Matthew Lynn

As missiles fly across the Middle East as Israel and Iran embark on what could well become a wider regional conflict, you might expect turmoil in the financial markets. After all, if the beginning of a third world war doesn’t knock a few dollars off the Apple share price it is hard to know what would. But it turns out that investors, at least for now, appear indifferent. Investors, at least for now, appear indifferent Looking at a trading screen this morning you would probably think not much was going on in the world. The FTSE100 was up 30 points. Overnight, the Nikkei was up by 1.2 per cent; and when Wall Street opens it is expected to be up by a few points as well. Gold was down by 0.4 per cent, and oil by slightly under 1 per cent. It is all very meh.

This afternoon's spending review mostly consisted of rehashed announcements, and in fact Tory plans that had been quickly rebadged. But there was one commitment that stuck out. The Chancellor Rachel Reeves is planning to spend £39 billion – serious money even by the standards of an organisation as extravagant as the British state – on ‘affordable’ and ‘social’ housing. Following her announcement, the scaffolding will almost certainly be going up in Blackpool, the spades will be turning over the ground in Preston, and the cement mixers will be churning in Swindon. But there's just one problem: the UK doesn’t need more ‘affordable homes’ – it just needs more places for people to live.

When the fintech giant Wise floated its shares on the London Stock Exchange in 2021 it was widely seen as proof that the City still had a future as a centre for equity trading. This was London’s largest-ever tech listing: it was one of only a handful of new British companies with a global presence and it was hailed as the perfect example of how the London stock market could still be an effective home for growing businesses. Against that backdrop, its decision today to move its primary list to the United States is a crushing blow. Has Wise just killed the London stock market?

It will be like Liz Truss on roller skates. The next election may still be four years away, and the manifestos still need to be fleshed out. Even so, the City has already started issuing stark warnings of a run on the pound if there is a Reform government led by Nigel Farage as Prime Minister. Of course, it is a measure of how far the party has come that the City is taking it seriously. The trouble is, there is also an element of truth in it. Reform would face a huge backlash in the markets – and the party will have to be ready for it.

China has wrapped up a pretty good trade deal. The UK has managed to agree to lift some of the US tariffs. With President Trump touring the Gulf states this week, they may soon have an arrangement in place, especially as Qatar took the precaution of gifting the president a new 747. Japan may well have something signed over the next few weeks. There is just one exception. Where is the EU’s deal? President Trump has described the EU as ‘nastier than China’ Despite the panic last month, it looks like the global trading system will soon be back to relative normal. The US and China, the two largest economies in the world, have called a truce, lowering tariffs on both sides.

Keir Starmer says it is a 'fantastic, historic' day after signing a trade deal with the United States, but is the agreement really something to celebrate? Ten per cent tariffs, announced last month, still apply to most UK goods entering the US The government is no doubt cock-a-hoop to be the first country to get a trade deal with President Donald Trump over the line, and there are a few wins: tariffs will come down for cars, steel, and potentially for pharmaceuticals, exempting UK exporters from the worst of the tariffs imposed on the oddly-named ‘Liberation Day’.

It was a mark of respect. After Warren Buffett, who can lay claim to the title of the greatest investor of all time, told his army of loyal shareholders over the weekend that he was finally stepping down from the Berkshire Hathaway empire he has built over the last six decades, the firm’s shares fell 5 per cent when trading opened on Wall Street. Buffett, however, is 94. It should not have come as a surprise to anyone that he was retiring. In fact, the fall proves once again the central insight on which Buffett has built his remarkable career – the markets are not as efficient as they think they are. His retirement should’ve been expected It is not hard to understand why the shares fell.

There is not much that Chancellor Rachel Reeves can look forward to right now. The Labour party has just been hammered in the local elections. The economy has stagnated, and government borrowing has started to spiral out of control. There is, however, this: the City now expects interest rates to start falling at the fastest pace since the financial crisis a decade and a half ago. There is just one catch: it probably won’t be enough to save Reeves's failing chancellorship. The Bank of England is widely expected to cut interest rates from 4.5 per cent to 4.25 per cent next week. Even better, the consensus among City forecasters is that we will see a series of rate cuts over the next six months that will bring rates below 3 per cent by the end of the year.