Good morning and welcome to FirstFT. In today’s newsletter:
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Oil price returns to prewar level
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Trump slams Nato for lack of support in Iran war
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Venezuela rocked by two huge earthquakes
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How China is transforming itself into a robot economy
The Brent crude price fell to its pre-Iran war level, encouraging traders to shrug off the risk of any aftershocks from the crisis.
The international benchmark dipped 1.8 per cent to $72.40 a barrel, the first time it has traded under $72.48, its closing price on the day before the US-Israeli military campaign in Iran. Traders were willing to pay more for oil to be delivered later in the year, indicating that the market in the short term is oversupplied.
The conflict in the Middle East trapped more than a billion barrels of oil inside the Gulf. Yesterday 31 tankers left the region, almost 50 per cent more than the day before, according to ship data analytics company Windward. Vessels transiting the Strait of Hormuz must use authorised routes and co-ordinate with Iran, the country’s navy said.
“Traders are pricing in a return to normality,” said Francis Osborne, head of oil analysis at Argus Media, which assesses benchmark crude prices. “They are not taking into account the risks further down the road, which still remain very real.” Read the full story.
Here’s what else I’m keeping tabs on today:
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US: Q1 GDP third estimate; Chicago Federal Reserve president Austan Goolsbee and New York Fed president John Williams to give speeches.
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Earnings: Acuity Brands Q3, BlackBerry Q1, Bosideng Q4/FY, Darden Restaurants Q4/FY, Halfords FY, H&M HY, McCormick Q2, Methode Electronics Q4/FY, Moonpig FY, Serco pre-close trading update, SunRice FY, Synnex Q2, Vitasoy International FY, Volex FY, Winnebago Industries Q3, Wise FY, Worthington Steel Q4/FY
Five more top stories
1. Two major earthquakes struck the Venezuelan capital yesterday evening, leaving dozens dead and toppling buildings. The first, with a magnitude of 7.2, struck near the Caribbean coastal town of Morón, followed less than a minute later by a 7.5-magnitude earthquake 16km away.
2. US senatorial Democrats are investigating Yorkville Advisors, a financial group with ties to the Trump family, over a special-purpose vehicle set up to raise $200mn to buy a business in Venezuela. Ron Wyden, a top Democrat, wrote to Mark Angelo, president of Yorkville Advisors, to request additional information about the firm.
3. Meta has accelerated plans to replace human moderation of content and advertising with large language models, as the $1.4tn tech group looks to cut costs to offset chief executive Mark Zuckerberg’s vast spending on AI. The move could save the company billions of dollars each year, according to four people familiar with the matter.
4. President Donald Trump said he expected “loyalty” from Nato allies, as he railed against the military alliance for not being faster to assist in the war. “I just want their loyalty,” he said in the Oval Office alongside Nato secretary-general Mark Rutte yesterday. “We’re so loyal to them, we’re always fighting for them,” he added.
5. Two of Britain’s biggest trade unions are increasing pressure on Andy Burnham, the UK’s probable next leader, not to pick energy secretary Ed Miliband as his finance minister, arguing that his North Sea oil policy has damaged jobs in the sector. Read the full story.
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Fiscal tightrope: Burnham will find it hard to shield middle earners from big tax rises if he needs to raise revenue, economists warned.
The Big Read
Demographic change in China is the country’s biggest economic headwind. Its working-age population, which peaked at 1bn in the last decade, is set to fall to just 300mn by 2100, according to the UN. So Beijing is aiming to use AI-enabled robots to fill the gap.
We’re also reading . . .
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Big spender: The White House asked Congress to sign off on $88bn in new federal spending, including $67bn to cover the cost of the Iran war.
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Ukraine military reform: Kyiv is planning measures to combat manpower shortages and exhaustion. But for some troops, the moves come too late.
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In hot demand: Investors have been piling into shares of air-conditioning companies amid sweltering heatwaves.
Chart of the day
The largest US banks would lose more than $708bn in an economic collapse but remain above regulatory capital requirements, according to the Fed’s stress tests. The results of the annual exercise allowed several Wall Street lenders to lift investor payouts.
Take a break from the news . . .
Scientists have identified twin faraway “super-puff” planets that are less dense than candyfloss. The awe-inspiring discovery offers clues to how celestial bodies form and evolve.
