This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week.
THE COLOURED HIGHLIGHT REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.
IN BIG PICTURE NEWS...
Iran flares up again, Ukraine gets the upper hand and South Korea's in bear market territory
IN WAR NEWS…
IRAN – The ceasefire is not holding well, with the US and Iran attacking each other again. The US blamed Iran for attacks on ships in the Strait of Hormuz, and Iran said it was retaliating, sending oil prices up sharply before they calmed down. Washington is growing frustrated at the slow pace of talks over implementing the memorandum of understanding. The US aimed to further degrade Iran’s ability to attack commercial shipping, while Iranian forces struck infrastructure at US military bases in Kuwait and Bahrain.
UKRAINE – Zelenskyy said that the war will ultimately be decided in the air, having pushed Russia’s fleet back in the western Black Sea. He is at the NATO summit in Turkey seeking further support.
Ukraine has intensified attacks on Russian shipping in the Azov Sea, disrupting fuel supplies to occupied Crimea.
Trump’s noticeably more supportive stance towards Ukraine, including allowing it to manufacture US weapons, has reassured nervous NATO allies who are used to him criticising Zelenskyy.
IN TRUMP THINGS…
Trump threatened to remove all 80,000 US troops from Europe, raising the issue at the NATO summit in Ankara alongside renewed talk about Greenland.
The president has launched “Trump accounts”, a savings scheme for American children born between January 2025 and December 2028, giving each child $1,000 to invest in funds managed by major Wall Street firms, with parents, friends and employers able to top this up to $5,000 a year. The scheme could prove popular ahead of the midterm elections given ongoing dissatisfaction with his economic record.
Questions remain over whether Trump’s Venezuela strategy of backing Delcy Rodriguez is working, given her deep unpopularity following criticism of the government’s slow earthquake response, with some suggesting an election may ultimately be needed to restore investor confidence.
IN DEFENCE…
Turkish authorities cracked down on dissenting voices ahead of this week’s NATO summit, arresting a comedian whose routine mocking President Erdogan had drawn 11 million YouTube views. Major questions facing the summit include what role the US will play going forward, whether it will withdraw forces from Europe, and how individual European nations will need to adapt their own defence roles in a world with a reduced American military backbone.
Germany’s TKMS won a landmark Canadian contract to supply 12 diesel-powered submarines capable of operating in Arctic conditions, beating South Korea’s Hanwha Ocean, in a deal that reflects Canada’s efforts to reduce dependence on the US.
Germany separately announced plans to borrow €800bn for rearmament, a historic shift given the country’s traditional aversion to debt, aiming to hit 3.5% of GDP in defence spending by 2029, six years ahead of schedule, even as its debt to GDP ratio rises to 69.5% (although that’s still below the Eurozone average).
British defence start-up Kraken Technology became a unicorn following its latest funding round! It makes autonomous maritime vessels including mine hunting vessels destined for Royal Navy use in the Strait of Hormuz,
IN REGIONAL/INDIVIDUAL COUNTRY NEWS…
IN ASIA
CHINA – Factory gate prices rose at their steepest rate since July 2022, marking a fourth consecutive month of expansion according to the latest Producer Price Index data.
SOUTH KOREA – the KOSPI fell into bear market territory (this means that it’s down 20% from its recent high) as investors fret over the long term prospects of AI chipmakers. That being said, underlying demand for chips remains strong and the move looks like profit taking rather than a genuine reversal IMO.
IN THE UK…
Incoming PM Andy Burnham is facing criticism over the slow pace of his transition, particularly his reluctance to confirm who will sit in his Cabinet. Later in the week, one of Burnham’s advisers drew up a paper that focused on cost of living support, help for small businesses and high streets, housebuilding and greater state control of public services, offering an early glimpse of his likely economic agenda. Staying on policies, there’s doubt as to how effective an expected “mansion tax” will be because research from Zoopla shows that around 40% of homes estimated to be worth £1.5m or more have never had a sale recorded on the Land Registry! Officially known as the High Value Council Tax Surcharge, the widely expected “mansion tax” is due to launch in April 2028 with an annual charge starting at £2,500 for homes valued above £2m.
In terms of what’s facing him, the OBR has warned that Burnham will need £120bn of tax rises or major spending cuts to put UK finances on a sustainable path. On the plus side, the IMF handed the UK the only growth upgrade among G7 economies, crediting stronger than expected growth earlier in the year and a smaller than feared hit from the Iran war, though such forecasts are not always taken too seriously.
Meanwhile, Nigel Farage stood down as MP in order to fight a by-election in Clacton following a row over an undeclared £5m gift from a donor.The Conservatives, Labour and the Liberal Democrats all declining to stand against him, effectively guaranteeing his return regardless of the investigation’s outcome, though his highest profile challenger will be a comedian dressed as a bin standing under the name Count Binface.
Several NHS hospital trusts have admitted errors in the data used to support claims that Palantir’s technology delivered a 15% fall in patient discharge delays, casting doubt on evidence previously cited as proof the Federated Data Platform was working. I suspect that there is more to come from this…
IN COMMODITIES NEWS…
RARE EARTTHS – US rare earth products are increasingly being exported to Japan and South Korea via government backed producers including MP Materials, Energy Fuels and Phoenix Tailings because domestic demand has not yet materialised, despite Trump’s efforts to build a national supply chain.
OIL – Citi started the week by forecasting that Brent could fall to $60 a barrel by Christmas, half its peak level during the Iran war, but then oil prices rose sharply, breaching $80, after Iran resumed attacks on tankers near the Strait of Hormuz. Given oil price volatility it’s not surprising that the CME Group is launching a smaller 10 barrel West Texas Intermediate futures contract that will make oil trading more accessible to retail investors. I would say that this could exacerbate price volatility given retail traders’ reputation for being flaky.
A wave of successful strikes on Russian oil refineries has forced Russia to ban diesel exports and divert supplies to the domestic market to ease queues at petrol stations. These strikes knocked out 30-40% of the country’s refining capacity and the world’s farmers, food producers and transport companies are particularly exposed to the resulting cost pressures.
Canada unveiled plans for a new oil pipeline running over 1,000km from Alberta to the coast of British Columbia as part of efforts to become an energy superpower less reliant on the US market, alongside plans to triple LNG production through five new terminals over the next decade.
IN ENERGY NEWS…
US clean power prices are set to rise sharply, with Power Purchase Agreement costs for solar and wind projects expected to climb by anything from 40% to 120% once Inflation Reduction Act subsidies expire for projects starting construction after July 4th. Texas PPA prices could potentially rise from $55 to $121 per megawatt hour. This follows a period in which the subsidy helped nearly double US solar capacity between 2022 and 2025, and comes as data centre driven electricity demand is expected to climb between 25 and 50% by 2050.
In the UK, Sizewell B has been granted a 20 year life extension to 2055, having originally been due to close within the next decade. It currently supplies around 3% of Britain’s electricity.
IN INVESTMENT, BUSINESS & EMPLOYMENT NEWS...
IN INVESTMENT NEWS/TRENDS…
SK Hynix raised $26.5bn on its NASDAQ debut, which was seven times oversubscribed and the biggest ever US listing by a foreign company. Investment banks including Goldman Sachs, JPMorgan, Bank of America and Citi shared a $140m fee pool! Samsung and SK Hynix now account for just over half of South Korea’s entire market cap!
Concerns are growing about whether OpenAI and Anthropic will struggle to float given investor focus on cash generation, cash burn rates, the risk of former partners like Microsoft and Google becoming competitors and the potential commoditisation of frontier AI models. Anthropic is currently seen as being ahead of OpenAI with business customers in areas like law and science.
M&A – the value of UK takeover bids is now 27 times the value of new London listings according to EY data, with 28 proposed takeovers of UK companies worth over £100m so far this year! Overseas buyers have been exploiting depressed valuations while IPO appetite for the London market remains subdued amid the Iran war and political uncertainty.
Defence groups struck $8bn of maritime tech deals this week. Lockheed Martin bought UK defence firm Ultra Maritime for $3.5bn while Thales bought maritime robotics firm Exail Technologies, reflecting growing focus on protecting undersea infrastructure.
EasyJet agreed to a £5.5bn takeover by US private equity firm Castlelake at £6.90 a share, its fifth offer, with the deal to be formalised by August 3rd and the acquirer pledging to support the airline’s existing strategy rather than break it up.
ITV is selling its media and entertainment business, including ITVX, to Sky in a £1.6bn deal that would create a combined entity reaching over 20 million households and potentially accounting for around 70% of UK TV advertising spend.
UniCredit has built a 48% stake in Germany’s Commerzbank following its all-share offer made in March.
Next is reportedly considering an early stage bid for department store Harvey Nichols.
Tesco is considering the sale of its central and eastern European business, which would mark the end of its international ambitions beyond the UK and Ireland.
Uber has paused its European food delivery expansion to focus on pursuing a takeover of Delivery Hero after its earlier €10bn bid was rejected in May.
Getty Images has abandoned its proposed $3.7bn merger with Shutterstock after the UK’s Competition and Markets Authority wanted conditions that it deemed too onerous despite the deal having cleared the US Justice Department in April.
Tencent is in talks to become the largest shareholder in AI agent start-up Manus after Beijing blocked Meta’s proposed $2bn acquisition of the company and ordered its unwinding.
The CEO of German satellite group OHB has objected to the proposed merger of the space divisions of Airbus, Leonardo and Thales, codenamed Bromo, arguing it would be anticompetitive. The venture is proceeding to file for formal EU antitrust clearance. I think this is just a case of OHB getting FOMO about Bromo!
IN BUSINESS NEWS/TRENDS…
PRIVATE CREDIT – big institutional investors committed at least $16bn to private credit funds even as retail investors continued heading for the exits, according to Preqin data, suggesting big money remains supportive of the asset class despite some high profile defaults and concerns about software sector exposure.
PREDICTION MARKETS – Prediction markets are under increasing pressure. Polymarket is under investigation by America’s Commodity Futures Trading Commission (CFTC) over consumer protection concerns. Currently, prediction markets aren’t classed as gambling, which means that users can participate from age 18 rather than 21. Minnesota is banning prediction markets from next month and US senators have already prohibited themselves and their staff from using the platforms, suggesting regulatory pressure on the sector is building.
UK BUSINESS SENTIMENT – UK businesses’ willingness to invest in big projects has hit its lowest level since the end of the pandemic according to BCC research, with companies describing themselves as having been “taxed out of existence” by rising costs and levies.
IN EMPLOYMENT TRENDS…
UK consultancy revenues rose 3% last year according to Management Consultancies Association data, a marked improvement on 2024, with a further 6% rise forecast this year as companies seek help navigating geopolitical uncertainty around energy resilience and supply chain diversification. Cybersecurity tipped as being the next major growth area following high profile attacks on JLR and M&S.
Recent success at AI law firm Garfield AI heralds the emergence of a new breed of smaller, nimbler law firms. Garfield AI specialises in claims up to £10,000, and recently won its first court case. AI is increasingly able to handle growing volumes of document review.
A new directive from the UK Jurisdiction Taskforce warns that lawyers could be professionally liable for failing to use AI where doing so would have improved their work.
The FCA says AI has cut the time needed to handle some supervisory cases from up to four hours to just six minutes.
An OECD report found that three in four London jobs are at risk from AI, the highest proportion among major global cities given the concentration of finance, professional services and creative roles. Outside London, it estimates that 60.9% of jobs across the wider UK labour market are highly exposed.
Chancellor Reeves is preparing to launch a City “skills compact” under which firms commit to retrain thousands of financial sector workers for the AI era.
Businesses are hiring part-time staff at their fastest rate in three years according to KPMG and REC data, while UK unemployment rose to 4.9% in the three months to April and job vacancies hit a five year low.
Microsoft is cutting 4,800 jobs, around 2% of its workforce, as part of an Xbox overhaul that will see it sell four gaming studios and slim down its Activision, Blizzard and Mojang teams.
IN CONSUMER AND RETAIL NEWS...
IN CONSUMER TRENDS…
Jet fuel prices have fallen 40% from their April peak but airlines haven’t yet passed on the savings given continued strong travel demand. The real test likely to come in the next major booking season (although if the Iran war drags on then higher-for-longer jet fuel prices will continue!).
US – Walmart has cut prices on thousands of items including minced beef, cherries and Coca-Cola to help customers through the cost of living crisis, a move that was welcomed by Trump. The White House had apparently pressured major grocers to cut prices on a call last week. Walmart, Kroger and Albertsons were asked to cut beef prices ahead of July 4th. Trump publicly praised Walmart’s move and urged others to follow, which is ironic considering that his own tariffs and decision to go to war with Iran have powered inflation!
RUSSIA – an intelligence report suggests Russia is heading towards a potential banking crisis. Household bankruptcies increased by almost a third last year as a result of banks being pressured by the Kremlin to bypass normal credit checks and issue subsidised loans to defence companies and homebuyers to stimulate the economy and fund the war.
SOUTH KOREA – huge bonuses of around $400,000 on average for Samsung and SK Hynix chip workers are causing disquiet in the country. This isn’t surprising given that the average national salary is about $33,500! Many from traditionally more prestigious professions are questioning their career choices and getting quite jealous about it.
THE UK – the World Cup and the current heatwave are being blamed for holding back a housing market recovery following the post Iran war slump, according to the latest RICS survey. That being said, separate data showed the first house price rise in three months – but then again we’re about to hit a traditionally quiet period of the year for house sales.
The Wegovy weight loss pill has gone on sale in UK high street and online pharmacies, priced from £69 to £189 a month depending on dose. It requires a medical consultation but it’s not yet available on the NHS. Somewhat unsurprisingly, demand has been high!
IN RETAIL NEWS…
Ocado has set out a succession timetable for co-founder and chief executive Tim Steiner, who will remain in post for at least 18 months before transitioning to a founder role. A new CEO is expected around the start of 2028, following a boardroom battle with the chairman over his departure.
IN TECH & STREAMING NEWS...
IN TECH NEWS…
AI – The FCA warned of an “arms race” to keep pace with AI use in financial services and wants powers to consider regulating large language models such as ChatGPT, Claude and Gemini directly. Research shows that 20% of UK adults are already comfortable using AI to make financial decisions despite the lack of a regulatory safety net!
AI MODELS – Meta released Muse Spark Image, its first image generation model since Mark Zuckerberg’s AI overhaul, which will power new Instagram editing features and advertising tools. The company also has a model called Muse Video also in development.
OpenAI has released ChatGPT 5.6, which includes a new product called Sol, following a delay linked to White House cybersecurity concerns. This is a nice move ahead of its IPO…
OpenAI and Google have been selling AI services to Singapore based subsidiaries of blacklisted Chinese groups Alibaba, Baidu and Tencent, a legal but controversial practice. This contrasts with Anthropic, which has banned Chinese owned entities from using its most advanced models (although there are still workarounds).
CHIPS – Samsung reported a third consecutive quarter of record profit driven by relentless AI demand.
Apple has agreed to buy $30bn of US made chips from Broadcom over five years as part of its wider $600bn US investment pledge aimed at avoiding Trump’s tariffs, with Broadcom’s supply contract extended to 2031.
DATA CENTRES – Research from the Uptime Institute suggests around half of the world’s major data centre projects will either be cancelled or delayed due to local opposition and supply chain constraints, even as underlying demand for such projects keeps rising.
Private equity firm Carlyle is selling its data centre power platform Copia Power to EQT for a fivefold return, with EQT already holding over $100bn in data centre and renewable power assets.
HARDWARE – Meta is testing “super sensing” AI glasses capable of continuously recording the wearer’s surroundings without the usual recording light being activated, raising significant privacy and ethical concerns.
SpaceX has received bullish price targets from Wall Street banks following the end of its post IPO quiet period, with Morgan Stanley at $300 and Goldman Sachs at $205, against a float price of $135 that briefly reached $225 before settling around $151.
STREAMING – Netflix is exploring live TV channels and bundling with other subscription services as it looks for new ways to keep subscribers engaged.
IN AUTOMOTIVE NEWS...
BATTERIES – EV batteries are proving far more durable than expected after hundreds of thousands of miles. I would have thought that this will support stronger second hand values.
Battery swapping is emerging as a key technology for electric trucks, with 30% of heavy trucks sold in China last year being electric thanks to improved battery density, faster charging and swapping schemes where batteries are leased from suppliers like CATL. This is the company that recently partnered with UK energy firm Octopus to build 30 swapping stations by 2035, potentially bringing forward peak oil demand.
ELECTRIC TRUCKS – Chinese electric truck start-up Windrose Technology is facing mounting debt, a lawsuit and scrutiny from US safety regulators.
ELECTRIC CARS – Tesla sales are recovering in Britain, with the Model 3 and Model Y the two best selling vehicles last month and Tesla the second best selling brand behind VW.
IN MISCELLANEOUS NEWS...
REAL ESTATE – UK house prices rose 0.2% in June according to the Lloyds house price index. This is the first rise since the Iran war prompted three months of declines. Affordability remains a challenge and interest rates could yet rise further to combat inflation.
Housebuilder Vistry warned of a first half loss due to heavy discounting needed to clear unsold homes. It also announced the departure of its finance director.
Data from Knight Frank shows AI companies are driving strong growth in London office lettings, particularly around King’s Cross, Euston and Fitzrovia, pushing rents higher in an already tight market.
FINANCIALS NEWS – The Bank of England plans to ease the leverage ratio for UK lenders in order to boost lending and stimulate the economy, in the latest relaxation of rules introduced after the 2008 financial crisis. Morgan Stanley reckons this could give major UK lenders an extra £270bn of lending capacity.
IT reseller Computacenter’s shares have nearly doubled this year after strong hyperscaler demand for its AI datacentre services led to upgraded profit forecasts.
Eurostar has updated its contract with train manufacturer Alstom to ensure new Celestia trains, due for delivery in 2031, can withstand temperatures of up to 55 degrees Celsius, up from the original 45 degree specification! These trains are expected to remain in service for 30 years.