,680 points
Neil Wilson, UK investor strategist at Saxo Markets, reports that markets are very “headline driven” right now, reacting to the latest news from the Middle East.
He explains:
After rallying on Monday on hopes that the Israel and Iran conflict would remain contained, stock markets have lurched lower again on Tuesday after US President Trump left early from the G-7 summit in Banff and told Iran to evacuate Tehran, signalling potential escalation of the conflict.
Trump said he left the summit early due to something “much bigger” than discussing a ceasefire. Israel and Iran meanwhile traded strikes for a fifth day. Reports have indicated that Tehran is willing to negotiate, but it takes two to tango and Israel won’t stop until it feels like it’s done enough.
Diplomatic sources in Iran have reportedly pushed for a cease-fire, but Israeli PM Netanyahu said on Monday his country was “not backing down” from eliminating Iran’s nuclear programme.
Oil up 1.5% as Israel-Iran conflict continues
That brief fall in the oil price (see 7.52am) didn’t last long.
Brent crude is now up 1.5% today at $74.36 per barrel, wiping out yesterday’s dip.
Oil is rising as the Israel-Iran conflict enters its fifth day, with attacks between the two countries continuing.
Earlier today, sirens sounded in several areas across Israel following the identification of missiles launched from Iran, according to Agence France-Presse (AFP).
AFP also reported that two explosions were heard on Tuesday in Iran’s northwestern city of Tabriz.
UK government aiming for 'competitive' energy prices for businesses
The UK is aiming to have energy costs that are competitive with Europe, business minister Sarah Jones has said ahead of the imminent launch of government’s industrial strategy.
Jones said that the cost of energy is one of the top three concerns for businesses, who are hoping for aid in the long-awaited strategy.
Her comments came as she announced the first £250m in funding for the Aerospace Technology Institute, which administers research grants. The government had already said it expects to spend £975m on research programmes up to 2030.
The funding will support hydrogen-powered flight, 3D printing and using laser beams for large-scale manufacturing of aeroplane parts, the government said.
Jones was speaking in the rarified surroundings of a gold-leaf salon of the Napoleonic-era residence of Britain’s ambassador to France during the Paris air show, a biannual gathering of the global aerospace and defence industries.
She told the Guardian:
“Whether you’re a company wanting to invest in the UK or whether you’re an existing company in the UK, energy prices is a challenge.
The fact that we’re not competitive with it, with Europe, is the challenge.”
As well as hurting existing industry, high energy prices relative to rivals have made it harder for the UK to attract new industries. That includes so-called sustainable aviation fuel (SAF), made either using biological matter or from hydrogen made using green electricity.
“You’ve got to make sure you have the right environment in place for SAF, and obviously there are other countries that can produce certain things cheaper,” said Jones.
“I think there can be a SAF industry in the UK. There are certain industries that are very interested in coming and that’s what we’re trying to work towards.”
Updated
UK car industry cheered by US trade deal sign-off
Overnight, Keir Starmer and Donald Trump have signed off a UK-US trade deal at the G7 summit in Canada, with the US president saying Britain would have protection against future tariffs “because I like them”.
This means tariffs for UK carmakers will be reduced to 10% from 27.5% (25% being the recently introduced new tariff, and 2.5% existing duty). Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders, said industry hopes the new 10% tariff rate will start “in the next few days”, speaking on BBC Radio 4’s Today programme.
The UK-US trade pact had been negotiated in early May, “but we’ve been waiting for it to be implemented so manufacturers can start shipping without being subject to those punitive tariffs,” he said. He added that “a lot less” had been shipped to the US in the meantime, with some UK manufacturers shipping “a handful” while “a lot had to pause, waiting”. (British luxury carmakers Jaguar Land Rover and Bentley halted shipments, for example.)
Hawes says:
“They’ve been pausing because their customers – they’ve got shrewd customers – were going to wait and see what was going to happen from when the deal was announced. You could see that the cost to the ultimate consumer was going to come down because of the reduction in the tariff, but you just didn’t know when.”
He expressed confidence that the new tariffs will be in place for some time, saying that “it’s been long negotiated and as the president says, he likes the UK”. He noted that UK exports have never been a threat to the US, as they tend to be small volume, high value manufactured goods, “not the type that are made in the US”.
BoJ governor warns oil price changes could lift underlying inflation
Over in Tokyo, Japan’s central bank chief has warned that the jump in the oil price, if maintained, could push up inflation.
Speaking after the BoJ left interest rates on hold today, governor Kazuo Ueda told reporters:
“Coupled with already rising food prices, such moves in oil prices caused by tensions in Iran and Israel, if persist, could risk affecting inflation expectations and underlying inflation. So we must scrutinise developments carefully.”
Ueda also touched on trade war concerns, warning that manufacturers could be forced into cost-cutting if their profits were hit.
He also warned that the economic outlook was clouded by trade war worries, saying:
“Even if developments surrounding U.S. trade policy stabilise toward a certain direction, there’s very high uncertainty on how that could affect the economy….
For the time being, there is extremely high uncertainty over each country’s trade policy. As such, there is bigger downside risk for both Japan’s economy and prices.”
Updated
The pan-European Stoxx 600 index has fallen to a three week low this morning.
It’s down 0.9% today, with all the major European indices in the red.
European markets opens lower
European stock markets have opened in the red.
In London, the FTSE 100 index of blue-chip shares has dropped by 45 points, or 0.5%, to 8830 points.
Germany’s DAX dropped almost 1%.
Traders will be watching the Middle East, after US president Donald Trump told Iranians to “immediately evacuate” the capital.
In a post on his Truth Social site, Trump says:
Iran should have signed the “deal” I told them to sign. What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!
Jim Reid, market strategist at Deutsche Bank, says investors are in “a bit of a limbo” as to whether anything substantive came out of the G7 summit before Trump’s early departure from the gatherering of world leaders.
Reid adds:
There are still big questions as to whether Israel would be receptive to a ceasefire, given that it is seeking to destroy Iran’s nuclear program. Moreover, the public rhetoric hasn’t leant that way either, and Iran’s Mehr News Agency cited a senior security official saying that it is prepared to deliver a “major blow” to Israel after its strikes. So there is maybe diplomatic movement behind the scenes but not yet in the open.
Updated
The oil price has dipped slightly this morning, as the Israel-Iran conflict continues to drive markets.
Brent crude has dropped by 0.75% to $72.73 per barrel.
That wipes out some of the oil price’s 7% surge on Friday; it dropped by 1.35% on Monday.
Introduction: Fuel tanker rates surge as Middle East crisis worries markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Israel-Iran conflict is pushing up the costs of chartering oil tankers from the Middle East, as geopolitical fears weigh on markets again.
Tanker rates for vessels carrying refined oil products from the Middle East have surged in the last few days, amid concern that travelling through the Strait of Hormuz is now more risky.
The cost to ship fuels from the Middle East to East Asia climbed almost 20% in three sessions to Monday, according to data from the Baltic Exchange.
Bloomberg, which reported the data, explains:
Benchmark rates for a medium-sized vessel carrying refined oil product from the Middle East to Japan, known as TC1, rose to 136 Worldscale points on Monday from 114 on Thursday. Costs for smaller vessels doing the same route, or TC5, advanced to 167 points, from 139 two sessions prior.
The corresponding level for mid-sized tankers carrying fuels from the Persian Gulf to East Africa, or the TC17 route, meanwhile, was at 287 Worldscale points on Monday, against 202 two sessions ago.
Worldscale points are a percentage of an underlying flat rate, which is set for each major route at the start of the year.
Tanker rates for vessels carrying refined oil products from the Middle East have surged in recent days, as the exchange of fire between Israel and Iran puts the flow of goods in the Hormuz Strait in the spotlight https://t.co/cPqG5QZo2T
— Bloomberg (@business) June 17, 2025
LSEG data shows that the global benchmark rate for a very large crude carrier moving oil from the Middle East Gulf to Japan rose over 20% on Friday after the tensions broke out, and gained another 16% on Monday.
Prices jumped amid worries that Iran could potentially target energy facilities or shipping routes, or even close the Strait of Hormuz, if the current conflict – which began on Friday morning when Israel attacked Iranian nuclear facilities and missile sites – escalates.
Lazard Geopolitical Advisory (LGA) has warned:
A temporary disruption of the Strait of Hormuz, a key transit chokepoint for 30% of seaborne oil and 20% of LNG, could push oil prices upwards of $120 per barrel and would likely require US direct involvement to secure safe passage for energy flows.
Even in the absence of a Strait closure, oil markets will see continued volatility as the risk of a disruption evolves.
Naval forces have warned that electronic interference with commercial ship navigation systems has surged in recent days around the Strait of Hormuz and the wider Gulf, which is having an impact on vessels sailing through the region.
Lloyd’s List Intelligence, which monitors maritime traffic, said that loadings of vessels in the Gulf continued over the weekend but tankers waiting to load in Iran were keeping a greater distance from the port.
Shares rallied yesterday in Europe, and in the US, following reports that Iran was seeking an end to hostilities and the resumption of talks over its nuclear programs.
But stocks are likely to fall back today, as hopes of peace talks fade, after Israel issued an evacuation order to residents of a large part of Tehran.
Donald Trump, who left the G7 leaders summit early last night, has denied that he cut short his appearance at the meeting to broker a truce between Israel and Iran.
The agenda
All day: Paris air show
9am BST: IEA monthly oil market report
9.45am BST: Bank of England financial policy committee member Randall Kroszner gives a speech
10am BST: ZEW survey of German economic sentiment
11am BST: Germany’s Bundesbank issues monthly report
1.30pm BST: US retail sales report for May
2.15pm BST: US industrial production data for May
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