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...
The impasse continues, Starmer has a nightmare and global oil reserves continue to drain away
IN WAR NEWS…
The US and Iran started the week off by exchanging fire in the Gulf and the US paused “Project Freedom” after Saudi Arabia initially withheld support, saying that Trump’s actions were “unnecessarily escalatory and not well thought through”.
DEFENCE – German arms giant Rheinmettal’s Q1 revenues fell short of expectations because although it’s flooded with orders, in investors are getting increasingly worried about whether it can translate this into profit and whether it can boost capacity enough to cope
IRAN WAR IMPACT…
The war in Iran continues to send shockwaves through global supply chains. A new report highlights what’s being dubbed “plastic shock” hitting Asia, as manufacturers grapple with serious shortages stemming from the ongoing oil crisis. The Strait of Hormuz bottleneck is severely restricting supplies of naphtha – a petroleum derivative used in both chip manufacturing and plastics production – with prices in Asia having nearly doubled since the conflict began. The knock-on effects are hitting packaging for food, medical aid and everyday consumer products.
Fertiliser costs have meanwhile surged between 50% and 70% since the war broke out in late February, which could have “dramatic” consequences for global food prices. UK crops are likely to be insulated this year given that most fertiliser has already been applied, but next year could tell a very different story – and this will be a global problem, not just a British one. A survey by Opinium found that 80% of Britons are already concerned.
Shipping giant Maersk, which carries about 20% of the world’s seaborne containers, is absorbing a $500m monthly hit from what its CEO called the “most comprehensive energy shock in our lifetimes.” He has joined a growing chorus of business leaders sounding the alarm about damage to global trade.
IN TRUMP THINGS…
There was some bad news for the president on the legal front, as the US Court of International Trade ruled that tariffs imposed under Section 122 of the Trade Act of 1974 were “unauthorised by law”. The ruling only applies to the two companies that brought the case, but it’s a setback that will embolden others to challenge. Separately, Trump is giving the EU until 4th July to implement its side of last year’s trade agreement, threatening a sharp tariff hike if it doesn’t comply.
REGIONAL/INDIVIDUAL COUNTRY NEWS…
CHINA – China is quietly building soft power as America burns bridges. While Japan has manga and South Korea has K-pop, China’s cultural influence is growing with TikTok, open-source DeepSeek and visa-free travel for Europeans. Recent surveys show growing majorities in Asian and European countries and Canada are more willing to align with China than America. Trump, meanwhile, continues to antagonise potential allies – reportedly calling India a “hellhole,” slapping it with heavy tariffs and piling levies onto EU vehicles. At this rate, he really will have no friends left.
INDIA – PM Modi is on a roll after a historic BJP victory in the opposition stronghold of West Bengal, with his majority also increasing in Assam – putting him in strong position for a fourth term in 2029. This is remarkable given that his party lost its national parliamentary majority just two years ago. Grassroots campaigning, welfare handouts and genuine voter engagement are thought to be behind the surge.
EUROPE
RUSSIA – Security protocols around Putin have been tightened significantly amid growing fears of assassination, with the president spending increasing time in underground bunkers. His approval rating has fallen to its lowest level since autumn 2022, according to both state and independent pollsters. Putin is spending almost all his time on the war, leaving domestic and international politics increasingly unattended.
MIDDLE EAST
UAE – Fertiliser giant Fertiglobe is now transporting product overland to ports outside the Strait of Hormuz. This is an extremely expensive way of doing things but rising prices are making this commercially viable. The company is running plants at full capacity, which at least tells you demand isn’t the problem!
THE UK
UK goods exports to the US remain lower than before Trump’s April 2025 tariffs, leaving us running a trade deficit with our biggest trading partner for three consecutive months, despite the much-trumpeted “economic prosperity deal.” Either the government pushes harder, or we diversify away from a trading partner that has proven deeply unpredictable. On that front, the UK-Australia deal is delivering real benefits, with Australia having accelerated its dealmaking since Trump’s Liberation Day tariffs. Australia also concluded a new EU deal last month after eight years of negotiations.
The fiscal outlook is getting murkier, with 30-year bond yields hitting 5.77% – their highest level since 1998. Iran war worries and concerns about the Starmer government’s viability are hammering sentiment and making the Chancellor’s job even harder.
On the home front, the PM remained defiant in the face of calls for him to resign. He said that he ‘won’t accept deals’ to quit Number 10 ahead of local elections where Labour was expected to get a right thrashing – which it did. In the end, Reform was the biggest winner while Labour and Conservatives languished. The LibDems had modest success and the Greens also picked up some seats.
IN COMMODITIES NEWS…
OIL – Global oil reserves are depleting at a record pace. Goldman Sachs reckons they’re at their lowest in eight years, with only around 45 days’ worth of refined products left worldwide. Jet fuel stocks hit their lowest level in April and US gasoline stocks are on track to hit their lowest-ever level in April – just before road trip season!
Norway will reopen three gasfields that have been dormant for four decades, with production restarting in 2028. Environmentalists are unhappy, but Europe needs alternatives and Norway is western Europe’s biggest petroleum producer. American oil firms, meanwhile, are coining it in! US fuel exports are at record levels, with petrol costs $4.53 a gallon. If it breaches $5, the White House may have to restrict exports.
Shell has sparked the ire of climate campaigners with a 115% jump in Q1 profits, largely from trading volatile prices. The frustration is understandable, but Shell didn’t ask for this war and making money from trading isn’t inherently “evil”, especially when a windfall tax risks repeating the mistake of stopping North Sea investment dead. BP, meanwhile, is selling stakes in two major carbon capture projects as it continues retreating from climate commitments.
IN CRYPTO NEWS…
The Trump family’s World Liberty Financial is suing major backer Justin Sun – the “banana guy” – for defamation following posts on X. This comes after Sun sued WLF for fraud last month, claiming it restricted his ability to sell tokens and extorted him for more funds. The WLFI token has collapsed 80% from its peak.
Separately, Morgan Stanley is launching spot crypto trading on E*Trade at half a cent per dollar traded, undercutting rivals including Charles Schwab. Crypto’s march towards the mainstream continues.
IN INVESTMENT & FINANCIALS NEWS...
IN INVESTMENT NEWS/TRENDS…
MARKETS – UBS research shows over half of the S&P 500’s 12% rally since the early April ceasefire was driven by just five stocks: Alphabet, Nvidia, Amazon, Broadcom and Apple. This runs counter to fragile consumer, squeezed spending power squeezed and precarious household finances. Companies are still coasting on pre-war feelgood, but the longer the war goes on, the more corporate casualties are likely to emerge. Meanwhile, cash-rich companies will find opportunities to snap up distressed smaller rivals.
Hedge funds posted a 5% rise April – their best month since November 2020 – driven by tech-focused funds, robust earnings, hyperscaler investment and a boom in memory stocks. Marshall Wace, Balyasny, Millennium and Citadel were among the standout performers.
M&A – GameStop made an unsolicited $56bn offer to merge with eBay, having quietly built a 5% stake. It’s a half-cash, half-shares deal at a 46% premium to eBay’s February closing price. The CEO argues a merger could reduce costs, boost earnings and give eBay a proper retail network. Some say that the rationale is flimsy and unoriginal. We’ll see.
Vodafone is also taking full control of VodafoneThree by buying CK Hutchison’s 49% stake in an all-cash £4.3bn deal, expected to complete in H2.
IN FINANCIALS NEWS…
BANKS – NatWest profits surged as war-driven borrowing cost rises boosted its Net Interest Margin, prompting a full-year guidance upgrade. Higher interest rates are a double-edged sword good for margins but increasing the risk of bad loans as customers are squeezed.
HSBC took a $1.3bn hit including a $400m fraud-related charge and war-related exposure, though underlying operations remain reasonably solid.
TSB will disappear from high streets after over two centuries as Santander phases out the brand following last week’s merger, targeting £400m in combined savings. Another high street stalwart bites the dust!
FINTECH – South Korean fintech Toss is making waves with FacePay – facial recognition payments now used by nearly 10% of the population, with 4.8m users and scanners in 330,000 outlets since September. The lead developer is targeting the elimination of physical credit cards in Korea within three years. Privacy concerns will be the main barrier to adoption in Europe and the US, but it’s genuinely impressive.
Corporate card platform Ramp is raising $750m at over $40bn – a 30% valuation uplift in just six months – using AI to automate finance tasks. This one looks very hot.
IN EMPLOYMENT, CONSUMER-RELATED & LEISURE NEWS...
IN EMPLOYMENT TRENDS…
Graduate job opportunities have fallen by a third over the past year, according to the latest figures from Adzuna. Coinbase is cutting 14% of its workforce, blaming AI and Cloudflare is slashing 1,100 jobs, joining PayPal and Freshworks in announcing AI-related cuts in the same week. It won’t be the last.
The accountancy profession is also changing, with the hallowed path to partnership losing its lustre – the Big Four are increasingly demoting partners, prompting many to set up rival firms.
Meanwhile, over 7,000 Just Eat couriers have launched legal action to secure minimum wage and holiday pay, with the tribunal running until 2nd June. Worker or contractor? The outcome has implications far beyond Just Eat.
IN CONSUMER TRENDS…
“AFFORDABLE LUXURIES” – Live Nation swung to a loss on legal fees – it was found to have illegally monopolised US concert ticketing — but revenues rose on strong demand for live experiences. It does make you wonder about the potential for virtual concerts: with ticket prices rocketing and technology improving, there’s a compelling proposition in high-quality virtual events blended with food delivery. Acts get unlimited audiences; fans get affordable tickets. Someone will crack this I’m sure!
DoorDash, which now owns Deliveroo, saw Q1 revenues boom by 33%, though profits dipped on higher costs. In what looks like a cost-of-living crisis, it still amazes me how much people spend on take-outs!
Heat pump sales rose 34% in Germany and 21% in France in Q1 as higher fossil fuel prices drive consumers towards alternatives.
IN THE UK – NIESR economists are warning that 200,000 UK households could be tipped into poverty by higher energy, petrol and food costs combined with slowing wage growth.
ECIU research suggests food prices are on track to be 50% higher by November than at the start of the cost-of-living crisis in 2021 – prices for pasta, frozen veg, chocolate and eggs are all up at least 50%, beef up 64% and olive oil has more than doubled. Three of England’s worst ever harvests have happened in the last five years. The government has precious few levers.
IN RETAIL NEWS…
UK retail space is shrinking for the first time since the 1940s, with closures outpacing new development – a trend accelerating this year. Online now accounts for 28% of sales, up from under 15% a decade ago. Property developers are redirecting capital to warehouses and data centres. We’re entering cost-of-living crisis 2.0.
Chinese e-tailer Joybuy, owned by JD.com, is making a UK push with its “double 11” delivery promise. It can’t cover the whole country yet but it’s making progress – and it’ll be interesting to see how it fares against a well-entrenched Amazon.
IN CONSUMER GOODS…
LUXURY – LVMH is shifting from buyer to seller, putting Marc Jacobs, Joseph Phelps Vineyards and its Fenty Beauty stake up for sale to refocus capital on Louis Vuitton and Dior. Some pruning makes sense although timing is awkward – luxury is having a hard time and everyone knows it, so buyers are likely to be low-balling.
IN LEISURE NEWS…
PUBS – Pub groups are pinning their hopes on the World Cup to boost sales. Greene King reported an influx of bookings and Admiral Taverns expects 10% more beer sales.
Heineken’s Star Pubs has been upgrading screens and sound systems since September to attract the punters. Heineken is also trialling a “contemporary pub model” – coffee shop by morning, remote-work friendly by day, comedy or game night by evening. The problem is that drink prices are high, the cost-of-living squeeze is real and the games are at awkward times because of where they are. Supermarkets and people hosting at home could be the bigger winners IMO.
JD Wetherspoon issued its third profit warning this year. If even ‘spoons is struggling, smaller operators must be having a miserable time.
GAMBLING – Kalshi has quadrupled its valuation to $22bn in under a year – nearly double Flutter’s market cap. Flutter is reportedly considering ditching its London listing for New York which, given the divergence in growth prospects, makes complete sense.
Meanwhile, Polymarket is hosting a market where $693,000 has been wagered on a hantavirus pandemic. Betting on war and death is illegal in the US, but Polymarket’s offshore base lets it circumvent those rules.
TRAVEL – Airlines have cancelled 13,000 flights in May as scarce jet fuel forces capacity cuts. Lufthansa couldn’t refuel one of its Cape Town flights on landing and is now scheduling refuelling stops on some Asia and Africa routes.
Rail ticketing platform Trainline is also feeling the pinch – sales to foreign visitors have dived, prompting muted earnings guidance.
Airbus secured a $19bn order from AirAsia, potentially rising to $38bn if a larger variant is launched. This will be a huge boon to Airbus’s Canadian manufacturing base and PM Carney is loving it.
IN TECH & MEDIA NEWS...
IN TECH NEWS…
AI – The IMF has warned that rapid AI advancement poses a potential “systemic” shock to financial systems, with advanced models dramatically reducing the time and cost needed to find and exploit vulnerabilities in widely-used systems. It adds to a growing chorus calling for oversight.
Google, xAI and Microsoft have meanwhile agreed to pre-deployment national security reviews by the Center for AI Standards and Innovation – probably following the alarm caused by early versions of Anthropic’s Claude Mythos model, which prompted Anthropic’s ongoing legal dispute with the government over its “national security threat” designation. Relations appear to be thawing.
Palantir delivered record quarterly revenue of $1.63bn on surging US military demand.
German rival Celonis, valued at $13bn, is positioning itself as Europe’s answer to Palantir, having worked with BMW, Airbus and AstraZeneca and recently signed a deal covering half a million UK civil servants.
DeepSeek is approaching a $45bn valuation as China’s state-backed Big Fund leads a new round with Tencent participating, powered by Huawei’s Ascend 950PR chips.
CHIPS – AMD beat Q1 forecasts on AI infrastructure demand.
Samsung hit a $1tn market cap – only the second Asian company after TSMC to do so. This was also due to AI-related demand.
Arm is projecting $2bn in sales from a new AI data centre chip by 2027-28, though making its own chips puts it in direct competition with its customers including Nvidia, Google and Amazon.
HARDWARE – Apple has reached a $250m settlement over overstated 2024 AI Siri capabilities, admitting no fault ahead of an expected AI-enhanced Siri reveal next month.
Anthropic has secured 300 megawatts of computing capacity from SpaceX’s Colossus 1 data centre, adding to Amazon and Google deals.
Nintendo’s share price has fallen 45% since August as AI-driven memory chip price inflation has been squeezing margins and threatens Switch 2 pricing. Sony is down over 30% since November for similar reasons.
IN MEDIA NEWS…
Disney reported higher revenues despite slower US theme park footfall, as visitors spent more and cruises held up. The outlook is murky given rising fuel costs and a drop in international visitors amid anti-American sentiment – plus the distraction of Trump allies pursuing the company over a Jimmy Kimmel joke about Melania.
IN SOCIAL MEDIA NEWS…
Meta is building a highly personalised “agentic” AI assistant for its 3bn-plus users, powered by its new Muse Spark model. The trust issue is the key obstacle – genuine usefulness requires handing over sensitive personal information – but this feels like the inevitable direction of travel.
Meta is also facing a copyright lawsuit from major publishers including Hachette and Macmillan over training its Llama models. If publishers win, AI companies may have to start paying for quality content, which would reshape the economics of model training entirely.
Meanwhile, Meta is challenging Ofcom over the Online Safety Act’s fining methodology – a predictable move from a company that treats regulatory penalties as a cost of doing business.
Match Group reported higher profits as Tinder’s Gen Z turnaround gains traction, helped by a double date feature, better recommendations and Face Check verification. Hinge continues to perform well.
IN AUTOMOTIVE NEWS...
IN AUTOMOTIVE NEWS…
The Big Three US carmakers – GM, Ford and Stellantis – have all flagged a $5bn commodities shock in Q1 results, warning that discounts could be cut and prices raised if the conflict persists another six months.
Toyota more than doubled EV sales in Q1 and is pushing further into electrification – notable given that many rivals are pulling back.
UK new car sales rose 24% year-on-year in April, with BEV sales surging 59.1% to account for over a quarter of the total – higher fuel prices are a clear driver. Chinese brands played a big role, with the Chery group overtaking BYD, Ford, BMW and Mercedes-Benz in registrations.
Nissan is closing one Sunderland production line and cutting 900 European jobs, with talks underway with Chery and others. A Nissan-Chery deal would be quite the moment given the historical tensions between Japanese and Chinese automakers — and would underline just how serious Nissan’s position has become.
IN MISCELLANEOUS NEWS...
IN REAL ESTATE – RENTAL – London rental listings fell 21.7% in Q1 versus two years ago while for-sale listings rose 17.6%, as landlords exit the sector. With the Renters’ Rights Act now in force, making it easier to contest rent rises, the exodus is likely to continue. Fewer rentals means more competition for those that remain, so rents are likely to keep rising regardless. Stamp duty data also shows landlords and second-home buyers now account for the majority of receipts in over half of English local authorities, a revenue stream that looks increasingly fragile.
BUYING – Nationwide showed a fourth consecutive monthly house price rise with a new record high in April. However, Halifax, which tends to react faster to market shifts, showed prices peaking in February and softening in March – a reading more consistent with falling consumer confidence, declining new buyer enquiries in the RICS survey and reduced housebuilder website traffic.
Mortgage affordability has hit its worst level since 2008, with initial repayments averaging 21.3% of gross income and that’s using pre-Iran-war data, so the real picture’s probably even worse.
IN PHARMACEUTICALS – Novo Nordisk gets a second shot at weight-loss supremacy with the pill version of its semaglutide treatment. The clock is ticking – patents expire in the US and Europe in 2032 – so it will be working hard to maximise returns before generic competition arrives.