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Weekly Notes

The Week In Markets – 7th June – 13th June 2025

It was a busy week in the UK, with key economic data releases including GDP, unemployment, and average earnings figures. London also played host between the US and China as they continued trade talks. While the discussions were initially focused on reaching an agreement regarding rare earth minerals, the final outcome appeared to leave markets uncertain about what had actually been agreed upon.

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were both present at meetings this week, as both sides agreed to implement the consensus deal reached during the Trump-Xi phone call last Thursday. The deal included preliminary agreements on export licenses for Chinese rare earth minerals and magnets, while Washington committed to granting an additional 20,000 student visas to Chinese nationals. Although reciprocal US tariffs on Chinese goods remain at 30%, they have significantly decreased from the previous peak of 145%. Chinese exports to the US fell -34.4% (year-on-year) in May, and this downward trend is expected to continue, as trade talks like those held this week appear to merely “kick the can down the road.”

UK wage growth for the three months to April fell to its weakest level in seven months, with average earnings rising by 5.3%, below the market forecast of 5.4%. Meanwhile, the unemployment rate rose to 4.6%, the highest level since August 2021. The Office for National Statistics (ONS) also reported that 9 million people aged 16 to 64 are now economically inactive.

The government faces a dilemma: despite increasing the national minimum and living wages, along with implementing national insurance changes effective from April 1st, measures intended to encourage greater workforce participation, labour market activity remains subdued. Hiring freezes have become more common, driven not only by rising business costs but also by broader economic uncertainty.

Midweek, Chancellor Reeves unveiled her first multi-year spending review, allocating over £2 trillion across government departments for the next three years. Defence spending is set to rise to 2.6% of GDP, while the NHS will receive £29 billion annually for day-to-day operations. In contrast, sectors such as foreign aid are expected to face cuts. Reeves also announced a £10 billion investment to build thousands of new homes across England. These spending measures aim not only to stimulate economic growth but also to restore Labour’s reputation, which has faced challenges despite their sweeping victory last July. The Conservatives have criticised the plans as “unachievable,” anticipating that Reeves will be forced to return in the autumn with further tax hikes.

UK GDP data was the most discouraging for markets this week, as the British economy slowed sharply in April. Month-on-month GDP contracted by 0.3%, while year-on-year growth slowed to 0.9%, down from 1.1%. The UK’s dominant services sector shrank by 0.4%, highlighting the breadth of the slowdown. Despite being one of the few countries with a trade deal with the US, the UK is beginning to feel the ripple effects of Trump’s tariffs. British exports to the US fell by £2 billion in April—the largest monthly drop since records began in 1997. Markets believe the door is closed on a rate cut from the Bank of England (BoE) next week, though the likelihood of a cut in August has increased.

Nvidia CEO Jensen Huang is in high spirits after the company reported its tenth consecutive quarter of exceeding earnings forecasts last month. Speaking this week, Huang praised the UK’s growing artificial intelligence ecosystem, highlighting innovative start-ups such as DeepMind, Wayve, and ElevenLabs. Earlier this year, Prime Minister Keir Starmer announced plans to boost the UK’s AI sector, including relaxed planning regulations for new data centres. Huang noted that the UK’s AI infrastructure is the only missing piece and confirmed Nvidia’s commitment to increasing investment starting with the supply of its latest Blackwell GPU chips.

The FTSE 250 has become a hunting ground for larger firms seeking value, and Spectris is no exception. The company, which supplies hardware and software to pharmaceutical and automotive manufacturers, saw its share price tumble ahead of Trump’s “Liberation Day” announcement in April. US private equity firm Advent has since placed a $5.06 billion bid for Spectris, an 85% premium to its share price last Friday, marking the largest takeover in Britain this year.

Spanish multinational clothing retailer Inditex reported a 1.5% rise in Q1 sales to €8.27 billion, falling short of analyst expectations of €8.36 billion. The company, which owns brands such as Zara, Stradivarius, and Bershka, attributed the soft start to both global economic uncertainty—dampening consumer spending—and adverse weather conditions in key markets like Spain, which accounts for 15% of its global sales. Despite the sales miss, Inditex generated a net profit of €1.31 billion. CEO Óscar García Maceiras emphasised the group’s focus on inventory control and investment in store upgrades, noting that these strategies have built resilience and will help the company navigate challenging market conditions.

US inflation data for May was released and bucked the recent downward trend, rising to 2.4%. A positive for markets was that it didn’t climb as high as the expected 2.5%, as Trump’s tariffs gradually begin to feed into the data. The main driver of rising inflation was a 0.3% increase in shelter costs (rent), while food prices also rose by 0.3%, reversing a 0.1% decline the previous month. In contrast, airline fares fell by 2.7%, reflecting the reversal in demand. The US Federal Reserve has remained cautious this year, having not cut interest rates at all, as it continues to assess the impact of Trump’s tariffs. Policymakers are likely to wait not only for inflation to move closer to the 2% target, but also for signs of a softening labour market, which has so far remained resilient.

Oil prices surged by more than $4 a barrel on Friday morning, reaching their highest level in five months amid escalating tensions across the Middle East. Our core message on the importance of diversification within portfolios remains as crucial as ever, and we continue to emphasise the value of long-term investing to capitalise on opportunities created by short-term market movements. We now look ahead to key updates from both the Bank of England and the US Federal Reserve next week.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 31st May – 6th June 2025

The unlikely bromance forged between Donald Trump and Elon Musk seems to have very quickly, and very publicly, broken down. Musk joined Trump’s presidential campaign and served as the head of the newly created Department of Government Efficiency (DOGE). However, recently the relationship has deteriorated with Musk publicly criticising Trump’s proposed tax bill legislation, calling it a “disgusting abomination” and asking lawmakers to “kill the bill”. Trump used his social media platform, Truth Social, to respond, calling out Musk and moving to cut subsidies to a range of his companies, including Tesla and SpaceX.

Staying with the US, but shifting to data as opposed to drama, there were signs of some weakness this week, maybe indicative of the tariff turmoil beginning to bite. ISM Manufacturing PMI data came in below 50, and below expectations, highlighting the continued pressure the manufacturing sector is experiencing. Unemployment claims, released on Thursday, came in higher than expected. The weak data put downward pressure on government bond yields (prices rose), with the yield on the US 10-year Treasury falling below 4.4%.

The European Central Bank (ECB) met on Thursday and once again cut interest rates. This was the eighth cut in just over a year and took the main rate to 2%. With Eurozone inflation falling below the 2% target in May (1.9%), and growth still lacklustre, the ECB decided to continue on their rate cutting journey in an effort to boost the economy. With the risk of tariffs looming over Europe, the cut in interest rates should come as a welcome relief. At 2%, interest rates are at their lowest level in over two years and have de-coupled from the US and UK, where rates remain above 4% (for now). European equity markets reacted positively to the news, continuing what has been a very strong 2025 for the asset class.

A range of commodities have performed well over recent weeks, with both copper and oil prices moving higher. Silver, which has been largely overlooked due to gold’s breakout, has quietly been performing very well, and this week broke above $36 an ounce, reaching a 13 year high. It’s still considerably below its all time high of $50, but the precious metal is beginning to appear on investors radars. We have also seen gold and silver miners perform well recently, delivering strong earnings driven by rising revenues and falling energy costs.

The US dollar continued to slide this week against most major currencies. It is down 8% year-to-date versus sterling and has acted as a significant headwind for sterling investors holding US assets. Despite significantly weakening this year, the currency continues to look expensive on a range of metrics.

In what was a quiet week in the UK there was disappointing news for the stock market as fintech darling Wise Plc announced plans to have its primary listing in the US. With the UK lacking market leading tech firms, it is a blow to see Wise move.

The last key datapoint of the week came this afternoon, with US Non-Farm Payrolls data released. It showed more hiring for the month of May than anticipated, with 139,000 jobs added to the economy. Unemployment held steady at 4.2%, while average hourly earnings were higher than expected. The news looks to be well received by equity investors, with the US futures market moving around 1% higher.

Our diversified approach has proved its worth so far in 2025, with portfolios now at, or close to, year-to-date highs. The biggest contributors to performance this year have largely been different to 2023 and 2024 – which was dominated by US equity – with large holdings such as infrastructure (Atlas), global value (Havelock) and specialist Japan (Zennor) delivering strong returns.

Andy Triggs, Head of Investments

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 24th May – 30th May 2025

“Absolutely crazy”. Those words could describe many events and individuals over the past week. But this week began with President Trump using them to describe President Putin, following a series of aerial attacks in Ukraine. Trump expressed strong disapproval and hinted at the possibility of imposing further sanctions on Russia. Ukrainian President Zelensky also responded to the attacks, accusing Russia of toying with diplomacy and showing no genuine interest in ending the war. His remarks underscored how far the situation remains from the long-hoped-for peace deal.

Monday marked Memorial Day; a U.S. bank holiday dedicated to honouring those who lost their lives in military service. President Trump appeared to be in good spirits, announcing a one-month extension on an EU trade deal deadline. While we’ve seen Trump use this playbook before, the move came as a welcome surprise. A proposed 50% tariff, set to impact the entire 27-nation bloc starting June 1st, was pushed back to July 9th. European markets responded positively, with the DAX 100 (Germany) closing 1.68% higher on the day. The euro also continued its upward trend against the dollar.

European Central Bank President Christine Lagarde has made it clear that she envisions the euro as a viable alternative to the US dollar as a global reserve and trade currency. Growing uncertainty surrounding US trade policies has prompted investors to reduce their exposure to dollar assets. Lagarde believes that the current geopolitical and economic climate presents an opportunity, one that the euro must “earn”. To seize the opportunity, Europe must reduce reliance on the dollar by promoting the euro as the preferred currency in trade agreements. Additionally, enhancing military and security capabilities will be essential to reassure investors of Europe’s geopolitical stability, an area in which Germany has already taken significant steps. “If Europe succeeded, the benefits would be large,” Lagarde stated. However, this is an ambitious goal. The US dollar still accounts for 58% of global foreign exchange reserves, compared to the euro’s 20% share.

A few months ago, Donald Trump boldly declared his intention to restore the United States to a golden age of manufacturing. This vision faces several clear challenges, including the need to build or refit factories, address workforce shortages, and reduce the country’s dependence on global supply chains. Global corporations are increasingly responding to the pressures created by Trump’s policies, with some beginning to reshore operations. For instance, BMW has announced plans to increase output at its South Carolina plant by up to 80,000 units. Similarly, Honda has stated their intention to relocate parts of car production from Mexico and Canada to the United States.

US PCE inflation for April eased to 2.1%, down from 2.3% in March. Core PCE (excludes food and energy) came in at 2.5% year-on-year, marking the lowest level since March 2021, which will please the Federal Reserve. Services inflation, one of the more persistent components of overall inflation, also showed signs of softening, easing to 3.3%. The Fed has indicated it remains “on the sidelines” as they continue to monitor how recent tariffs are filtering through to the data. The next Fed meeting is scheduled for 18 June, and unless there is a significant shift in the data, another pause in rate changes appears likely.

Nvidia reported strong first-quarter earnings on Wednesday, with revenues of $44.06 billion surpassing expectations. This marks the tenth consecutive quarter in which the company has exceeded earnings forecasts. There had been concerns that trade tensions between the US and China might disrupt this trend. Looking ahead, Nvidia expects to generate approximately $45 billion in chip sales in the next quarter. However, the company has accounted for an estimated $8 billion in lost sales due to US restrictions on the export of its H20 chips to China. Nvidia shares have risen by over 5% this week, bringing them back into positive territory for the year following notable underperformance in March and April.

German retail sales data released early this morning came as a surprise, showing a decline of 1.1% for April. This was well below market expectations, which had forecast a 0.2% increase, continuing the positive trend seen earlier in the year. The drop has been attributed to weak consumer confidence, driven by ongoing economic uncertainty, which particularly affected online retail and the food sector. Despite the disappointing figure, market reaction has been muted, largely due to a significant upward revision of March’s retail sales, from an initial -0.2% to +0.9%, a stark contrast.

This week brings a close to May – a month which has been strong for risk assets. The old adage of “sell in May and go away” has not worked, as equity markets have responded positively to what is perceived to be advances in trade and tariff negotiations. The summer months will prove interesting as the impacts of tariffs begin to be felt. So far it has only showed up in soft data, which has been very weak. Given this normally leads hard data by a few months there is the potential for some weakness, as such it makes sense to be diversified across a range of assets.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 17th May – 23rd May 2025

UK inflation took centre stage this week, with headline CPI coming in above expectations at 3.5%. In a double blow to Rachel Reeves, public sector net borrowing was higher than expected for April, despite the fact receipts were higher, in part due to an increase in National Insurance.

Taken at face value, the UK inflation data released on Wednesday made for painful reading with both headline and core CPI above expectations. Digging a little deeper into the data, it looks as though the bigger than expected rise in inflation was driven by several one-off factors, including water and energy bills, as well as the timing of Easter, so there is the potential for inflation to trend lower later in the year. The market it appeared took the data at face value, with UK government bond yields rising (prices falling) on the news. The yield on the 10-year UK government bond rose above 4.7%, heading towards the top of a recent trading range. After a period of strong performance, UK equities also came under pressure.

It wasn’t just UK yields rising this week with both US and Japanese yields, particularly at the long-end, pushing higher. A US 20-year Treasury auction on Wednesday had weak demand, which led to bond yields pushing higher. The yield on 20-year US debt is now above 5.1%, which will put further pressure on their fiscal position. Over in Japan, 30-year debt rose above 3%, posing a serious issue to a country with extremely high debt levels.

UK retail sales data for April was released early this morning, showing a 1.2% month-on-month increase. The Office for National Statistics (ONS) attributed the surge to sunny weather throughout the month, which boosted footfall in stores and led to a rise in purchases of outdoor goods. March’s figure was revised up to 0.1%, confirming the fourth consecutive month of positive growth in retail sales. The last time we saw a similar streak was in 2020, as consumer spending rebounded following the first lockdown.

Assets such as gold and bitcoin seemed to be the beneficiaries of weaker government bonds, with prices rising throughout the week. After a mini pull-back, gold climbed back through $3,300 an ounce, just shy of all-time highs. Bitcoin has risen above $110,000, a new all-time high and is up over 50% since Trump rowed back on proposed tariffs on 8th April.

Manufacturing has been in the doldrums over recent years and purchasing managers index (PMI) data from the UK and Europe came in below 50, highlighting the sector as being in contraction. Trade wars, high energy costs and supply chain disruptions have been sighted as some of the major headwinds facing manufacturing. Within Europe, Germany’s bold fiscal stimulus measures could see somewhat of a renaissance in manufacturing over the coming years.

Novo Nordisk has announced that CEO Lars Jørgensen will be stepping down. Having served in the role for the past eight years, Jørgensen stated he would remain in the post for a short period to support a smooth transition to new leadership. Once Europe’s most valuable company, Novo’s shares have fallen by 30% since the start of the year. The incoming CEO will certainly face a significant challenge—not only in closing the gap with rival Eli Lilly, but also in navigating President Trump’s planned tariffs on pharmaceuticals.

The US dollar’s safe haven status continues to be questioned in 2025. The greenback currency weakened throughout the week, rising above 1.34 vs GBP.

US equities were the laggard this week, having rebounded strongly since the April lows. Concerns around the US deficit led to pressure on bonds, equities and the US dollar. We continue to favour a diversified approach in portfolios that is not simply a one-way bet on US equities and the US dollar.

 

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 10th May – 16th May 2025

Shortly after Liberation Day, equity markets bottomed on 8th April. Following on from Trump’s tariff reversal we have seen extreme retail buying, a decision that so far has paid off handsomely. US markets have surged, buoyed by President Trump’s global tour to secure new trade deals. The S&P has climbed back into positive territory for the year (in USD terms), and the tech-heavy Nasdaq index entered a bull market since the April low.

US inflation data has remained a key focus over the past couple of years, though more recently it has been overshadowed by ongoing tariff discussions. In the twelve months through April, US CPI came in at 2.3%, falling below market expectations of 2.4% and marking the lowest level in over four years. Shelter costs (rent) continued to be a leading contributor to inflation, rising 4% in April. In contrast, airline fares, which had surged through Q4 2024 into early 2025, extended their decline, falling 2.8% as US consumers pulled back on travel.

These inflation figures may give the US Fed confidence that inflation is under control, however, it is clear that the effect of tariffs are yet to be felt in pricing, and the Fed seems keen to wait for more data points before cutting rates further.

US retail sales for April, released on Thursday, slowed sharply to 0.1%, down from a revised 1.7% gain in the previous month. March’s spike in spending was largely attributed to front-running tariffs, as consumers rushed to make purchases ahead of Liberation Day. That effect has now faded, and we’re seeing the expected pullback in consumer activity. Sales at auto dealerships, which led the way in March with a 5.5% increase, dipped to just 0.1% in April. Meanwhile, sales of sporting goods, hobby, and musical instrument stores slumped by 2.5%.

US equity markets had a strong week, surging on news that the US and China had reached a trade agreement. China had been the only country excluded from the initial 90-day tariff pause announced by President Trump. Under the new deal, tariffs on Chinese imports will be reduced from a staggering 145% to 30% for the next three months. In return, China has agreed to scale back its countermeasures on US imports to 10% and restore access to rare minerals and magnets critical for GPU chip production.

US Treasury Secretary Scott Bessent, who was on hand in Geneva to sign the agreement, acknowledged that while the deal marks a significant step forward, it will take years to fully repair the US-China relationship. However, he noted that there is room for further negotiations.

Trump began a trade tour in the Middle East this week, securing major deals across defence, energy, and technology. In Saudi Arabia, he finalised defence and energy agreements, while in the United Arab Emirates, a joint US-UAE initiative was announced to build the largest AI data centre outside the United States. The most significant deal came in Qatar, where the US secured the sale of 210 Boeing jets valued at $96 billion.

As optimism around global trade improves and risk sentiment rises, safe-haven assets have taken a hit—gold prices fell 4% this week amid the wave of trade announcements.

There was positive news in the UK as Q1 data showed the economy growing at its fastest pace in a year, despite concerns that Labour’s tax policies and Trump’s tariffs might hamper growth. GDP rose by 0.7% between January and March, beating market expectations of 0.6%. Growth was recorded across several sectors, including retail, computer programming, car leasing, and advertising. It’s a welcome boost for Chancellor Rachel Reeves. Although business and consumer sentiment have declined in recent months, Reeves maintains that the Labour Party has made the right choices—highlighting four interest rate cuts, two trade deals, and a rise in the minimum wage since the election.

Markets have recovered in near record time, with retail investors almost trained to buy the dip. While tariff news has certainly improved, it still seems highly likely that a level of tariffs will remain in place, and this is likely to make trading conditions challenging. With risks and uncertainty still at elevated levels we think it makes sense to tread a careful path with asset allocation.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 3rd May – 9th May 2025

“Be fearful when others are greedy, and be greedy when others are fearful,”, are wise words from the great investor Warren Buffet, who announced his retirement at Berkshire Hathaway’s annual shareholders meeting last weekend. A man whom thousands of investors have looked up to over his 70-year investment career will hand the keys over to Vice President Greg Abel at the end of the year.

Warren Buffet has been vocal in opposing the trade war initiated by President Trump, stating, “Trade should not be a weapon”. Canadian Prime Minister Mark Carney shared this view during his meeting with Trump in the Oval Office on Tuesday. Canada is the US’s second largest trading partner after Mexico, with over $760 billion worth of goods flowing between the two countries. Carney mentioned that progress was made during the meeting as he attempted to push back on the tariffs set by the US; however, further talks may be necessary for President Trump to reconsider his position.  

The US Federal Reserve met on Wednesday and held rates steady at 4.5%, just as markets had forecast. Fed Chair Jerome Powell continues to be criticised by Trump for “acting too late”. However, Mr Powell stood firm stating, “the scale, the scope and the persistence of the tariff effects are very, very uncertain”. It was noted that GDP fell in the first quarter as households and businesses attempted to front run tariffs. The term used for the Fed at this point in time is “sidelined”, until it is clear through data points which way the economy will pivot. The data points that the US Fed rely on are backward-looking, which in turn means that as the Fed react to data, they may truly be behind the curve in making cuts.

Donald Trump is certainly a busy man as he works his way through trade negotiations with several countries. He reiterated the need for a Russia/Ukraine peace deal via the Truth Social platform and suggested a 30-day ceasefire, warning both countries would face further sanctions if it wasn’t respected. Ahead of his re-election, he boasted he would end the war in 24 hours, however, over 100 days later there is still no plausible agreement.

There was a lot of talk regarding a breakthrough deal that the US and UK had made, as Prime Minster Kier Starmer labelled Thursday, a “fantastic, historic day”. The US agreed to cut the 25% tariffs on British steel and aluminium down to 0%, a huge boost for the sector. In addition, car export tariffs fell from 27.5% to 10% on a quota of 100,000 British cars, approximately the number the UK exported last year. The UK is the first country to strike an agreement with Trump during the 90-day liberation day pause, however, it seems the US has heavily won this trade deal. British beef farmers received a tariff free quota on 13,000 tonnes of meat but PM Starmer is still pushing against tariffs affecting the pharmaceutical, tech and film/tv sectors.

The Bank of England met on Thursday, cutting rates by 25bps (0.25%) to bring interest rates to 4.25%, in line with market expectations. Of the nine policy committee members, five voted to cut rates by 25bps, two voted for a larger cut of 50bps (0.5%) and two voted for no change. Easing inflation figures were the driving point behind the rate cut and bringing inflation back towards the 2% target is a top priority. We can expect to see a “gradual and cared approach” to the future rate cutting path as the impact of tariffs on data begins to feed in. Over 600,000 homeowners have a tracker mortgage, so the rate cut will have a positive impact on their monthly repayments.

Over in Germany, conservate leader Fredrich Merz was elected Chancellor on Tuesday. It wasn’t as smooth sailing as expected; he initially failed to win the first round of voting with just 310 votes, six shy of an absolute majority. The second round of voting was completed 24 hours later, and he then won 325 votes. There is certainly heightened mistrust between the coalition government of the conservatives and social democrats. Germany is Europe’s largest economy and political stability is crucial for the country to rejuvenate economic growth.

You may have noticed more adverts from Chinese fast fashion retailors Shein and Temu this week as they pivot from the US towards Europe. Both companies experienced extraordinary growth in the US over the last few years, as consumers could purchase clothing as cheap as $12 and accessories as cheap as $5. There has been a significant shift in digital ads spending towards the UK and France and the companies will now attempt to undercut heavyweights such as Zara, GAP and H&M. If you haven’t seen their adverts yet, you will soon!

Rumours of trade negotiations advancing with multiple nations helped support equities this week. Small and mid-cap equities have been under pressure since 2022, lagging their large cap peers, however, we have witnessed steady outperformance over the last month, which continued throughout the week.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 26th April – 2nd May 2025

This week marks the beginning of May, but the focus in markets has been on the 100-day milestone of President Donald Trump’s tenure. Trump’s short time in office to date has been eventful to say the least and has been described with terms such as “disastrous”, “chaotic” and “Trumpression” – a Trump led depression. With his approval ratings near record lows, he will be under pressure to ensure the next 100 days are viewed as more positive by the US electorate.

Wednesday was the 100-day mark and coincided with the release of the US Q1 GDP figures. The GDP data showed a decline to -0.3%, the first economic contraction in three years, raising fears of a potential recession and confirming a US economic slowdown. This figure was skewed by an oversized number of imports from American businesses and consumers in anticipation of Trump’s tariffs. Elon Musk, who recently stepped back from his role at the Department of Government Efficiency (D.O.G.E), significantly contributed to the economic pullback as government spending fell by 5.1%.

Trump immediately hit back at any suggestion that the blame should stop at his door, stating that the economy is facing a Biden “overhang”. He asserted that once his tariffs take effect and companies begin to move production into the US, the country’s economy will “boom”. We will have to wait and see if Mr Trump’s plan will succeed, but it seems the jury is out for US consumers as sentiment continues to plummet.

Many will remember the disastrous meeting two months ago between President Trump, Vice President JD Vance, and Ukraine President Zelensky, which left little optimism for any potential deal. However, after months of tense negotiations, the US and Ukraine signed an agreement granting the US access to Ukrainian minerals, which ultimately will fund the country’s reconstruction. A peace deal between Ukraine and Russia has yet to be achieved, but a three-day ceasefire will begin on 8th of May to commemorate the 80th anniversary of the Soviet Union’s victory in World War II. 

It was a busy Wednesday, with the release of the US PCE index for March. The US PCE is the Federal Reserve’s preferred measure of inflation, and it was positive to see inflation fall to 2.3% (year-on-year) from the previous month’s figure of 2.7%. On a month-on month basis, the index remained flat. The US Fed will meet next week to discuss the future interest rate path, and on a positive note, Fed Chair Jerome Powell will lead the meeting despite Trump threatening to fire him. However, there is not expected to be any change to rates this time, as the Fed will wait for “clearer signs”, believing the real impact on the economy, inflation and unemployment from tariffs lie ahead.

As we enter the new month, the first Friday always brings us the US non-farm payrolls report. The data remained positive, showing that 177,000 jobs had been added to the economy, following the revised figure of 185,000 for March. The unemployment figure for March remained at 4.2% for the second consecutive month.

UK retail sales have continued to surprise to the upside with March’s figure of 0.4% coming in against expectations of a -0.4% decline. Clothing and outdoor sales led the way, with the Office for National Statistics (ONS) attributing this to good weather. Although this is positive news, there is still concern that the impact of tariffs, along with energy and council tax bills, will affect April’s data and lead to a slowdown in consumption.

We have the first May bank holiday coming this Monday, which often leads to a spike in takeaways. Just Eat and Uber Eats are the preferred choices for UK consumers, but this may change as US delivery agent DoorDash made a $3.6 billion cash buyout offer for Deliveroo. This move will expand DoorDash’s reach into the UK and across European countries such as France and Italy. Deliveroo shares jumped 17% on the day.

Gold dropped to a two-week low on Thursday, a move we can expect as trade tensions begin to ease. While uncertainty remains, there has been progress with US-China tariff negotiations along with continued hope for a Ukraine and Russia resolution which has led investors towards risk assets and away from safe-havens such as gold. This has also led to strong UK equity performance, with the FTSE 100 on track for its 15th consecutive daily increase, its longest winning streak on record.

Equity markets have continued to rebound from recent lows after heightened volatility at the start of April. There is renewed hope that tariff deals will be struck, and the worst-case scenarios will be avoided. Recent inflation data has been better than expected from most developed markets and this may support further rate cuts, which would be a boost to businesses and consumers.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 18th April – 25th April 2025

Equity markets advanced this week on the hopes that trade deals would soon be announced and that the worst may now be behind us. While nothing official has been announced, the US are engaged with many nations and investors expect positive news flow over the coming weeks.

The US equity market has borne the brunt of the tariff sell-off, with investors questioning whether the premium valuation is now justified. Over recent days we have seen the US market lead equities higher, with the beaten-up technology sector one of the bright spots this week. Equities rallied on news from Trump; firstly that he did not intend to sack US Fed Chair Jerome Powell, and then confirmation of talks with China and that a de-escalation on the elevated tariffs was likely.

We are currently in the thick of earnings season and there were key updates from Tesla and Alphabet (Google), two of the “Mag 7” group. After disappointing earnings from Tesla, CEO Musk said he would be taking a step back from Trump’s cost-cutting team (DOGE) and focus more on the business. Alphabet posted very strong results last night and announced a $70bn buyback plan. While tariff news and uncertainty has the ability to impact future earnings, it’s clear that many companies are still performing well and delivering positive earnings growth.

Staying with the US, durable goods orders smashed expectations, rising 9.2% month-on-month for March. While the data is very positive, it is likely there was some front loading in orders prior to the tariff announcements.

There was mixed data from the UK as services PMI came in below expectations and below 50, which indicates a contraction. Services has been a bright spot in the economy, so it is a concern to see this deteriorate. The trend was witnessed across Europe with data from France, Germany, and the wider Eurozone showing services PMI below 50. There was more positive news for the UK with strong retail sales released this morning, rising 0.4% over March. The International Monetary Fund (IMF) downgraded its GDP expectations for 2025 from 1.6% to 1.1%, citing trade wars, borrowing costs, and energy prices as the drivers of the adjustment.

BlackRock CEO, Larry Fink, spoke positively about the UK this week, praising Labour’s pro-growth agenda and stating that UK equities were at a “too deep” discount with BlackRock said to be investing in the undervalued equity market. Capital inflows will be needed to help close the valuation gap and so it is pleasing to see BlackRock’s positive stance on the UK. With investors questioning the US market currently, the UK, along with Europe, could be beneficiaries of any reversal in positioning.

It was a mixed week for gold, which hit new all-time highs at the start of the week, rising above $3,500 an ounce. However, as investors adopted a more risk-on stance, gold suffered, falling over 3% from the highs. The US dollar, typically a safe-haven currency, has traded very differently over recent weeks. The currency has sold off along with equities and has now rallied this week given the more positive tariff rhetoric. Sterling went to 1.34 vs the US Dollar at the start of the week, before falling back. We also saw the Euro make three-year highs vs the US Dollar.

After a very tricky April, it has been pleasing to see some relative calm in markets, with equities continuing to move off recent lows. We expect asset markets to stay volatile as we head into May, but there is potential for good news flow, with both the UK and US central banks meeting as well as the prospect for trade deals to be announced. We continue to search for oversold parts of the market that offer attractive entry points.

Andy Triggs, Head of Investments

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 12th April – 17th April 2025

Many investors will be glad of the shortened work week after a bruising April. Thankfully, this week has been calmer than the previous week, although there has still been a raft of data and policy decisions to digest. We saw UK inflation data released, the European Central Bank cut rates for the third time this year, whilst the Bank of Canada held interest rates steady. In the spirit of Easter, here’s an interesting fact: Cadburys factories produce 1.5 million Creme Eggs daily. If stacked, they would reach 10 times the height of Mount Everest!

We begin in the US with Mr Elon Musk, Head of the Department of Government Efficiency (DOGE), announcing shortcomings in his lofty promises. When Mr Musk first took the job, he claimed he would save the US Government $1 trillion, but this week stated he may only cut government spending by $150 billion, a mere 15% of his goal. A range of government contracts and jobs have been cut already, but they may still go further. Meanwhile, the US Treasury department reported that President Trump has spent $155 billion more than the former president did, in the 87 days since his inauguration. The cost-cutting plans of President Trump and Mr Musk are adding up, or should we say, not adding up.

US Federal Reserve Chair Jerome Powell noted that President Trump’s policies are putting the Fed in “uncharted waters”. The policies are likely to derail economic growth, increase unemployment and cause a reacceleration in inflation – a nightmare scenario for the Fed. They are expected to hold off on any rate decisions at the next meeting and analyse further data points for more clarity.

Boeing, the American airline company, is one of the latest casualties in the trade war between the US and China. China has ordered airlines to halt the purchases of Boeing airplanes and jets, causing shares to fall almost 9% year- to-date. This move comes in retaliation after the US government banned the sale of certain Nvidia chips to China. Nvidia, the posterchild of Artificial Intelligence, stated the ban would lead to a $5.5bn hit to revenues. The share price fell 7% on the news.

US retail sales for March were announced on Wednesday and surprised to the upside as they rose by 1.4% (month-on-month), the most significant rise in over two years. Car dealership sales led the way with a 5.3% rise, likely a rush to purchase as President Trump’s automaker tariffs kicked in at the beginning of April. Markets had anticipated a 1.1% rise in retail spending; however, it is likely we may see a reversal in the coming months as sentiment declines. It’s useful to note that retail sales are not real (adjusted for inflation) therefore it’s possible any increase in data points could be a result of goods prices rising.

UK inflation for March was released yesterday, showing a decline to 2.6% for the second consecutive month. Services inflation, which had crept back up to 5% in previous months fell to 4.7%, a positive for the Bank of England. We mentioned in the last weekly that the effects of “Awful April” with price increases across gas, electricity and water prices, are set to impact future data points. The Bank of England (BoE) has projected inflation to rise to 3.6% in the next print and is likely to remain above 3% for the rest of the year. Despite this, the BoE is expected to reduce interest rates at their next policy meeting in early May.

As expected, the European Central Bank (ECB) cut interest rates for the third time in 2025, bringing the deposit rate to 2.25% and the interest rate to 2.4%. Speaking at the press conference, ECB President Lagarde stated “the economic outlook is clouded with exceptional uncertainty” and “downside risks to economic growth have increased”. These views are likely shared amongst other central banks, CEOs and consumers, which is weighing on sentiment and, if allowed to persist will likely weigh on consumption and investment.

Gold continued its meteoric rise, pushing higher once again this week, including rising over 3% on Wednesday. Investors continue to shun typical safe-haven assets, such as US government bonds and US Dollars, instead flocking to gold.

After the volatility of last week, it was pleasing to see markets calm a little this week. That being said, we did still see 3% moves in US indices intraday this week. We continue to tread a careful path forward, focusing on diversification to help manage risk. This approach has meant drawdowns of portfolios have been much less than that of world equities.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 5th April – 11th April 2025

It is fair to say this has been an unprecedented week in markets, with tariffs leading to once-in- a-generation moves. On Wednesday, a week after “Liberation Day”, US President Donald Trump announced a surprise 90-day pause in tariffs. This led to a huge relief rally, as we saw US equity markets experience their best trading day since 2008. We will try and unpack what happened in this rollercoaster week below – brace yourself for the regular use of the word “tariffs”!

We wrote about Liberation Day in the last weekly and its impacts on the markets, causing chaos across the globe. We had seen multiple days of US equities selling off and this week there was rising pressure on bond markets and the US Dollar. There really were not many hiding places as Europe, UK and Japan markets also bore the brunt of the pain. With no regard for the markets disarray, Mr Trump began the week stating, “everyone wants to come and make a deal”. He claimed offers had been presented to him that never would have happened but for the moves he made. Ironically, such countries may not have been forced to make such deals if they hadn’t been hit with excessive tariffs.

There were murmurs around the White House on Monday that a 90-day pause could be on the cards; however, these were taken with a pinch of salt. We then saw the big U-turn come on Wednesday as Mr Trump announced that the retaliatory tariffs on countries (excluding China) would be postponed for 90 days. In totality, countries are still dealing with the initial 10% tariffs rate, with the exception of China, but markets reacted positively to the news. By close on Wednesday, the S&P had risen 9.5%, it’s third-best day since 1950. The technology-heavy Nasdaq index rose over 12%, adding $2 trillion in market cap as Nvidia, Apple and Tesla shares all surged over 10%. It looks as though Trump had to backtrack due to pressure from the bond markets. The disorderly sell-off in US Treasuries, if left to continue, would have widespread negative impacts on the US economy, and as such Trump likely bowed to this pressure. Much like Liz Truss found in 2022, you do not mess with the bond market!

While Wednesday’s relief rally was needed, this does not signal the end to the trade war, as Canada and Mexico are still subject to the 25% tariffs rate, and China have been hit the hardest with tariffs increasing to 125%. The Chinese Yuan fell to its weakest level in over 17 years to 7.34 versus the Dollar, causing the Chinese Central Bank to step in. Markets have estimated the impact of the tariffs could lead to China’s exports to the US almost halving in the next few years, a big blow to China’s GDP, which may fall by 1.5%. Mr Trump stated a resolution with China was certainly possible; however, China continue to match Mr Trump tit-for-tat, announcing their own 125% retaliatory tariffs.

The 90-day reprieve is certainly not a time where government officials intend to sit on their hands and do nothing. European Finance ministers have come together to attempt to reach a trade deal with the US. The EU economy is forecasted to grow under 1% this year so the continuation of tariffs poses potential recessionary risks. US tariffs are already in place on the automaker industry and EU officials are ready, to resort to “response mechanisms” if a resolution cannot be found. UK automaker Jaguar Land Rover has initiated a halt in shipments to the US for a month as they consider how to mitigate the costs of tariffs and potential rerouting.

In terms of economic data, it has actually been a positive week. US CPI figures for March unexpectedly fell below market expectations to 2.4%. Consensus forecasts were for a fall to 2.5% amid lower fuel prices. Month-on-month, the inflation rate was -0.1%, again below market forecasts of 0.1%. Core inflation fell below the 3% mark to 2.8% (year-on-year).  Rising airline and hotel prices had been key contributors to the reacceleration in inflation to end last year; however, both sectors fell 5.3% and 3.5% for the month respectively, as we are seeing the turn in consumer discretionary spending driven by weakening consumer sentiment.   

UK GDP figures for February were released this Friday morning, showing the economy grew by 0.5%. Unexpectedly, market forecasts had predicted slight growth of 0.1%, however, there was growth across all sectors, including the manufacturing sector which has been weak of late. There is certainly a lot more for the Labour party to do to continue improving the UK’s economic prospects, as consumers this month face “Awful April” with price increases on energy, water and council tax bills.

We move to news of actual rollercoasters, as Universal Studios announced they will open their first European theme park in England. In a deal set to bring an estimated £50 billion to the UK economy, the theme park will be constructed and open by 2031 in the town of Bedford. Approximately 20,000 jobs will be created during the construction process with a further 8,000 in hospitality once open as 8.5 million visitors are expected within the first year. A win for the Labour party as PM Kier Starmer proudly announced the plan for growth and bringing joy to Britain.

This week will likely go down in history with incredible daily swings in market prices. Trying to trade these markets is fraught with danger, and sometimes the best approach is to do nothing, as difficult as that can be. We’ve already witnessed this week the incredible rallies that can occur on good news, and over the course of the next few months there is the potential for tariff deals to be made, and for central banks to step in and assist.

We’ll finish on a quote from the Democratic political strategist James Carville in 1994 who sums up the power of the bond market:

“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

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