FirstFT: Biden urges Israel to show restraint after Iran’s attack

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Good morning. We start today with President Joe Biden leading calls for Israel to show restraint after Iran’s drone and missile attack over the weekend as Washington and its allies seek to de-escalate Middle East tensions and reduce the risk of a full-blown regional war.

Israel’s war cabinet yesterday met to consider its response to Iran’s unprecedented attack, but have not yet made a decision on what action it would take, an Israeli government insider said. The person added it was clear that Israel had to respond, but it was “just unclear when and how big”.

Iran launched the attack, the first such assault from its own territory against Israel, as retaliation for a suspected Israeli strike on its consular building in Damascus this month that killed several high-ranking Iranian commanders.

Biden has counselled Israel to take a measured approach. “The president has been clear. We don’t want to see this escalate,” said John Kirby, spokesperson for the US National Security Council, on NBC’s Meet the Press. “We’re not looking for a wider war with Iran.”

UK foreign secretary Lord David Cameron and President Emmanuel Macron joined the calls for restraint this morning as they warned of the risk of a “conflagration in the region”.

Here is the latest news from our reporters in the Middle East and in Europe — plus the latest Financial Times analyses on the strike.

• As it happened: Here’s how Iran’s “Operation True Promise” involving more than 300 missiles and drones was carried out — and how Israel and its allies repelled the attack.

• Market reaction: Oil prices were muted as traders shrugged off fears the conflict could escalate into a full-blown war.

• Iran’s “mission accomplished”: In launching its first direct attack on Israel, insiders say Tehran thinks it has successfully delivered a clear message: “We’re crazier than you realise.”

• US-Israel ties: The attack has increased pressure on American lawmakers to approve new aid for the Jewish state.

And here’s what else I’ll be watching on a busy day:

• US-Iraq relations: Middle East tensions will be very much on the agenda today as President Joe Biden hosts Iraq’s Prime Minister Mohammed Shia al-Sudani at the White House.

• Donald Trump: The first criminal trial brought against a former US president begins in New York. The “hush money” case features a colourful cast including the former president’s ex-fixer and a porn star.

• Global economy: Leaders and policymakers gather this week in Washington for the IMF and World Bank spring meetings. Tapping more aid for debt-strapped nations is one of the issues to be discussed.

• Results: Charles Schwab, Goldman Sachs and M&T Bank reveal their first-quarter results.

• Economic data: Peru’s statistics agency, Inei, releases monthly economic growth data.

Former House speaker Nancy Pelosi has joined the line-up for the FT Weekend Festival US edition on May 4 in Washington DC. Explore the rest of the programme and register for a 15 per cent discount if you sign up today.

Five more top stories

1. US and Indian economic performance is stoking optimism for slightly better global growth this year, according to research for the FT. A gauge of the performance of the US economy, taking in measures of confidence, financial markets and real activity, has recovered to its highest levels since mid-2022, providing a bright spot amid a largely lacklustre global economic backdrop. India has seen a similar pick-up.

2. ETFs have taken over as the dominant holding in the $5.1tn US model portfolio market. Exchange traded funds accounted for 51 per cent of underlying assets at the end of last year, up from 46.7 per cent in early 2022, according to data from Broadridge Financial Solutions, a financial technology company. “ETFs are having tremendous success in the industry as low-cost, tax-efficient portfolio building blocks,” said Andrew Guillette, vice-president of global insights at Broadridge. Here’s why the share of ETFs in model portfolios is surging.

3. Japan’s biggest brewer Asahi is cutting down on alcoholic drinks as a growing number of consumers go teetotal. Chief executive Atsushi Katsuki forecast zero- and low-alcohol drinks would generate half of the company’s beverage sales in as soon as 16 years. He said the company was planning to expand its line-up of alcohol-free beverages in the US, one of the world’s biggest drinks markets, through investments in start-ups. Read the full story here.

4. The EU must integrate its financial, energy and telecoms markets or face losing its “economic security” and falling further behind the US and China, a former Italian prime minister has warned. Enrico Letta, who was tasked by European leaders to assess the state of the bloc’s underperforming single market, told the FT that further integration was a matter of survival.

5. Activity in China’s equity capital markets has slumped to multi-decade lows, with Chinese companies raising just $6.4bn in mainland IPOs, follow-on and convertible share offerings so far this year — the lowest level on record, according to Dealogic data. Thomas Hale has more details from Shanghai.

The Big Read

By 2045, about $90tn in the US alone is set to be transferred from those born before 1964 to their heirs. As baby boomer wealth starts to trickle down to younger cohorts, and with government coffers around the world strained by the costs of the pandemic and ageing populations, arguments about preventing intergenerational inequality have grown in salience. While the super-rich are a tempting target, critics say inheritance taxes are unpopular and ineffective.

We’re also reading . . . 

• Gold is back: There are predictable reasons behind the precious metal’s recent surge, but there are deeper, longer-term messages in its rise too, writes Rana Foroohar.

• Chief AI officer: Companies from Accenture to Dell are introducing the leadership role. But what do they actually do?

• LVMH: Succession planning at the world’s biggest luxury group is speeding up as French billionaire Bernard Arnault carefully lays the groundwork for his five children.

• South Africa: Cast out from the African National Congress, former president Jacob Zuma has surprised rivals and upset the electoral calculus ahead of crucial polls.

Chart of the day

The latest FT-Michigan Ross poll finds American voters are blaming Joe Biden less for inflation. “Mr Biden’s recent, more strident accusations that greedy corporations are responsible for price increases seem to have won him points,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. The president’s approval rating for his handling of the economy is also slowly climbing up.

Take a break from the news

Music offers us the chance to connect with ourselves and with others, if only we let it, writes the FT’s Enuma Okoro after attending “listening experiences” in New York and Berlin. She wonders whether the intimacy of such shared events based around a select playlist could deepen our emotional self-awareness.

Additional contributions from Benjamin Wilhelm and Tee Zhuo