Friday 26/06/26

Attack in Strait of Hormuz halts evacuation plan for stranded ships (Financial Times, Alice Hancock and Andrew England) shows that a ship was attacked in the Strait of Hormuz yesterday. It sounds like it strayed off the official route and got a slap on the wrist for its troubles. The vessel is owned by shipping line Evergreen. Oil prices didn’t go bananas in response to this, so it seems like the incident was isolated. Some other tankers were turned back by Iran when they attempted to cross the Strait yesterday. It sounds to me like the Iranians are sabre-rattling and wanting to show everyone that they’re boss.

In defence news, India’s military speeds up orders for weaponised drones (Financial Times, Krishn Kaushik and Chris Kay) shows that there’s a new sense of urgency from the Indian military who recently tested a drone-launched missile that has the ability to hit targets in the air and on the ground. Indian drone makers had previously concentrated more on using them for surveillance but now they’re switching to the more attack-focused version as the Iran war has showed them the value of this type of drone. Companies such as NewSpace Research and Technologies (NRT) and IdeaForge are among the companies that could benefit, particularly as the government is committed to boost defence spending from 2% now to 2.5% of GDP by 2031.

Key US inflation index rises to 4.1% amid Strait of Hormuz disruption (The Times, Mehreen Khan) shows that the personal consumption expenditures (PCE) index – seen as a key measure of US inflation – hit its highest level in three years as rising global energy costs had a knock-on effect to prices prior to the most recent US-Iran agreement. It increased from 3.8% in April to 4.1% in May. Analysts had been expecting this but it’s worth mentioning that the Fed targets a core PCE rate of 2%. * SO WHAT? * The overall expectation is for US interest rates to go up but economists at Citi said that markets are overestimating how high they will go because falling global oil prices and a slowdown in the labour market should take the edge off.

Electricity prices soar as Europe battles heatwave (Financial Times, Attracta Mooney, Rachel Millard, Ian Johnston and Sarah White) shows that Europe’s energy system has been put under a lot of pressure this week as France, Spain and the UK have reported record June temperatures that have caused chaos! Just to make things worse, high temperatures lower the efficiency of solar panels and gas-fired power plants…

Further to what I just said, Aircon stocks become next hot bet as Europe wilts (Financial Times, Ramsay Hodgson) shows that investors have been buying share in companies like Carrier Global (New York listed, makes most of its revenues from residential air conditioning), Madison Air Solutions (makes custom heating, ventilation and air conditioning – HVAC – systems for homes, hospitals, offices and agricultural and industrial use) and Daikin Industries (the world’s biggest HVAC systems manufacturer). * SO WHAT? * Europe seems to be poorly served by air conditioning, particularly compared to the US – so there could be huge upside to these companies if the climate activists are right and that the consistently higher temperatures force equipment replacement as older gear just doesn’t cut it any more. In addition to the obvious residential demand driven by weather conditions, commercial HVAC companies are arguably going to get a more sustained boost from the build-out of data centres and office retrofitting.

Ares Management’s flagship private credit fund hit by 14% withdrawal requests (Financial Times, Eric Platt) gives us another example of the travails of private credit as it turns out that investors tried to take out over $1.5bn from one of the company’s flagship private credit funds in Q2. We saw the same kind of thing earlier this week with rival Apollo. * SO WHAT? * Limiting redemptions may limit the exodus for now but this can’t continue forever, particularly if the value of the underlying assets falls because of AI.

Patent cliffs aren’t the only driver of biotech M&A boom (Financial Times, Lex) is an interesting article because while it acknowledges that the patent cliff is very much a motivator behind some of the pharmaceutical-biotech M&A activity we’re seeing at the moment, some of it is also due to companies wanting to be on the front foot – so they buy early stage assets. Interestingly, around 60% of biotech M&A deal value this year has come from assets that are either at phase 2 or earlier in the FDA approval process. Over the last five years, it was more like 45%, according to Bernstein research. Eli Lilly, Novartis and Gilead are just some of the companies that have ploughed money into early-stage assets and at least some of that is due to a more relaxed antitrust regime since Trump came to power. Also, pharma companies have, according to EY research, come into 2026 with a lot of spare cash (about $2.1tn) so it looks like we haven’t seen the end of the shopping spree yet!

Then in EasyJet rejects fourth offer but opens books to US suitor (The Times, Robert Lea) we see that EasyJet has rebuffed a takeover offer from US fund Castlelake for the fourth time but it said that it would partially open the books to the bidders, which suggests that there still is a deal to be done – but at the right price. So far the offers that have been rejected have been 560p per share, then 600p, then 625p and then 650p.

Trump administration asks OpenAI to stagger release of new model to vet users (Financial Times, George Hammond and Joe Miller) highlights further US government meddling in AI – this time the administration has asked OpenAI to stagger the roll-out of its latest AI mode GPT 5.6, so that organisations that get early access can be vetted by the US government. The company had planned to give around two dozen partners access to this model ahead of a broader rollout but now all of them will have to be vetted. * SO WHAT? * This follows on from the Department of Commerce’s decision to slap export controls on Anthropic, which meant foreign nationals weren’t able to access Fable and Mythos, the company’s newest models. Although Trump is keen not to hamper the progress of AI companies, the wider administration has a funny way of showing it.

Then in Meta looks to AI to review harmful content in cost-cutting drive (Financial Times, Hannah Murphy and Cristina Criddle) we see that Meta is rapidly moving towards using AI for content moderation rather than humans. It has accelerated plans to make the switch and it has already replaced about 50% of human review requests with LLMs this year. It is thought that the company will want this to rise to 90% by the end of the year, for certain types of content. Thus far, Meta has relied on a mix of humans and automated systems to determine whether a post or an ad breaches its rules. Humans tend to get involved in appeals. * SO WHAT? * I have to say that I think that AI in content moderation is a good thing because it means that human moderators won’t have to plough through as much extreme and distressing content. The problem at the moment is that the AI still makes mistakes.

Micron shares jump as blockbuster results spark Wall Street tech shake-up (Financial Times, Emily Herbert and Tim Bradshaw) highlights another big day for trading for Micron as it closed up by 15.7% yesterday, although it went higher during the day. At one stage, Micron’s market cap overtook that of Meta! Micron’s results were strong and it is just one of the chip companies that have benefited from the AI boom to the extent that its share price has tripled this year!

Then in Law firms look for clear gains from AI (Financial Times, Nick Huber) we see that law firms continue to spend increasing sums on legal tech but are adopting it with varying degrees of speed. Companies like Legora, Harvey and Relativity are increasingly helping lawyers and customers alike in getting work done. The tech can help lawyers smash through huge volumes of documents in record time and increase efficiency. Anthropic specifically targeted the legal sector as a growth area early this year and OpenAI is now planning on releasing AI software that also targets the sector. There are some open source players as well, like Mike OSS, and a few law firms who are developing their own capabilities in this area. * SO WHAT? * I suspect that spending on legal tech will continue to rise – both within law firms and in-house departments – but then the pressure to demonstrate the benefits are also likely to increase. The interesting thing about in-house here is that legal tech arguably levels up the playing field because this is a rare instance of when both law firms and their clients will have the same tech. There is a possibility that in-house teams might feel that they don’t need law firms, particularly if they have the same models!

Apple increases MacBook and iPad prices by 20% (Financial Times, Michael Acton) heralds the inevitable after outgoing CEO Tim Cook teed it up – the company is raising prices. The news meant that Apple took a 6.1% hit – its biggest one-day fall since Trump announced his “liberation day” tariffs last year. So far, it’s not said anything about raising prices for the iPhone, which makes up about 50% of its revenue. Prices have risen for its HomePod, Vision Pro and Apple TV boxes. Apple says that a shortage of memory and resulting price rises have been to blame – Morgan Stanley research said that memory prices had risen sixfold over the last year! Other companies including Dell, HP, Lenovo and Asus have also had to raise prices for the same reason…

In a quick scoot around some of today’s other interesting stories, U.S. Bans Polestar, Chinese-Owned EV Maker, From Selling Cars in the U.S. (Wall Street Journal, Ryan Felton) sounds the death knell for Polestar in the US as the Commerce Department deemed their cars a security risk. Polestar was spun out of Volvo and is majority owned by Geely.  It’ll sell its remaining stock of vehicles in the US and give access to service centres for repairs, so owners won’t feel like they’ve been completely abandoned! * SO WHAT? * This is just the latest move by the US government towards banning Chinese-owned cars. This is a blow for the company because the US market is big – but surely it must have been a bit prepared for this outcome!

Meanwhile, Ferrari marketing chief ousted after launching car that looks like a Nissan (Daily Telegraph, Eleanor Harmsworth) highlights the abrupt departure of its head of marketing following the disastrous launch of the much-derided Luce, Ferrari’s first ever fully electric vehicle. Good riddance. What was that guy thinking?? Will it pull the launch of the Luce, though??

In UK housebuilders warn of ‘shockwaves’ as tariffs on steel imports double (Financial Times, Peter Foster and Gill Plimmer) we see that ministers have confirmed that they are going to halve tariff-free quotas on double duties on steel UK imports to 50% in order to protect UK steelmakers from being overrun by cheap Chinse imports. * SO WHAT? * Although this is good for steelmakers, the UK construction and housebuilding industries said that this will result in “shockwaves” as their costs are going to go up. I guess this is a case of priorities between saving one industry and making life difficult for another…

Bayer wins crucial US Supreme Court ruling over Roundup weedkiller (Financial Times, Florian Müller and Ella Lee) highlights a massive development for the German pharmaceuticals group as the US Supreme Court overturned a $1.25m jury award to plaintiff John Durnell who said that Monsanto’s weedkiller, Roundup, gave him cancer and should have carried a cancer warning. This litigation has cost Bayer, which bought Monsanto in 2018 for $63bn, over $10bn – so you can understand why Bayer’s share price shot up by over 19% on the news. * SO WHAT? * This

judgment is likely to limit future liability for pesticide makers whose product labels comply with US Environmental Protection Agency (EPA) standards. This is a huge development for Bayer and gets rid of the litigation cloud that has been hanging over it for so long. If the plaintiffs accept Bayer’s proposed settlement then that will be the end of this series of lawsuits. Monumental.

‘Magic circle’ law firm profits overtaken by US rivals (Daily Telegraph, Louis Goss) cites analysis by Law.com which says that the traditional “Magic circle” firms of A&O Shearman, Clifford Chance, Freshfields, Linklaters and Slaughter & May have dropped down the rankings of profits per lawyer to be overtaken by rivals from America! A&O Shearman was the only “Magic circle” firm to squeeze into the top 10 in 10th place while, of the 18 firms with revenues of over £1m per lawyer, 14 were from the US! US firms have been paying up – both in terms of newly qualified salaries and partner payouts – to attract top talent. * SO WHAT? * This sounds exactly like what happened in the UK in the 90s and noughties with US investment banks. If it wasn’t for AI, I would say that there will probably be a lot of consolidation going on now with US law firms buying British law firms but I actually wonder if they will take more of a cherry-picking approach to add individuals and teams rather than swallow whole firms. It would be cheaper to do it this way and they could still grind out cost savings with AI…

Then in Ryanair adopts ‘free of charge’ family seating policy after watchdog investigation (The Guardian, Julia Kollewe) we see that those stingy geezers at Ryanair are changing their family seating policy because the CMA was conducting an investigation into the airline’s policy of charging families for the privilege of sitting together – after they had checked in for their flight. Presumably they decided to give in before they were forced – but that didn’t prevent the perennially combative CEO Michael O’Leary from saying “We will reluctantly adjust to this industry standard as we don’t want to waste time explaining to misguided regulators how badly they misunderstand what is in the best interest of UK Europe’s consumers”.

I think that this is a genius way to get your kid to eat broccoli! Who knew??