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Stocks of AstraZeneca (LSE:AZN) and GlaxoSmithKline (LSE:GSK) declined on Wednesday following comments from U.S. President Donald Trump about the potential introduction of tariffs on imported pharmaceuticals.

AstraZeneca shares fell by 1.2%, while GlaxoSmithKline saw a similar 1.2% drop during London trading. Other pharmaceutical companies, including Roche, Sanofi (NASDAQ:SNY), as well as Indian firms Sun Pharma and Dr. Reddy’s Laboratories, also experienced downward pressure.

Speaking at a campaign event, Trump emphasized the need to bring pharmaceutical manufacturing back to the United States and warned that “significant” tariffs on drug imports could be imposed shortly.

Earlier in April, similar statements had sparked a notable sell-off in the sector, wiping approximately £14 billion off the market value of UK-listed pharmaceutical companies.

Industry groups such as PhRMA and BIO warned that imposing such tariffs might violate World Trade Organization regulations and could disrupt global supply chains. Additionally, the European Union, China, and South Korea have formally opposed the proposed measures.

GlaxoSmithKline has responded by ramping up its manufacturing investments in the U.S. and expanding AI-based efficiency initiatives, while AstraZeneca said it is closely monitoring ongoing geopolitical developments.

Until now, pharmaceutical products have largely been exempt from major U.S. tariffs. The Office of the U.S. Trade Representative declined to provide any comment on the potential introduction of new duties.

U.S. stock index futures were slightly higher early Wednesday, hinting at a modest rebound following Tuesday’s broad decline. Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 each pointed to a positive open as traders attempted to shake off the previous session’s jitters.

The market’s cautious optimism comes even as geopolitical anxieties remain elevated, particularly surrounding the escalating conflict between Israel and Iran. Tensions intensified after Iran’s Supreme Leader, Ayatollah Ali Khamenei, warned of severe consequences if the U.S. intervenes militarily, following former President Donald Trump’s public demand for Iran’s “unconditional surrender.”

Despite these headwinds, trading activity is expected to remain measured ahead of the Federal Reserve’s policy announcement this afternoon. While the Fed is widely anticipated to hold interest rates steady, investors will closely scrutinize Chair Jerome Powell’s comments and the central bank’s updated projections for insights into the future rate path.

Markets fell sharply on Tuesday, reversing Monday’s gains. The Nasdaq Composite dropped 0.9% (−180.12 points) to close at 19,521.09, while the S&P 500 lost 0.8% (−50.39 points) to settle at 5,982.72. The Dow Jones Industrial Average declined 0.7% (−299.29 points), ending the session at 42,215.80.

The sell-off was partly driven by profit-taking after Monday’s rally, which had been supported by speculation of a possible de-escalation in the Middle East. However, Trump’s abrupt departure from the G7 summit and his social media statements sparked renewed concerns over deeper U.S. involvement in the region.

Responding to reports that French President Emmanuel Macron claimed he had left the G7 to work on peace efforts, Trump posted, “He has no idea why I am now on my way to Washington, but it certainly has nothing to do with a Cease Fire. Much bigger than that.” A follow-up post demanding Iran’s surrender intensified investor fears.

Economic data also contributed to the day’s losses. The U.S. Commerce Department reported a sharper-than-expected decline in retail sales, which fell 0.9% in May, following a revised 0.1% dip in April. Economists had projected a milder 0.6% decline. Excluding vehicle-related sales, retail activity slipped 0.3%, missing forecasts of a slight gain.

Airline stocks, which had rallied earlier in the week, were hit hard, with the NYSE Arca Airline Index tumbling 3.8%. The housing sector also took a hit, as the Philadelphia Housing Sector Index dropped 2.5%.

Broader weakness was seen across several industries, including pharmaceuticals, telecommunications, and healthcare. In contrast, energy stocks advanced alongside rising oil prices, reflecting the market’s sensitivity to developments in the oil-rich Middle East.

With both geopolitical and monetary policy uncertainties looming, markets are expected to remain volatile in the short term.

European stocks are turning in a mixed performance on Wednesday, with Middle East tensions, regional inflation data and central bank decisions in focus.

Amid escalating tensions between Iran and Israel, the Strait of Hormuz, a critical global oil route, has become a focal point of concern. Investors remain worried that disruption of oil flows through this narrow strait could hit global economy hard.

In economic news, U.K. consumer price inflation softened in May largely due to easing transportation cost, data from the Office for National Statistics revealed.

The consumer price index registered an annual increase of 3.4 percent, slightly slower than the 3.5 percent rise seen in April. However, inflation was slightly above forecast of 3.3 percent.

The annual inflation rate in Austria edged down to 3.0 percent in May 2025 from 3.1 percent in the previous month, matching preliminary estimates.

Elsewhere, Sweden’s central bank has cut its key policy rate to 2 percent and said there was a small chance of further easing later this year if economic weakness persists.

Later in the day, the Federal Reserve is widely expected to leave rates unchanged, but investors will scrutinize updated economic projections for clues to future moves.

While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is down by 0.1 percent and the German DAX Index is down by 0.3 percent.

BP Plc (LSE:BP.) and Shell (LSE:SHEL) were moving higher as oil prices held near five-month highs amid fears the U.S. may join Israel’s offensive against Iran.

Plane maker Airbus (EU:AIR) rallied over 3 percent after an announcement that it would increase shareholder returns in the coming years.

In his latest research note for Solomon Global, contributing analyst Nick Cawley explains why the Federal Reserve is expected to hold interest rates steady this week — and how escalating geopolitical tensions are reinforcing gold’s status as a safe-haven asset.

With markets pricing in a near-100% probability that the Fed will leave rates unchanged at 4.25%–4.50%, attention is turning to Chair Powell’s post-meeting comments and the updated ‘dot plot’ for clues on future policy shifts. Despite moderating inflation and a strong jobs market, concerns persist around the delayed impact of the “Liberation Day” tariffs announced by President Trump, which could drive inflation higher in the coming months.

Cawley also highlights the intensifying conflict between Israel and Iran, which continues to underpin demand for safe-haven assets. With tensions escalating and military action spreading, investor appetite for gold remains strong.

“If gold breaks and closes above its prior all-time high at $3,500/oz, price discovery should drive the precious metal to test round numbers at $3,600/oz and $3,700/oz.,” notes Cawley, contributing analyst for Solomon Global.

To download and read Nick Cawley’s full market analysis and gold outlook, click here

Stock Futures Rise

U.S. stock futures edged higher on Wednesday amid escalating tensions in the Middle East and anticipation of the Federal Reserve’s interest rate decision. By 03:30 ET, Dow futures were up 0.2%, S&P 500 futures rose 0.3%, and Nasdaq 100 futures gained 0.3%.

Recent Market Moves

On Tuesday, major indexes fell due to renewed Israel-Iran fighting and weak U.S. retail sales data. The S&P 500 dropped 0.8%, Nasdaq 0.9%, and Dow 0.7%. Volatility spiked to the highest level since late May.

Oil Prices

After a 4% jump on Tuesday driven by supply concerns amid the conflict, oil prices retreated slightly. Brent crude was down 0.3% to $76.20/barrel; WTI dipped 0.3% to $73.02/barrel.

Middle East Conflict

Israel’s air force struck Iranian nuclear and weapons sites as part of efforts to curb Iran’s missile and nuclear programs. The conflict has intensified since last Friday, with reciprocal missile attacks and casualties reported. U.S. President Trump demands “unconditional surrender” from Iran and asserts U.S. air superiority, though the role of U.S. military involvement remains under debate.

Federal Reserve Outlook

The Fed is widely expected to keep rates steady at the conclusion of its meeting, monitoring tariff impacts on inflation and growth. The Fed’s updated “dot plot” forecasts will be closely watched; markets currently price in the next rate cut around September. Rising oil prices could complicate inflation dynamics and temper easing expectations.

Crypto Regulation

The U.S. Senate passed bipartisan legislation creating a regulatory framework for stablecoins, requiring issuers to back tokens with liquid assets and disclose reserves monthly. This marks a significant milestone for cryptocurrency regulation.

Bank Capital Rule Adjustment

According to Bloomberg, U.S. regulators plan to ease the enhanced supplementary leverage ratio (ESLR) for major banks like JPMorgan and Goldman Sachs, reducing capital buffer requirements to ease constraints on Treasury trading.

European markets held steady on Wednesday as investors cautiously weighed ongoing tensions between Israel and Iran alongside the upcoming conclusion of the U.S. Federal Reserve’s policy meeting.

At 07:05 GMT, Germany’s DAX index dipped 0.1%, France’s CAC 40 gained 0.2%, and the U.K.’s FTSE 100 rose 0.1%.

Israel-Iran Conflict Raises Market Unease

The conflict between Israel and Iran entered its sixth day amid heightened geopolitical tensions. A Wall Street Journal report revealed that U.S. President Donald Trump convened senior advisers to discuss options, including potential strikes on Iran. Trump demanded Tehran’s “unconditional surrender” and claimed U.S. control over Iranian airspace, fueling fears of broader regional escalation.

Fed Meeting Nears Conclusion

Investors remain cautious ahead of the Federal Reserve’s two-day meeting wrap-up. While a rate hold is widely expected, markets will closely scrutinize Chair Jerome Powell’s remarks and updated economic forecasts, especially given signs of cooling U.S. retail sales and increased recession risks. Currently, markets anticipate two rate cuts by year-end, though this outlook could shift post-meeting.

U.K. Inflation Moderates

U.K. inflation slowed in May as consumer prices rose 3.4% year-on-year, slightly down from April’s 3.5%. Services inflation—a key focus for the Bank of England—fell to 4.7% from 5.4%, aligning with forecasts. The BoE is expected to keep rates steady on Thursday after a May rate cut to 4.25%, with two more 0.25% cuts priced in by year-end.

Other Highlights

• Sweden’s Riksbank will announce its interest rate decision later Wednesday.
• UBS was downgraded to “underweight” by Morgan Stanley due to capital uncertainties and weaker earnings prospects.
• Oil prices eased slightly, with Brent crude down 0.1% to $76.38 and WTI crude down 0.1% to $73.21, retreating from a 4% surge amid supply disruption fears in the Strait of Hormuz.

Citigroup analysts say the trajectory of oil prices will be a key factor driving stock market performance in the near term as investors monitor escalating violence in the Middle East.

In a client note, Citi highlighted that geopolitical flare-ups like the Israel-Iran conflict generally cause only short-lived impacts on equities unless they trigger sustained spikes in energy prices. The firm noted that if tensions continue to escalate, sectors likely to outperform include European energy stocks, traditional defensive sectors, and markets such as Switzerland and the UK.

The analysts pointed out that before the recent escalation, global equity valuations had priced in an average level of “geoeconomic risk,” suggesting some resilience to shocks.

On Wednesday, oil prices eased slightly, retracing part of the previous day’s 4% gain, as markets balanced concerns over potential crude supply disruptions against an impending U.S. Federal Reserve interest rate decision.

• Brent crude futures slipped 0.3% to $76.20 a barrel but remained above the $76 level for a second day.
• West Texas Intermediate (WTI) crude also fell 0.3%, settling near $73.02 per barrel by early U.S. trading.

U.S. stock futures were trading higher amid the cautious sentiment.

Meanwhile, Israel’s air force announced strikes targeting centrifuge and weapons manufacturing facilities near Tehran, part of an ongoing campaign aimed at curbing Iran’s nuclear weapons and missile programs.

The conflict has intensified since Israel’s airstrikes on Iranian nuclear sites last Friday, sparking retaliatory missile attacks and casualties on both sides.

U.S. involvement remains a critical focus. Former President Donald Trump has demanded an “UNCONDITIONAL SURRENDER” from Iran, describing Iran’s Supreme Leader Ayatollah Khamenei as an “easy target” and indicating U.S. support for Israel’s air dominance over Iran.

U.S. Vice President J.D. Vance clarified that Trump’s military actions would be aligned with American interests, though the president could still decide to take further steps to prevent Iran’s uranium enrichment.

British equities started the day on a positive note Wednesday, with the FTSE 100 inching up following data indicating a cooling in UK inflation for May. Meanwhile, the British pound strengthened against the US dollar, surpassing the $1.34 mark.

At 07:05 GMT, the FTSE 100 gained 0.08%, while the pound advanced 0.2% against the dollar. In Europe, Germany’s DAX index slipped 0.1%, whereas France’s CAC 40 edged up 0.1%.

UK Inflation Shows Slight Easing in May

Inflation in the UK softened modestly in May but remained above the Bank of England’s target rate of 2%, ahead of the central bank’s forthcoming interest rate announcement. Consumer prices increased 3.4% year-over-year, a slight decrease from April’s 3.5% rise. Monthly inflation was 0.2%, aligning with expectations but significantly down from March’s sharp 1.2% increase.

Other Market Highlights

• AO World (LSE:AO) reported a 27% rise in annual profit, fueled by strong consumer sales and improved cost efficiency.
• Unilever (LSE:ULVR) has nominated Peter ter Kulve to head its soon-to-be-listed ice cream business, despite some previous internal board concerns related to his role in the Ben & Jerry’s division.
• Ocado (LSE:OCDO) is expanding its partnership with Catalonia’s Bon Preu, planning a new fulfillment center to support online grocery deliveries in the region.

AO World (LSE:AO), the UK-based online electrical retailer, announced on Wednesday a 27% rise in adjusted pre-tax profit, reaching £43.5 million for the fiscal year ending March 31, 2025. This performance exceeded the company’s earlier revised profit guidance of £39-44 million.

The company’s core business focused on direct-to-consumer retail experienced robust growth, with revenues increasing 12% to £832 million. On a like-for-like basis, group revenue expanded 7% to £1.108 billion, fueled by the continued success of AO’s Five Star membership program and a broadened product range now offering approximately 9,000 items.

Adjusted pre-tax profit margin improved to 4.1%, up from 3.3% in the previous year, reflecting progress toward AO’s medium-term target margin of 5%.

John Roberts, AO’s Founder and CEO, remarked, “Celebrating our 25th anniversary, this has been our strongest year yet. We delivered record pre-tax profits, grew sales substantially, and continued to provide our growing customer base with reliable, exceptional service.”

The Five Star membership program showed solid momentum, with rising membership numbers, strong renewal rates, and increased share of customer spend. Repeat customers contributed over 60% of total orders, a figure AO expects to rise as its offerings and brand awareness expand.

Financially, AO World ended the year with net cash of £23 million, after acquisition-related costs for musicMagpie and funding its Employee Benefit Trust. The company also boosted its Revolving Credit Facility from £80 million to £120 million, extending its maturity to October 2028.

Looking forward, AO World forecasted adjusted pre-tax profits of £40-50 million for fiscal 2026, despite ongoing macroeconomic uncertainties. The company remains optimistic about capturing long-term opportunities within its estimated £28 billion total addressable market.

Gold prices remained stable during Wednesday’s Asian trading session as investors took a cautious stance ahead of the Federal Reserve’s interest rate announcement later in the day. The metal’s appeal as a safe haven was bolstered by escalating tensions between Israel and Iran, alongside reports of potential direct U.S. military involvement in the region.

Earlier this week, gold gave back much of its recent gains following news of Iran seeking a ceasefire. However, renewed air strikes and stern warnings from U.S. President Donald Trump toward Iran have shifted the mood back to risk aversion.

Spot gold was steady at $3,388.25 per ounce, while August gold futures held firm near $3,405.95 as of 01:56 ET (05:56 GMT).

Middle East Conflict and Weak U.S. Data Support Bullion

The geopolitical climate intensified as Israel and Iran continued aerial confrontations into their sixth day. Reports from the Wall Street Journal suggested that President Trump is contemplating U.S. military strikes on Iran, including its nuclear command infrastructure, demanding “unconditional surrender” from Tehran.

Meanwhile, Reuters noted an increased deployment of U.S. fighter jets and extended stationing of warplanes in the Middle East. Though described by the Pentagon as defensive, these moves have raised concerns over possible U.S. involvement in the conflict.

This backdrop coincided with disappointing U.S. economic figures, including a 0.9% drop in May retail sales, which strengthened expectations for a Federal Reserve rate cut later this year. The Fed’s policy meeting concludes on Wednesday, with markets widely expecting interest rates to remain unchanged but closely watching for revised economic projections.

Given ongoing geopolitical risks and soft U.S. data, gold is expected to maintain its support in the near term.

Metal Prices Gain on Weaker Dollar

Other metals also experienced gains amid a weaker U.S. dollar, making commodities more affordable for overseas buyers. The Dollar Index dipped 0.2% in Asian trading.

Silver futures increased by 0.6% to $37.37 per ounce, while platinum futures rose 0.5% to $1,269.90 per ounce. Copper futures advanced as well, with London Metal Exchange copper up 0.3% to $9,703.75 per ton and U.S. copper futures climbing 0.9% to $4.839 per pound.