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...
A US-Iran deal is struck, it's the beginning of the end for Starmer and Rolls-Royce has a great week
IN WAR NEWS…
Iran and the US agreed a deal to open the Strait of Hormuz and extend their ceasefire, the most positive development seen so far in the conflict. The Strait will reopen in phases over 30 days as Iranian forces clear mines and the ceasefire is extended by 60 days. Oil prices fell and global markets rose on the news. This is a far cry from the “unconditional surrender” Trump demanded 100 days ago and instead confirms Iran’s capacity to withstand American pressure through its control of the Strait. The deal is widely seen as the least bad available outcome rather than a genuine resolution since major issues such as Iran’s nuclear programme and the permanent terms for using the Strait, including possible tolls, remain unresolved. Iran’s regime has survived intact and arguably emerged stronger, Israel is unhappy that the deal restricts its options in Lebanon and Gulf states must now reconsider their own alliances – do they huddle up closer to the Americans or seek other alliances instead?
Trump’s administration is considering a $300bn fund to help rebuild Iran if the deal holds although the money would reportedly come from companies wanting to do business there rather than the US government directly. Iran’s government is largely treating the outcome as a victory, having absorbed huge losses including 3,500 civilian deaths and damaged infrastructure without any regime change resulting. The two sides have electronically signed an interim memorandum of understanding under which the US will lift sanctions and release frozen Iranian funds, while Iran receives a waiver to export oil during the ceasefire period. Iran has separately announced plans to introduce maritime tolls for the Strait of Hormuz within two months and has rejected a European plan for a naval escort mission, with its supreme leader claiming Trump agreed the deal “out of desperation”.
IN DEFENCE NEWS…
The CEO of US defence tech start-up Anduril has called for a reset of America’s arms export controls to make it easier for allied nations to manufacture US weapons and boost production capacity.
France is seeking new defence partners, including the UAE, after its next-generation fighter jet project with Germany collapsed, with Dassault widely seen as the sticking point due to its reluctance to share sensitive technology.
In the UK, ministerial resignations and US criticism over defence spending shortfalls continue to weigh on Starmer. The Strategic Defence Review recommended an additional $68bn of spending over ten years against a current budget of around £60bn, while strategists argue Britain should refocus on defending the North Atlantic from Russian submarines and protecting undersea cables and maritime supply routes.
IN TRUMP THINGS…
Trump’s approval rating in Venezuela has fallen sharply since February amid frustration at the slow pace of change, with inflation still above 600% despite rising oil sales not yet filtering through to ordinary citizens.
On the domestic front, Trump has got some ground to make up in undoing some of the damage he’s done to his support base which may be why he appears to be using a personal vendetta against opponents as a distraction from the underwhelming Iran deal, with California governor Gavin Newsom claiming Trump has ordered the Justice Department to investigate him for considering a presidential run.
IN REGIONAL/INDIVIDUAL COUNTRY NEWS…
THE AMERICAS
US – The Fed kept interest rates unchanged for the fourth meeting in a row under new chair Kevin Warsh, signalling a shift in focus from jobs towards taming inflation. Trump, who spent the best part of two years criticising former chair Jay Powell for not cutting rates fast enough, appeared notably relaxed about Warsh holding rates steady.
US defence secretary Pete Hegseth announced a six-month review of US military presence in Europe following the withdrawal of 5,000 troops from Germany, and continued criticising NATO allies for not unconditionally granting the US base access for its Iran strikes.
ASIA
CHINA – Retail sales fell in May for the first time since December 2022, while fixed asset investment was also weaker than the previous quarter, suggesting China is still struggling to recover from its prolonged property sector slowdown.
JAPAN – The Bank of Japan raised its short-term policy rate to around 1%, its highest level in 31 years, as inflation continues creeping into the economy.
EUROPE
The EU has officially started accession talks with Ukraine after Hungary lifted its veto under its new leader, having previously been blocked by pro-Russia former leader Viktor Orban. Swiss voters rejected a proposal to cap the country’s population at 10 million, a defeat for the right-wing campaign behind the vote, with the government, business groups and unions arguing the restriction would undermine access to foreign labour at a time of challenging demographics.
UK
The UK economy contracted 0.1% in April as the Iran war hit the services sector but the economy still expanded 0.7% over the three months to April versus the previous quarter. Arts, entertainment and recreation businesses were hit hardest, along with weakening retail activity. UK inflation held steady at 2.8% versus market expectations of a rise to 3%, thanks to easing food price inflation. This marked the second consecutive month of inflation undershooting forecasts. The Bank of England subsequently held interest rates at 3.75% in a seven to two vote.
The Makerfield by-election proved to be a defining moment, with Andy Burnham’s Labour facing stiff competition from Reform and the newer Restore Britain movement, which has been gaining Elon Musk-backed support. Burnham ultimately won, but the result leaves Starmer facing a genuine internal challenge.
IN COMMODITIES NEWS…
OIL – Oil prices fell to a three-month low as global markets hit record highs on the Iran deal breakthrough. Average US petrol prices dropped below $4. Prices are unlikely to fully return to pre-war levels for months as buyers need time to replenish heavily depleted emergency stockpiles and repair damaged infrastructure. Oil sank below $80 as traders bet on a return of Strait of Hormuz flows. Analysts expect an eventual surplus to emerge as the UAE, now free of OPEC, opens its taps, Iran ramps up production as sanctions lift, and new projects in Brazil, the US and Guyana come online from 2027 while demand from China continues to weaken and the war has accelerated the broader shift away from fossil fuels.
IN ENERGY NEWS…
The war has accelerated the transition to clean energy in some respects but the industry remains cautious about whether the momentum will last. Some countries in north-east and south-east Asia have actually burned more coal during the crisis, while the US and Canada have increased fossil fuel production to meet domestic needs and boost exports. Individual consumers, meanwhile, are buying more EVs, solar panels and home batteries.
NUCLEAR – Rolls-Royce struck a deal with Japan to jointly develop Advanced Modular Reactors and their fuel, working with the National Nuclear Laboratory and the Japan Atomic Energy Agency, aiming to build a UK demonstrator reactor by the mid-2030s.
Rolls-Royce also won a contract to supply small modular reactors to Sweden’s Vattenfall subsidiary Videberg Kraft after a four-year process, its third such win after the UK and Czech governments.
Construction spending on commercial fusion plants is forecast to reach $73.1bn a year by 2040 according to consultancy Helixos, with suppliers including Japan’s Fujikura and US-based Aecom expecting profitability well before reaching maximum output.
IN INVESTMENT NEWS...
IN INVESTMENT NEWS/TRENDS…
TRENDS – Overseas buyers have spent £128bn acquiring British companies so far this year, more than three times the amount over the same period in 2025 and the highest level of UK M&A activity since just before the 2007 financial crisis, as depressed valuations and London’s pull attract foreign capital.
SDCL Efficiency Income Trust, once a popular ESG investment vehicle, saw its shares fall 25% to a record low after announcing it would suspend dividends and begin winding down, having been hit hard by higher interest rates and falling asset values.
Private equity firms are increasingly wary of investing in law and accountancy firms as AI threatens their business models, with writing, translation and legal services seen as particularly vulnerable, while capital flows instead towards industrials with assets less likely to be made obsolete by technology.
IN IPOs – SpaceX’s flotation was a runaway success, with shares climbing almost 20% on debut to push its valuation to around $2.1tn, making it the world’s sixth biggest company and Elon Musk the world’s first trillionaire when combined with his Tesla stake. Banks shared a record $500m fee pool, with Goldman Sachs and Morgan Stanley earning $100m each. Shares rose a further 20% the following day, taking the market cap to $2.5tn, before SpaceX briefly overtook both Amazon and Microsoft at a peak valuation of $2.97tn. SpaceX has also agreed to buy Cursor parent Anysphere for $60bn to boost its AI coding capabilities and enterprise reach, a move likened to Facebook’s acquisition of Instagram. Musk is now planning a $20bn bond sale to repay a bridge loan taken out when xAI and X were folded into SpaceX.
There are still the IPOs of Anthropic and OpenAI to come and hopes are rising among charities for a wave of philanthropic giving similar to that which followed Facebook’s 2012 listing given that Anthropic’s founders have already pledged to donate at least 80% of their wealth.
IN MONEY RAISING – Nvidia is seeking to raise over $25bn in its first bond sale since 2021, upsized from an initial $20bn target due to strong demand.
Jeff Bezos has backed Cambridge AI start-up CuspAI in a $400m funding round implying a $2.6bn valuation, up from $520m in September, with the company using digital simulation to accelerate the discovery of new materials.
M&A – Fox Corp announced the acquisition of streaming platform Roku in a $22bn deal, its first major acquisition since Lachlan Murdoch took over from his father.
American Express is buying Tripadvisor’s restaurant booking app TheFork for $700m to expand its dining network.
Yum Brands is selling Pizza Hut outside China to private equity firm LongRange Capital for $1.5bn to focus on its faster-growing KFC and Taco Bell businesses.
The CMA cleared Associated British Foods’ acquisition of Hovis, creating the UK’s biggest bread brand alongside its existing Kingsmill, Allinson’s and Sunblest brands.
Sportswear brand Castore bought a controlling stake in 160-year-old shoemaker Grenson, its latest acquisition after buying Belstaff last year.
IN EMPLOYMENT NEWS...
McKinsey is among companies increasingly using AI in recruitment, testing how candidates use the technology to research and analyse data as a marker of intellectual curiosity.
AI medical tools from Germany’s Mira and Google’s Amie matched or outperformed human doctors in controlled diagnostic and treatment tests, though developers caution they are not yet ready for real-world deployment.
In a separate test of AI stock-picking ability, six of eight major large language models lost money trading US stocks, while ChatGPT made almost $900 and Grok broke even on a $10,000 stake, suggesting professional investors remain safe from AI for now.
Accenture shares fell to their lowest level since 2017 after the company cut revenue forecasts, with its market cap down from over $200bn at the post-Covid consulting peak to under $80bn, as investors worry about AI displacing consultancy work. The company has spent $9bn on acquisitions this fiscal year, including cybersecurity firms runZero, NetRise and a majority stake in Dragos.
IN CONSUMER & RETAIL NEWS...
CONSUMER TRENDS
An impending El Nino weather event threatens to push household energy bills higher by intensifying competition between Europe and Asia for gas, with a hot Asian summer driving air conditioning demand and a cold European winter increasing heating use.
UK – private sector wage growth has slowed to its lowest rate in five years, a trend likely to support the case for the Bank of England holding interest rates steady for longer.
IN RETAIL NEWS…
Major retailers including Currys, B&Q and Amazon met the energy minister to discuss guidelines for selling balcony solar panels, which the government says could save households £70 to £110 a year and are particularly suited to flats and rented homes.
Over 65 business leaders and MPs signed a letter urging the government to halt “relentless” tax rises, while retailers separately pressed for an earlier closure of the de minimis customs threshold that currently lets firms like Temu and Shein ship parcels under £135 into the UK duty-free.
Cotswold Company reported record sales and a near 25% rise in annual profit, defying the broader furniture sector slowdown.
Aussie pharmacy Sigma Healthcare pulled out of talks to buy Boots. Even if takeover talks collapse, there’s still the prospect of the IPO that everyone had been expecting. It also shows that Boots is open to all options.
IN SUPERMARKETS – Tesco blamed poor weather and Middle East uncertainty for a slowdown in Q1 sales, with its chief executive saying sunshine has a bigger impact on grocery spending than the World Cup.
Aldi outlined a $9bn US expansion plan involving 4,000 new stores, with analysis showing new Aldi openings cut around one percentage point from competitors’ annual sales within a ten-mile radius.
IN TECH & MEDIA NEWS...
AI – The Trump administration forced Anthropic to suspend exports of its Fable and Mythos models and ban foreign nationals from using them, citing national security concerns and giving the company just 90 minutes to comply. Starmer is seeking a British carve-out from the ban, while the US and Europe are discussing a “trusted partner” scheme that could restore access. Anthropic’s Dario Amodei told G7 leaders in France to resist the temptation to splinter over AI, a call echoed by OpenAI’s Sam Altman and Google DeepMind’s Demis Hassabis, though Mistral’s chief executive warned that intertwined AI supply chains leave non-US countries vulnerable to being cut off. JPMorgan banned its Hong Kong staff from accessing Anthropic’s models following a similar move by Goldman Sachs earlier this year. The episode has intensified debate about European AI sovereignty, with commentators noting Europe currently lacks the companies needed to build leverage in the AI supply chain, since DeepMind is owned by Google and Arm is majority-owned by Japan’s SoftBank.
Canada’s Cohere, a non-American LLM provider, is tripling its UK footprint.
OpenAI spent $34bn last year, including $19bn on R&D, against revenues of around $13bn, ahead of a potential autumn IPO.
Legal AI start-up Legora plans to more than double its headcount after quadrupling its client list to around 1,200 in the past year.
DATACENTRES – Investors poured $58bn into 42 data centre financing deals this year, up from $34bn across 34 deals in the same period last year, with almost 850 data centres worth about $7tn currently under construction worldwide according to Oxford Economics.
HARDWARE – SpaceX criticised EU plans to reserve satellite spectrum for European players, warning it could undermine connectivity in Ukraine and create global interference problems.
Apple is preparing to raise gadget prices, attributing the move to rising AI memory chip costs ahead of the expected September launch of the iPhone 18, with DRAM prices having doubled in the first quarter of this year.
Snap launched its latest “Specs” augmented reality glasses at $2,195 after investing over $3.5bn in their development, though shares fell more than 9% on the news.
SOFTWARE – France’s domestic intelligence agency has replaced Palantir with local rival ChapsVision just months after renewing a ten-year contract, part of a broader European pullback from US tech firms that has also seen Germany’s armed forces cut Palantir from contracts and Denmark, the Netherlands and Switzerland reviewing or rejecting its services.
IN MEDIA NEWS…
The BBC’s new director-general Matt Brittin announced 550 job cuts while on holiday, alongside programme axings and a push towards mobile filming over camera crews, drawing criticism for poor timing just weeks into the role.
IN SOCIAL MEDIA NEWS…
Starmer announced a social media ban for under-16s that goes further than Australia’s equivalent, covering platforms including Facebook, Instagram, Snapchat, Reddit, TikTok, YouTube and Twitch, alongside restrictions on livestreaming and stranger contact extending to Roblox and Discord. Legislation is expected to pass by year-end with the ban taking effect by next spring. Enforcement will be modelled on the Online Safety Act, with fines of up to 10% of global revenue and Ofcom overseeing compliance. Industry groups have pushed back, warning the move could drive teenagers towards more harmful platforms.
Research firm eMarketer reckons that social media ad spend will be cut because of the legislation so it shaved £1.3bn to off its original expectation to leave an ad spend of £17bn.
IN MISCELLANEOUS NEWS...
IN AUTOMOTIVE NEWS – GM is in talks to supply weapons parts to Lockheed Martin as it looks to grow its small defence business while Renault and Thales are partnering on a tactical vehicle prototype for armed forces, building on Renault’s earlier drone partnership with Turgis Gaillard. Commentators are sceptical that defence work will rescue European carmakers from Chinese EV competition, given the loss of truck divisions that would have been natural defence partners and the specialised retooling defence contracts require.
Rivian cut just under 2% of its workforce in sales and marketing as it pushes towards profitability.
EV charging industry group ChargeUK has warned it could halve planned investment if Starmer waters down net zero targets amid reports the government may cut its 2030 EV sales target from 80% to 50%.
Jaguar Land Rover outlined ambitions to grow hybrid production and its US business to match the size of its entire current operation, while separately facing a whistleblower claim alleging it suppressed fire risk concerns over the Range Rover Evoque.
IN REAL ESTATE – housebuilder Vistry is offering staff voluntary redundancy as it seeks to conserve cash amid a weak housing market and rising material costs linked to Middle East disruption. The Item Club forecasts the housing slowdown will continue into next year due to weak consumer confidence, rising unemployment and elevated mortgage rates.
The government announced plans to overhaul the home-selling process, requiring upfront sales information packs and earlier binding agreements to reduce gazumping and gazundering, with Rightmove data showing average transaction times have risen 60% since 2007 to 170 days.
Rathbones shares fell almost 20% after the wealth manager announced it would pause investments by high-risk clients and suspend onboarding such clients for up to a year following an internal review, with fixes expected to take around two years and £60m.
Diageo’s new chief executive Dave Lewis has ordered job and cost cuts as part of a major restructuring focused on non-revenue-generating teams.
Chinese universities are climbing global rankings faster than UK and US institutions, with China’s representation in the top 1,504 QS World University Rankings rising from 13 to 85 institutions while a majority of US and UK universities fell, partly attributed to declining international student numbers following UK visa changes.