Good morning. Here’s what matters this morning.

The Strait of Hormuz situation has escalated sharply over the weekend. Trump announced the US Navy will begin “guiding” stranded commercial ships through the strait, calling it a humanitarian operation, while simultaneously warning that any Iranian interference will be “dealt with forcefully.” Iran’s response was immediate and pointed: Maj Gen Ali Abdollahi told commercial shipping to seek coordination from Iranian armed forces before attempting transit, and warned that any foreign military entering the strait would be attacked. That’s not a rhetorical skirmish — it’s two parties publicly staking out incompatible positions over the world’s most critical oil chokepoint, while apparently still talking. Trump described the nuclear discussions as “very positive,” which is doing a lot of work given what’s happening simultaneously in the water. For anyone positioned in energy or exposed to Asia-Pacific supply chains, this is the story of the week.

The economic damage from the Iran war is already registering in Asia. The FT reports that inflation across the region is rising sharply as energy import costs bite, with growth forecasts being revised down. Japan’s prime minister described the impact on the Asia-Pacific as “enormous” during a visit to Australia, where energy supply agreements were signed. That’s not a future risk — it’s a current drag on a significant slice of global demand.

Domestically, the local elections taking place this week in England and Wales are worth watching for what they signal about the political landscape rather than their direct policy consequences. Labour is expected to take a significant hit, with Reform and the Greens both positioned to make gains. The Welsh Senedd results in particular could be instructive about how vote-splitting plays out ahead of the next general election cycle.

On the AI and technology front, the Guardian’s investigation into facial recognition oversight is worth flagging for anyone thinking about UK regulatory risk in that space. The biometrics commissioner for England and Wales said legislation is failing to keep pace with deployment, an independent audit of the Met’s use of the technology has been indefinitely postponed, and a whistleblower has alleged misuse by retail operators. The direction of travel is towards tighter regulation, and the political pressure for it is building.

Separately, a Harvard study published over the weekend found that at least one large language model outperformed two human doctors on accuracy in real emergency room diagnostic cases. The study will add fuel to an already active debate about AI deployment in clinical settings, and has obvious implications for anyone looking at healthcare technology exposure.

The Bank of England’s rate decision is due Thursday. Markets are pricing in a cut, but services inflation data released last week gave the MPC less cover than some members would have liked.

Sources

Guardian, Al Jazeera, TechCrunch, FT, BBC News, Politico, The Economist — 2026-05-04