Trump and Xi had already held their first exchange by this morning. The two sides traded the usual pleasantries and made a show of goodwill on economic co-operation. The Chinese president nonetheless took the opportunity to note that Taiwan remains a flashpoint that could put the two countries on a dangerous path if mishandled. Consider that a warning. Xi Jinping then met the business leaders Donald Trump had brought along for the ride, a group whose companies are worth several trillion dollars between them, including Nvidia's Jensen Huang, Apple's Tim Cook and Elon Musk of Tesla, SpaceX, X and the rest.

On the geopolitical agenda, China and the United States are expected to discuss a trade truce, AI, energy and semiconductors. Experts believe the balance of power is less favourable to Washington than it was in 2017, when Donald Trump last visited during his first term. And then there is Iran. Before the trip, the US president loudly insisted that he did not need China to bring Tehran to heel. His secretary of state, Marco Rubio, struck a different note, saying the United States was trying to persuade China to push Iran to "renounce what it is currently doing and what it is trying to do in the Persian Gulf". As for the two presidents' schedule, while their delegations thrash out the technical details, it includes a visit to the Temple of Heaven and a state banquet on Thursday, followed by tea and lunch on Friday.

However much it may deny it, the White House is dragging a huge ball and chain in the form of the fallout from the war in Iran. The April inflation figures, released on Tuesday, caused concern. The producer-price data published yesterday were worse still: a 6% year-on-year increase, the highest since 2022 and far above what had been feared. The common denominator is energy prices. For now, the hit has not been passed on in full to US consumers: the data suggest companies have so far chosen to absorb part of the shock rather than pass it on entirely to their customers. But that cannot last indefinitely, which brings the issue back to timing. If a resolution to the crisis allows oil prices to fall back, the economic damage should be limited. Otherwise, the Fed will face a serious headache, forced to raise rates to curb inflation just when the economy needs support.

Market anxiety over inflation came to the fore yesterday during the US Treasury's sale of 30-year bonds. Investors demanded a yield of 5.05% to take down the debt, the highest level since 2007. But the inflationary surge is not confined to the United States: Japan has also had to borrow at record-high rates.

Trading is likely to be subdued across several European markets today, with many participants away. In the United States, macroeconomic data are now back in the spotlight, owing to the turmoil described above and the end of the first-quarter earnings season. This afternoon, attention will turn to weekly jobless claims, retail sales, import and export prices, and business inventories. Equity indices are still being pulled higher by semiconductor stocks, which have partly made up for Tuesday's wobble. Even Europe has rediscovered enthusiasm for its handful of sector champions, with STMicroelectronics and Infineon both gaining close to 10%.

In Asia-Pacific, the MSCI AC Asia Pacific index was trading close to flat this morning. South Korea, Hong Kong and Taiwan edged higher, while Japan and Australia fell. There is not much to read into the session, except that Trump and Xi's first joint appearance did not trigger any notable market reaction. European futures are pointing higher.

Today's economic highlights:

Today's agenda includes: in the United Kingdom, data on GDP growth, non-EU goods trade balance, industrial production, and business investment; In the Euro Area, ECB President Lagarde's speech; In the United States, initial jobless claims, retail sales, import and export prices, business inventories, followed by speeches from several Fed members. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,700.08
  • Crude Oil (BRENT): US$106.09
  • United States 10 years: 4.47%
  • BITCOIN: US$79,782.2

In corporate news:

  • BP plc and union leaders will resume talks on Monday over contracts for workers at its Whiting, Indiana refinery.
  • ITV: Comcast-owned Sky is nearing a deal to buy ITV’s media and entertainment arm, including a performance-linked payout, sources said.
  • Volkswagen is in talks regarding the possible sale of a European factory to the Chinese firm Xpeng, according to the FT.
  • Saab and the Polish group PGZ are joining forces in the naval sector.
  • Amadeus is issuing a €500 million 2031 bond at 3.75%.
  • Canal+ is issuing €700 million of 2032 bonds at 4.875%.
  • Havas renews its share buyback programme.
  • Vossloh is to acquire Cordel at 12.4 GBX per share.
  • An accelerated placement covering approximately 3.58% of the share capital of CIE Automotive was completed yesterday evening.
  • UPM acquires Avantium’s technology to produce glycol from plant sugars.
  • Burckhardt Compression is acquiring an Italian compressor manufacturer.
  • Var Energi has been added to the MSCI Norway index.
  • Sivers Semiconductors is preparing for a possible dual listing in the United States.
  • Cisco soared 20% in after-hours trading after announcing a pivot towards AI infrastructure.
  • Ford gained 13% yesterday, buoyed by the prospects of its energy storage division, as highlighted by Morgan Stanley.
  • Arm Holdings and SoftBank attempted to acquire Cerebras but were rebuffed, according to Bloomberg.
  • Broadcom is taking legal action against Brussels in connection with the antitrust investigation involving VMware.
  • Apple is exploring the integration of AI agents into the App Store, according to The Information.
  • The Council of State has rejected a request from Amazon regarding book delivery charges.
  • PayPal is partnering with Anthropic to offer a service for small businesses.
  • Cerebras has set the price for its IPO at $185 per share, raising $5.55 billion.
  • Today’s key earnings releases: Applied Materials, Brookfield Corporation, National Grid, 3i Group, PKO Bank Polski, CEZ, Telefónica, Aviva, Technoprobe, United Utilities…

See more news from UK listed companies here

Analyst Recommendations:

  • Vistry Group Plc: Berenberg maintains its hold recommendation and reduces the target price from GBX 500 to GBX 340.
  • Integrafin Holdings Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 440 to GBX 450.
  • Hsbc Holdings Plc: RBC Capital maintains its sector perform rating and raises the target price from GBX 1200 to GBX 1275.
  • The Weir Group Plc: Goldman Sachs maintains its neutral recommendation and reduces the target price from GBX 3050 to GBX 2840.
  • Ibstock Plc: UBS maintains its neutral recommendation and reduces the target price from GBX 140 to GBX 108.
  • Balfour Beatty Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 900 to GBX 985.
  • Hiscox Ltd: UBS maintains its buy recommendation and raises the target price from GBX 1725 to GBX 1850.
  • Airtel Africa Plc: Zedcrest Capital Ltd maintains its buy recommendation and raises the target price from NGN 3373.87 to NGN 5255.60.
  • Vodafone Group Plc: BNP Paribas maintains its underperform recommendation and raises the target price from USD 10.50 to USD 12.75.
  • Drax Group Plc: Morgan Stanley maintains its equalwt recommendation and reduces the target price from GBX 950 to GBX 900.
  • Glencore Plc: AlphaValue/Baader Europe maintains its add recommendation and raises the target price from GBX 660 to GBX 691.
  • British American Tobacco P.l.c.: Citi maintains its buy recommendation and raises the target price from GBP 49 to GBP 52.