Market Report: markets step down, central banks step back, and stablecoins step in
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Markets are back under pressure as US officials continue to weigh the possibility of direct involvement in the escalating Iran-Israel conflict. Any move in that direction would likely rattle investor confidence further, raising fears of a broader regional escalation and dragging in other major powers like China, where trade talks with the US are already on a knife’s edge. The FTSE 100 has mirrored the global risk-off mood, slipping in early trading and giving back yesterday’s modest gains.
Central banks are back in the spotlight today. After the US Federal Reserve kept interest rates on hold yesterday, it’s now the Bank of England’s turn to take centre stage. But don’t expect any surprises – markets are betting on a near-zero chance of a rate move this side of the Atlantic. Economic conditions have played out pretty much as expected since the last meeting in May. Wage growth is starting to ease a bit, and there are some headwinds on the horizon – from rising tariffs to geopolitical tensions between Iran and Israel. Still, domestic demand remains solid, and inflation is still above target, giving policymakers enough reason to stick with a ‘wait and see’ approach for now. Perhaps more important than the decision itself, absent any surprise, will be the Bank’s statement later today to see how they’re reading the tea leaves.
US markets gave up early gains after the Federal Reserve held firm on interest rates, brushing off pressure from President Trump. But it wasn’t just the decision itself that moved markets – it was Fed chair Jerome Powell’s cautious tone on inflation risks and the lingering uncertainty surrounding the full impact of tariffs. Those pushing cuts point to recent inflation data showing minimal effects from tariffs so far. But the White House’s unpredictable tariff approach has forced the Fed into a reactive stance, navigating unknowns in both the timing and impact of such a widespread tariff strategy, rather than steering proactively.
Coinbase is riding the wave of stablecoin momentum with the launch of a new payment stack aimed at making it easier for shoppers to buy and pay using US dollar-backed crypto. It’s a bold move that puts pressure on traditional payment giants like Visa and Mastercard, whose dominance in the card space is starting to look a little less certain. For crypto enthusiasts, this marks one of the first real-world applications of blockchain tech that could genuinely scale with consumer use. The pitch is clear: faster, cheaper transactions without the need for intermediaries. Of course, we’re still in the early innings – widespread adoption will take time, and legacy payment infrastructure won’t be displaced overnight, if ever. But make no mistake, this kind of innovation is bound to spark some tough conversations in executive suites at Visa and Mastercard as they map out the trajectory for debit payments over the next decade.
Oil prices are in a holding pattern as markets wait for clarity on possible US involvement in the Israel-Iran conflict. While the White House stayed vague after President Trump met with advisers, any direct action could escalate tensions and threaten vital energy routes like the Strait of Hormuz. Despite the pullback, prices remain near five-month highs, supported by ongoing geopolitical risk and the Fed’s signal of potential rate cuts later this year.”