Investors celebrate US-Iran deal

0:02Good morning from the Financial Times. Today is Tuesday, June 16th. And this is your FT News Briefing. Investors celebrated the news of a U.S.-Iran deal, and hedge funds are downbeat on European carmakers. Plus, we'll take a look at how Russia is recruiting unwitting foot soldiers in Europe. This is a sign of a gig economy, of people being recruited online, often paid via crypto, to do actions in the real world. I'm Mark Filippino, and here's the news you need to start your day.

0:42Global equities rallied and oil prices fell yesterday. That's after an agreement to reopen the Strait of Hormuz was announced over the weekend. Investors are betting the U.S.-Iran deal will reverse a surge in energy prices due to the conflict. But with inflation riding high, how long could it take for lower energy prices to actually make a difference? Here with me now is the FT's U.S. Markets Editor, Kate Duguid. Hi, Kate. Hi. So why are investors feeling so optimistic about this deal? So I think that the reason why investors are optimistic about this deal is because we've heard from Iran as well as from the United States.

1:19Previously, we had kind of only been hearing from President Trump and the White House, and we had not been hearing from Tehran. So I think that that's the real reason that investors are taking this seriously. The reason that they think that energy prices are probably going to fall. as the Strait of Hormuz is reopened and Iran goes about rebuilding some of the infrastructure that was destroyed. What does this mean for inflation overall? I mean, Kate, you know, how long could this change take to feed through the economy, especially given that the head of the world's biggest tanker operator said that ship owners probably won't go back through the strait for weeks?

1:59So I think that what you're hinting at, which is that we might have inflation for longer than just, you know, that these inflationary effects might persist, is absolutely right. I think that we will continue to see higher energy prices for a little while, given that, as you mentioned, the street itself is not completely open yet. But also because, like, a lot of critical infrastructure has been damaged and will take time to rebuild. you know, there are a number of different commodity markets that this is going to affect. One thing that we saw is U.S. wholesale inflation rose dramatically in April.

2:37And so that tends to be a predictor of inflation to come in consumer prices. It hasn't quite shown up in the CPI data yet, which has risen, but it's only been because of energy. It's not, core prices have not really risen very much. And the wholesale inflation data kind of suggests that it might still be to come. Kate, given the inflationary environment that we're in, I want to ask you about central banks because the Federal Reserve and the Bank of England are meeting this week. The European Central Bank met last week and raised rates. Could we see other central banks raise rates given what's going on with inflation?

3:12I don't think that we should expect a rate hike from either the BOE or the Federal Reserve. Core inflation has not risen fast enough to justify an immediate hike. But what I will say is that I do think that the Fed's statement will likely remove what's called the easing bias. And so that is an indication that the Fed is sort of is not looking to cut interest rates anymore, which is what was expected at the beginning of this year. At the Bank of England, Governor Bailey has signaled no immediate rush to raise rates despite higher inflation. But we are seeing splits emerging on the Monetary Policy Committee.

3:49And I think that'll be interesting to watch. Certainly, I think from both banks, we could expect to see an interest rate hike later on this year. Kate, as you've watched investors navigate this conflict and the energy crisis that came out of it, what's been your takeaway on investor thinking and behavior? We have seen investors continue to assume that Trump will sort of back down from his most radical claims. One of the things that's been interesting to see has been that the market tends to rally and pretty strongly when there's good news, when there's news about, you know, a potential deal or progress in talks.

4:29But it hasn't really fallen very much when fighting has resumed, which has been a little bit surprising. But I think it's because really sort of this taco trade is still very much present in investors' minds. You know, the war is unpopular. There's, I think, some sense that U.S. President Donald Trump has maybe reached his pain point. That's the FT's Kate Duguid in New York. Thanks so much, Kate. Thank you.

5:00Investors think that Chinese companies are going to eat European carmakers lunch. Hedge funds are betting against the debt and equity of some of the continent's biggest carmakers. at Stellantis, Volkswagen, BMW, and Mercedes-Benz. Carmakers' equity is also taking a hit. Tens of billions of euros have been wiped off the sector's market value this year. The industry in Europe is struggling to deal with growing competition from China, plus there's sluggish demand and don't forget U.S. tariffs. These are all long-term threats to the industry. One analyst told EFT that investors are realizing that this isn't a cyclical decline, but a structural one.

5:44Last year, there were several arson attacks on UK Prime Minister Keir Starmer's properties, including his home. And yesterday, a culprit was convicted. But it turns out the Ukrainian man who lit the fires didn't know much about who he was targeting. A Russian sabotage network recruited him online and gave him assignments without disclosing details. This is one of two recent exclusive stories from the FT about Russian online recruitment in Europe. The FT's Helen Worrell is an investigative reporter for the FT. She's here to tell us more about these operations. Hi, Helen. Hello. So let's start with these attacks against the Prime Minister who carried them out and how.

6:22So one of the attackers who we've written about is a young Ukrainian called Roman Lavrovich who arrived in the UK around the time that Russia invaded Ukraine. He worked in construction. It seems that he was sort of struggling to get regular work. He struggled with English and he posted regularly in Ukrainian language groups on Telegram looking for cash in hand work. And he was essentially recruited on Telegram by a Russian speaking handler called L Money, who we have established was based in Russia and is affiliated with a Russian hacking network. And tell me a little bit more about what he was hired for.

7:07How did he not know what he was doing? That part really struck me. I think one of the interesting things about people who are recruited to do this sort of informal work online is that often it relies on either a level of naivety or a sort of willingness to believe that they're doing something completely different. So first of all, Levinovich was asked to put up posters in London for a fake far-right group. That was sort of part of a far-right propaganda campaign. Then he did some reconnaissance around Starmer's house, looking at arson targets. And he also did some anti-Islamic graffiti on mosques around the capital.

7:53So he said in a police interview after the attack that he had absolutely no idea who he was targeting. He even claimed that he had no idea who Keir Starmer was. So clearly, whoever was tasking Lavrovich was benefiting from the fact that he was willing to do these actions without asking too many questions. Helen, you wrote a whole thing earlier this month about Russia recruiting teenagers to spy on Europe. Can you tell me more about some of the similarities that we're seeing? Of course, yeah. So the piece that I wrote earlier this month looks at both Russia and Iran and similarities in how essentially they are recruiting proxies online to carry out work for them.

8:40They seem to be targeting miners across mainland Europe and also in Israel. And often these are quite vulnerable people. That may be because they're young or because they are spending lots of time online. They're quite socially isolated. It might be easier to persuade them to do something that's potentially risky or difficult. And they may ask fewer questions about why exactly they're doing it or who they're doing it for. This is so interesting, Helen. I'd love for you to give me a bigger picture here. What's most notable to you about these stories? Are we entering a new era of Russian meddling in European affairs?

9:17I think this is definitely a new front in hybrid warfare. One thing I would point out very clearly is that in the case of the Ukrainian, we are not saying in our reporting that he was being directed by the Russian state. What we're saying is that the handler was resident in Russia and was affiliated with a Russian organized crime network. But I think this is a sign of a sort of informal, almost like a gig economy of people being recruited online, often paid via crypto to do actions in the real world, whether that's sabotage, whether it's distributing propaganda. And I think one of the factors here is that the risk really lies with the person who's recruited rather than the hostile state or the criminal group that's asking them to do the work.

10:13For those people who are tasking them, it's very hard to trace the activity back to them. That's the FT's Helen Worrell in London. Thanks so much, Helen. Thank you. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. check back tomorrow for the latest business news.

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