Happy Thursday and welcome to your morning wrap of the latest business and political headlines from around the world.
First up, Federal Reserve chair Jerome Powell said he will stay on the bank’s board for an indefinite period of time while a probe into the renovation of its headquarters continues.
“I’ve said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that,” he said at a press conference following the Federal Open Markets Committee meeting, where an unusually divided central bank held interest rates steady. “I’m encouraged by recent developments, and I’m watching the remaining steps in this process carefully."
He said his decision would continue to be guided by what he believed was in the best interest of the institution after his term as chair ended on May 15, and he would continue to serve as governor for an unspecified period of time.
Powell congratulated his successor, Kevin Warsh, who cleared a pivotal hurdle when the Senate Banking Committee voted to move him forward to the full floor vote. He also addressed the intense criticism he has copped from President Donald Trump, calling it “unprecedented in our 113-year history”.
“I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policies without taking into consideration political factors,” he said.
The US Federal Reserve Building.
The decision itself saw the FOMC hold the benchmark rate in a range between 3.5% and 3.7% for the third straight meeting. However, language in the statement hinted that rates could be cut in the coming months, prompting the most dissenting votes in more than 30 years, Associated Press reported.
In its statement, the Fed said developments in the Middle East were contributing to a high level of uncertainty about the economic outlook. “Inflation is elevated, in part reflecting the recent increase in global energy prices.”
Meanwhile, oil prices have jumped by close to 6% overnight after Trump said he would maintain the US naval blockade against Iran until it agreed to a nuclear deal. Brent crude, which is the international benchmark, was up close to 6% (as of 6:30am NZT) to US$118 per barrel.
“The blockade is somewhat more effective than the bombing,” Trump told Axios on Wednesday. “They are choking like a stuffed pig, and it is going to be worse for them. They can’t have a nuclear weapon.”
The Wall Street Journal also reported that Trump had told his aides to prepare for an extended blockade.
Oil prices reacted accordingly, which saw equity markets fall. The S&P 500, the tech-heavy Nasdaq and the Dow Jones Industrial Average all fell 0.3%, 0.3% and 0.8%, respectively.
After the bell, four of the 'Magnificent Seven' tech titans will report their results. That includes Alphabet, Amazon, Meta Platforms and Microsoft. Investors expect the companies to show revenue that justifies the huge amounts of capital they have invested in artificial intelligence.
In the United States, a Pentagon official said the war in Iran had cost the United States US$25 billion ($42.8b), providing the first indication of the cost of the conflict, Reuters reported.
Jules Hurst, who is performing the duties of the comptroller, told lawmakers on the House Armed Services Committee that most of that money was for munitions. Hurst did not detail what the cost estimate included, nor whether it included the likely costs involved in repairing bases damaged by the conflict. The US$25b cost is equal to the entire budget of Nasa for this year.
Now to the United Kingdom, where police are treating the stabbing of two Jewish men in North London as an act of terrorism, with the suspect described as hunting for anyone “visibly Jewish” to attack, The Guardian reported. The victims are aged 76 and 34 and are both in a stable condition in hospital. A man aged 45 was arrested at the scene on suspicion of attempted murder. The attacks come after a series of arson attacks on Jewish targets in London since March.
In business news, billionaire investor Bill Ackman’s Pershing Square USA has had a disappointing IPO, as shares in the much-anticipated listing fell below the issue price. They were trading at US$41.62 in late trading, down from their issue price of US$50.
The high-profile billionaire’s closed-end fund offers retail investors a stock-picking strategy that is traditionally limited to the super-rich. It raised US$5b through the IPO.
Ackman also listed his management business, which opened at US$24 a share. Because investors who paid US$50 for each share in the fund also received 0.2 shares in the fund management firm, the combined value is close to US$46.80.
Ackman, who built his fame and estimated US$9b fortune through activist campaigns at companies including Canadian Pacific and Chipotle, ranks among Wall Street's most closely watched investors.
In recent times, he has turned to social media platform X, where he has 2.1 million followers. He weighs in on everything from presidential politics to the dangers of sugary drinks.
