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Weekly Notes

The Week In Markets – 2nd August – 8th August 2025

The big news coming out of the UK this week was that the Bank of England (BoE) lowered interest rates. This move was largely expected but the vote to cut was anything but straightforward. For the first time in its history, the BoE required a second round of voting to determine their decision. During the first round, four members voted to hold rates steady, four voted for a 0.25% cut and one member voted for a 0.5% cut. With no clear outcome, a second round was required and here we saw five members voting for a 0.25%, enough to cement the decision. This unexpected development surprised markets, as estimates had suggested that seven out of nine policymakers would support a rate cut.

Interest rates were cut from 4.25% to 4%, a move markets had widely anticipated from the BoE. However, the real focus has been the internal division within the Bank itself. The split stems from differing views on how best to respond to the reacceleration in inflation and the rise in unemployment. Governor Andrew Bailey acknowledged there was “genuine uncertainty” regarding the future path of interest rates but reaffirmed the Bank’s commitment to a “gradual and careful” approach. The pound strengthened following the meeting and bond yields surprisingly moved higher, driven by less certainty of future rate cuts from the BoE.

Data reporting plays a crucial role in central banks’ decisions during their rate-cutting cycles. In a dramatic move, US President Donald Trump dismissed the head of the Bureau of Labor Statistics following a weaker-than-expected non-farm payrolls report for July. He accused her, without providing evidence of manipulating the figures, fuelling growing concerns about the reliability of government-released economic data and the frequency of subsequent revisions. Net downward revisions revealed that 258,000 fewer jobs had actually been created in May and June than initially reported, highlighting just how inaccurate recent jobs data has proved to be.

There was further movement within US government departments as Federal Reserve Governor Adriana Kugler announced her immediate retirement at the end of last week. President Trump acted swiftly, appointing Council of Economic Advisers Chairman Stephan Miran to serve out the remainder of Kugler’s term. Trump has repeatedly attempted to pressure Fed policymakers into lowering interest rates this year. By appointing Miran, who has been an outspoken critic of the Fed previously, accusing it of losing focus and accountability—the President appears to be gaining his influence over monetary policy.

Apple CEO Tim Cook visited the Oval Office following President Trump’s announcement that companies committing to US-based manufacturing would be exempt from a proposed 100% tariff on chips and semiconductors. In response, Apple pledged an additional $100 billion investment in US manufacturing over the next four years, bringing its total commitment to $600 billion and creating 20,000 new jobs. Despite needing to reassess its operations in India and facing market concerns over its lag in the AI race, Apple still beat Q2 earnings expectations. The company’s share price rose more than 6% over the week.

Swiss President Karin Sutter made a last-minute trip to Washington in an effort to prevent the enforcement of a 39% tariff on Swiss exports. However, she left empty-handed, having failed to secure a meeting with President Trump or his trade officials. Sutter had hoped to negotiate a reduction to 10%, given that the US is the largest importer of Swiss watches, chocolate, and machinery. While further negotiations between the two countries is expected, the tariffs came into effect on Thursday. Swiss officials have warned of a significant economic blow, with tens of thousands of jobs potentially at risk.

Gold rose to a two-week high on Thursday, after a period of price consolidation. With question marks lingering over US policy and Fed independence, investors are likely flocking to the safe haven asset. We continue to see strong demand for the precious metal from central banks who are increasing their holdings. In a world of uncertainty and inflationary pressures the case for gold continues to remain strong.

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 July – 1st August 2025

After months of threats, negotiations, and reversals, we’ve now reached the August 1st Trump tariff deadline. The executive order issued by the US President imposes tariffs on goods from over 90 countries, with the majority facing a 15% rate, however, there are a few notable exceptions.

To start the week, the US and EU reached a trade agreement imposing a 15% import tariff on EU goods. According to European Commission President Ursula von der Leyen, this was “the best we could get,” as it’s half the rate that had been threatened to take effect today. Much to President Trump’s satisfaction, the deal surpassed last week’s $550 billion agreement with Japan, with the EU committing to invest $600 billion in the US and significantly increase its purchases of U.S energy and military equipment.

Despite the agreement, there was pushback from several key politicians, including French President Emmanuel Macron. He criticised the deal, arguing that the EU was not “feared” enough by President Trump and suggesting that this was only a first step, with room for further negotiations. There had been faint hopes that Europe might secure a zero-for-zero tariff agreement.

Earnings season continues, and European drugmaker Novo Nordisk surprised markets by issuing a profit warning and acknowledging headwinds for its blockbuster drugs, Ozempic and Wegovy. Shares plunged down 30% over the week, wiping more than $70 billion off its market cap. Once seen as the leader in the weight-loss industry, Novo’s results appear to have opened the door for competitors like Eli Lilly. The company also announced the successor to former CEO Lars Jorgensen: Maziar Doustdar, previously VP of international operations. He is now tasked with reigniting sales, combating knock-off versions of Novo’s drugs, and reassuring investors that Novo remains a dominant force in the space.

Germany’s GDP contracted by 0.1% in Q2, marking a slowdown from the growth seen in Q1, which had been driven by strong purchases ahead of anticipated US tariffs. Germany is expected to be hit hardest by the newly agreed 15% tariffs due to its heavy reliance on exports. Further economic pain is likely before the planned fiscal stimulus takes effect in 2026.

The US Federal Reserve held its fifth meeting of the year and, as expected, kept interest rates unchanged. The policy decision concluded with a 9–2 vote, with governors Michelle Bowman and Christopher Waller advocating for a rate cut—marking the first time in 30 years that two governors have opposed the majority. What disappointed markets most was the post-meeting commentary from Fed Chair Jerome Powell, who poured cold water on growing expectations of a rate cut in September. Powell stated it was too early to determine whether a cut would be appropriate at the next meeting, noting that the unemployment rate remains low and the labour market resilient, suggesting that current rates have not hindered economic activity.

US Non-Farm Payrolls, released on the first Friday of each month, surprised markets with only 73,000 jobs created in July—well below the forecast of 110,000. This slowdown aligns with broader market expectations and reflects the impact of trade tensions, tariffs, and growing caution among businesses when it comes to hiring, as pressures continue to mount. The news helped increase the probability of a rate cut in September, with US government bond yields tumbling on the news.

US stocks pulled back following the Federal Reserve meeting and in anticipation of the 1st August tariff deadline. However, Meta (formerly Facebook) reported Q2 revenue of $47.5 billion, exceeding expectations and offered a strong outlook for Q3, with capital expenditure showing no signs of slowing. This led to shares rising by 11% on Thursday, bringing the year-to-date gain to over 32%. Microsoft also delivered strong results, highlighting the artificial intelligence (AI) boom is still well in motion and shows no sign of slowing just yet.

It was an eventful week for copper, with the price plunging a staggering 20% on Wednesday. Trump surprised the market by announcing that the 50% import tariff on copper would exclude refined copper cathodes, which are the most commonly traded form of copper.

There was further tariff meddling from Trump on Thursday, as he increased tariffs on a range of countries, including a 35% tariff on Canada and 50% tariff on Brazil. Interestingly, only nine countries were able to strike trade-deals with the US in the run up to today’s deadline, however, many countries have vowed to continue to negotiate. Countries such as Brazil, Canada and India were denied extensions.

It has been a tougher week for markets, with concerns over tariffs weighing heavily over global equities. After a very strong run over recent weeks, where seemingly news flow around trade agreements was positive, this week was a reminder of the fragility of global trade and the unpredictability of US President Trump.  

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 – 19th July – 25th July 2025

On Sunday, the ruling coalition led by Japanese Prime Minister Mr Ishiba and the Liberal Democratic Party (LDP) lost its majority in the Upper House of Parliament. This marks the first time since 1955 that the LDP has failed to maintain control of at least one chamber.

Premier Ishiba’s days may well be numbered, having already lost control of the Lower House in elections just nine months ago. Momentum is also shifting towards opposition parties, which have pledged to cut taxes and tighten immigration policies. Intriguingly, the Sanseito party, a far-right populist group founded in 2020, has gained significant traction through YouTube, increasing its representation from one seat to fifteen.

Mr Ishiba is brushing off internal party pressure over his leadership, vowing to remain in office. He reaffirmed his commitment to overseeing tariff negotiations with the United States and tackling high inflation, a relatively new phenomenon for Japan who battled deflationary headwinds for most of this century.

Despite a rocky start to the week, sentiment in Japan improved on Tuesday following an announcement by US President Trump that he had signed the “largest trade deal in history” with Japan. Japan, the fifth-largest trading partner of the United States in goods, currently runs a trade surplus of approximately $70 billion. Key elements of the deal include Japan’s purchase of 100 Boeing aircraft and an increase in defence spending with US firms to $17 billion. The country’s automotive sector—which accounts for over a quarter of its exports to the US—will also benefit from a reduction in tariffs to 15%, sending shares in leading automakers Toyota and Honda up by 14% and 8% respectively over the week.

Continuing on the road of automakers, electric vehicle manufacturer Tesla reported a decline in both revenue and profits in its second-quarter earnings. Revenue fell short of market expectations, coming in at $22.50 billion compared to the forecasted $22.74 billion. Tesla shares have dropped nearly 20% year to date, with much of the volatility attributed to CEO Elon Musk’s four-month tenure as head of the Department of Government Efficiency (D.O.G.E), which ended in a public fallout with President Trump. The company is expected to face a few “rough quarters” ahead, following the withdrawal of US subsidies for electric vehicle manufacturers. However, Musk remains optimistic around future revenue streams, particularly from self-driving services anticipated to launch next year.

The European Central Bank (ECB) met on Thursday and, as expected, left interest rates unchanged at 2.15%. The ECB has diverged notably from other central banks in their rate-cutting cycles, making this pause timely, especially with inflation holding steady at 2% in June. ECB President Christine Lagarde expressed satisfaction with the outcome, stating that the Eurozone is in a “good place” and emphasised the importance of looking ahead. Her comments refer to the anticipated trade deal between the United States and the European Union, which negotiators hope to finalise before the 1st of August deadline.

After three years of negotiations, the UK and India have signed a free trade agreement, agreeing to cut tariffs on goods ranging from motor vehicles to whisky. The deal marks Britain’s largest trade agreement since leaving the EU in 2020—at least until the pending trade deal with the United States is signed and finalised. Aimed at boosting trade by £25 billion, the agreement has lifted sentiment, helping the UK large cap index reach a record close for the fourth consecutive day.

Silver prices continue to surge, reaching their highest level in nearly 14 years—just shy of the $40 per ounce mark. The metal previously hit a record high of $49 in 1980, a level it last approached in 2011.

 

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 Market – 12th July – 18th July 2025

It was a busy week for data reports, with key releases including UK inflation figures, as well as US inflation and retail sales data. Starting with the UK, the Consumer Price Index (CPI) for June rose to 3.6%—the highest level in over 19 months.

Since inflation fell to 1.7% last September, it has been steadily rising in the UK. In June, inflation exceeded market expectations, climbing to 3.6%, while core inflation (excludes food and energy) rose to 3.7%. Price increases were broad-based, with notable rises in fuel, food, and transport costs, particularly train fares. This upward trend in inflation is becoming an increasing concern for the Bank of England (BoE), especially as it now surpasses inflation levels in the EU and US. The EU, who led the way with a significant rate cutting cycle, have seemingly tamed inflation with the latest reading in line with its 2% target.

Later in the week UK wage growth and unemployment figures were released. Wage growth (excluding bonuses) slowed from 5.3% to 5.0%, while the unemployment rate for May rose to 4.7%. These indicators suggest that the labour market is beginning to soften. As a result, the Bank of England (BoE) may consider a 25-bps (0.25%) rate cut at its August meeting. Governor Andrew Bailey commented this week that the weakening labour market, combined with stagnating economic growth, could provide the BoE with an opportunity to implement its first rate cut since February.

Chancellor Rachel Reeves remains in office after a challenging few weeks, during which she unveiled a new package of measures dubbed the ‘Leeds Reforms.’ Among the initiatives is a government-backed mortgage scheme aimed at encouraging lenders to take on more risk, and a push to channel savings and pensions into equities. These measures are designed to stimulate growth across the UK economy. The Chancellor expressed confidence that the reforms will have a ‘ripple effect’ across sectors, improving returns on savings and putting more money into the pockets of working people.

The proposed acquisition of Japan’s Seven & I Holdings, the parent company of the popular store 7-Eleven, by Canada’s Alimentation Couche-Tard has collapsed. Valued at $46 billion, it would have been the largest buyout in Japanese history. However, Couche-Tard accused Seven & I of failing to engage constructively in negotiations. The deal was widely seen as a litmus test for Japan’s openness to foreign takeovers, and its failure has raised doubts. Shares of Seven & I have dropped 13% over the week, falling to 1,933 yen, well below Couche-Tard’s offer of 2,600 yen per share.

Turning to the US, Consumer Price Index (CPI) data for June showed inflation rising to 2.7%, marking a reacceleration to levels last seen at the beginning of the year. This uptick is viewed as the first sign of tariffs beginning to filter through to consumer prices, with notable increases in the cost of appliances (+1.9%), toys (+1.8%), and sporting goods (+1.4%). While the Federal Reserve is set to meet later this month, markets anticipate that a rate cut is more likely at the September meeting. There is growing expectation that when the Fed does move, it may opt for a larger 50 basis point (0.5%) cut to regain momentum. Fed Governor Christopher Waller expressed support this week for beginning rate cuts as early as the upcoming meeting, though he is widely expected to be outvoted.

Following May’s disappointing decline in US retail sales of -0.9%, June saw a welcome rebound, with sales rising by 0.6%. This exceeded the consensus forecast of a modest 0.1% increase. However, part of the rise is attributed to tariff-driven price increases rather than higher sales volumes. For instance, auto dealerships led the gains, with receipts up 1.2% despite reporting a drop in unit sales. The recovery was evident across several sectors, as consumers initially responded to rising prices by drawing on credit and savings to maintain their standard of living.

We are now into earnings season, and Taiwan Semiconductor Manufacturing Co (TSMC), a global leader in AI chip production, posted record quarterly profits on Thursday. From April to June, net profit reached $13.5 billion, marking a 60% year-on-year increase. The company also expressed optimism for a strong third quarter, as it continues to supply Nvidia who have been given the thumbs up to resume chip sales in the US. TSMC shares are up nearly 9% since the start of the year.

Sterling has weakened over recent weeks against the US Dollar, falling from 1.37 to around 1.34. Signs of a slowing economy and the potential for increased rate cuts have likely driven the marginal weakness. The UK large cap index, which derives approximately 75% of its revenues from overseas responded favourably to the currency moves, breaking through 9,000 for the first time in history.

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 July – 11th July 2025

History was made once again on Thursday, as AI posterchild Nvidia closed the trading day up 0.75% at $164.10 per share—becoming the first company in history to surpass a $4 trillion market capitalisation. Nvidia has been at the forefront of the AI revolution, powering the ambitions of tech giants like Microsoft, Meta, and Alphabet with their processing units. These chips are central to the massive investments these companies are making in artificial intelligence. Remarkably, Nvidia’s market cap now exceeds the combined value of the entire UK stock market.

Last week, markets were focused on the looming July 9th deadline, when President Trump was expected to reimpose his “Liberation Day” tariffs on countries that had not secured a trade deal with the United States. Despite insisting he would not delay the deadline, Trump ultimately postponed it again, this time to August 1st granting countries a three-week reprieve. However, formal warning letters have already been sent out. Many nations have expressed their intent to finalise agreements, but reaching mutually beneficial terms has proven challenging. The most optimistic takeaway for many countries so far is that “progress” is being made.

Keeping up with the latest tariff announcements has become increasingly difficult, and a sense of malaise has settled over the markets, especially after copper became Trump’s next target. Copper prices in the U.S. surged to an all-time high of $5.84 per lb after Trump calmly declared, “Today we’re doing copper,” followed by, “We’re going to make it 50%.” The U.S. imported 810,000 tons of copper in 2024, a critical material not only for manufacturing and construction but also for military equipment. Markets began to take the announcement seriously when U.S. Commerce Secretary Lutnick confirmed that the copper tariff is expected to be signed into effect at the beginning of next month.

Trump has also turned his attention to Brazil, announcing a sweeping 50% tariff on all Brazilian imports to the U.S. The sudden move followed legal action against Trump’s close ally, former Brazilian President Bolsonaro, who is facing a lawsuit over his alleged role in a plot to overturn the 2022 Brazilian election. Trump responded on his Truth Social platform, calling the case a “witch hunt” and demanding it “end immediately.”  This development further strains the already tense relationship between Trump and current Brazilian President Lula.

In a surprising move this week, X CEO Linda Yaccarino announced her resignation via a tweet. Yaccarino, who joined the company in 2023, was brought on to help owner Elon Musk rebuild relationships with advertisers, many of whom had distanced themselves due to Musk’s controversial public statements. She was also tasked with transforming X into a multi-functional platform, incorporating payments, video, and AI integration. Her tenure can be seen as a partial success, though it was often overshadowed by Musk’s unpredictability, which at times undermined her efforts.

While the week has been dominated by U.S. developments, the UK also made headlines this morning with the release of disappointing GDP data. The UK economy contracted by -0.1% in May, marking the second consecutive month of decline. This came as a surprise to markets, which had forecast a modest 0.1% expansion. The continued downward trend in growth may influence the Bank of England’s upcoming decision on whether to cut interest rates. Meanwhile, pressure is mounting on Chancellor Rachel Reeves, especially following last week’s welfare reform U-turn. She reiterated her commitment to jumpstarting economic growth and delivering on her promises.

Despite the week’s unpredictability, equity markets have continued their upward momentum, with both the S&P 500 and Nasdaq reaching new all-time highs. The FTSE 100 also hit a record high, buoyed by strong performances in the mining and healthcare sectors.

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 – 28th June – 4th July 2025

“Big, Beautiful Bill”, the major tax and spending legislation demanded by President Trump, is set to be signed into law today, following its narrow passage through the Senate on Tuesday. The bill was approved by the slimmest of margins, with Vice President JD Vance casting the deciding tiebreaking vote. It includes sweeping tax cuts, reductions to social welfare programmes, and increased funding for the military and immigration enforcement—measures that could add an estimated $3.3 trillion to the national debt.

There were several complications in passing the bill, as the Senate vote extended overnight before it was ultimately advanced by a 51–50 margin, with two Republican senators voting against it. Concerns centred on the significant cuts to healthcare programmes, aid for lower-income Americans, and the projected $3.3 trillion increase to the existing $36.2 trillion national debt. The bill would also compel Congress to raise the debt ceiling or risk a default. It proceeded to the House of Representatives on Thursday, where it passed narrowly by 218 votes to 214. The legislation was finalised just in time to meet Friday’s deadline set by Mr Trump, who intended to sign it into law today on US Independence Day.

Another Trump-imposed deadline is fast approaching, as the 90-day freeze on the Liberation Day US tariffs is set to expire in just five days. Speaking earlier this week, President Trump made it clear he had no intention of extending the deadline, though he admitted it had been more difficult than expected to secure new trade agreements. He criticised several countries as being “spoilt from having ripped us off for 30, 40 years”.

The goal of completing 90 trade deals in 90 days was always highly ambitious. So far, only the UK and Vietnam have finalised agreements, while China has agreed to a “framework” towards a broader deal. US Treasury Secretary has expressed optimism, stating he expects a flurry of deals to materialise ahead of the looming deadline.

US Non-Farm Payrolls data for June was released a day early due to the Independence Day holiday. Despite the shift in timing, the underlying trend remained unchanged, with 147,000 jobs added over the month—continuing the pattern of labour market resilience. Markets had forecast an increase of 110,000 jobs, making the figures a positive surprise, particularly the 73,000 rise in government employment, which included a 40,000 increase in government education roles.

In contrast, the federal government shed 7,000 jobs in May, and cuts have continued at an unprecedented pace as the White House pushes forward with aggressive spending reductions. The unemployment rate fell to 4.1%, largely due to a decline in labour force participation.

The US Federal Reserve has kept interest rates unchanged at 4.5% since December 2024, and the timeline for the start of its rate-cutting cycle continues to be pushed back. Markets remain optimistic that the first-rate cut could come in September, followed by a second in December. There is also growing speculation that the cuts may be larger than the typical 25 basis points (0.25%).

There were fierce battles in the House of Commons as Prime Minister Keir Starmer was forced into a U-turn on welfare reform plans put forward by Chancellor Rachel Reeves. Intense political pressure from within the Labour Party saw 49 MPs vote against the government’s welfare reform bill. The proposed changes to Personal Independence Payments (PIP) and Universal Credit were widely criticised as harmful, prompting Starmer to delay any reforms to PIP pending a further review.

The climbdown leaves Chancellor Reeves in a difficult position, facing a £4.8 billion shortfall while maintaining her pledge not to raise income tax or VAT. Headlines across the UK focused on Reeves appearing emotional in the Commons, with speculation mounting after the Prime Minister declined to confirm whether she would remain in her role through to the next general election.

Investors shifted from tariff-driven panic to relief buying, pushing US stock markets back to record highs. The S&P 500 has surged roughly 26% since bottoming on 8 April, and AI poster child Nvidia is poised to become the world’s most valuable company ever as it approaches a $4 trillion market cap. Despite looming trade deadlines, optimism remains that “July Joy” could continue—historically the strongest month for the S&P 500 over the past two decades. Meanwhile, the US dollar posted mixed performance this week, strengthening slightly against pound sterling but weakening against the Swiss franc.

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 – 21st June – 27th June 2025

This week saw NATO Secretary General Mark Rutte host representatives from all 32 member states in the Netherlands for what became the alliance’s largest and most historic meeting to date. As the two-day summit in The Hague concluded, several key takeaways emerged: a renewed commitment to a 3.5% defence spending target, reaffirmed support for Ukraine, and a strong emphasis on collective defence – that an attack on one member is considered an attack on all.

Interestingly, eight of the 32 NATO member states, including Spain, Belgium, and Italy, are not currently meeting the previous 2% defence spending guideline. This makes it increasingly difficult for them to reach the newly proposed 3.5% target within the next decade. These countries already face tight public finances and competing domestic priorities, such as healthcare and education. Even when funds are allocated, there is often a procurement lag. Building up military capacity and acquiring equipment takes time, meaning that increased spending does not immediately translate into enhanced defence capabilities.

Just last week, we reported that the threat of President Trump appointing a new Chair of the US Federal Reserve had diminished. However, this week he has reignited his criticism of Chair Jerome Powell, describing him as “terrible” and expressing frustration that the Fed has not cut interest rates at all this year. Trump stated he has three or four candidates in mind as potential successors. Jerome Powell responded firmly, defending the Federal Reserve’s commitment to keeping inflation under control. Inflation remains clearly above the 2% target, and policymakers are increasingly concerned that the full impact of President Trump’s tariffs has yet to be reflected in the data. Powell’s message was clear: the Fed is “well positioned” to wait and observe the trajectory of the economy before making any policy adjustments.

US weekly jobless claims fell by 10,000 to 236,000, reflecting a decline in the number of Americans filing for unemployment benefits. The strong labour data will likely validate Powell in his decision not to cut interest rates this year.

In a week dominated by the US, there was positive news flow on the US-China trade deal. A White House official confirmed “the administration and China agreed to an additional understanding for a framework to implement the Geneva agreement”. Trump also hinted there could be another deal coming that would “open up” India. The positive rhetoric around trade deals helped propel equity markets, with the main US market a whisker away from an all-time high close as of yesterday. The market has rebounded an incredible 23% since the 8th   of April lows. While the US equity market has recovered, the US dollar remains weak, reaching its lowest level in nearly four years against sterling. This has been a headwind to sterling-based investors holding US dollar assets, given the dollar is down around 9% against sterling in 2025. It was interesting to see recent US dollar moves; it did not act as a safe haven asset when tensions between Iran and Israel escalated, and quickly sold off on the back of de-escalation, resuming its slide lower.

Here in the UK Prime Minister Starmer appeared to row back on welfare reforms. This is likely to put further pressure on the public finances and could lead to tax rises in the next budget. Staying with the UK, rumours broke on Wednesday that Shell were in early talks to acquire rival BP in what would be a blockbuster deal. Shell has poured cold water on the rumours, but with an activist investor holding over 5% of BP, there is potential for corporate activity to happen.

A fragile ceasefire between Iran and Israel led to weakness in the oil price this week. Absent of any geopolitical shocks, the oil market looks well supplied for the remainder of 2025.

As we enter the second half of 2025, global equity markets are displaying mixed momentum. The Hang Seng Index has led the way, surging 19.3% year-to-date. In contrast, US markets have posted more modest gains, with the tech-heavy Nasdaq up 3.0% and the S&P 500 rising just 1.6% (in USD terms). Looking ahead to next week, investor focus will be on key economic indicators such as UK GDP, Eurozone inflation, and the US Non-Farm Payrolls report.

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 – 14th June – 20th June 2025

The week began with leaders from the G7 gathering for their summit in Kananaskis, Canada. However, geopolitical tensions quickly overshadowed the event. The summit was dominated by the escalating conflict in the Middle East, prompting President Trump to leave early to address the situation. Ukrainian President Volodymyr Zelensky also departed the summit, though he secured new aid from Canada rather than the United States, as the G7 struggled to present a united front in efforts to resolve the ongoing conflict with Russia.

As expected, the US Federal Reserve left interest rates unchanged at 4.5% on Wednesday. There has yet to be a rate cut this year, and Fed Chair Jerome Powell has continued to voice concerns about a potential reacceleration in inflation over the coming months, as President Trump’s tariffs begin to impact prices. It is clear that the Fed will want to see signs of softening in the labour market, which has remained resilient throughout the first half of the year. Markets remain optimistic about the likelihood of two rate cuts in 2025, although expectations have shifted towards a more gradual pace, with just a single 25 bps (0.25%) cut anticipated in both 2026 and 2027.

President Trump has repeatedly made it clear that he wants Fed Chair Jerome Powell to cut interest rates since returning to office in January. While the threat of Trump dismissing Powell has diminished, he has indicated that he will soon nominate Powell’s successor—despite nearly a year remaining in Powell’s term. Such a move would likely cause significant unease in financial markets, particularly if the nominee is perceived as a Trump loyalist.

The UK and US have finalised their trade agreement, initially outlined in May. President Trump, who remains unpredictable, expressed clear admiration for Sir Keir Starmer and the UK, which he described as the country’s “ultimate protection”. Under the agreement, all tariffs in the aerospace sector will be removed, while tariffs on the automotive industry will be reduced from 25% to 10%. Both sides also pledged to continue working towards a zero-tariff arrangement on core steel products.

Italian car manufacturer Ferrari has delayed plans to launch its electric vehicle (EV) range from 2026 to 2028, due to a lack of consumer demand. Known for its loyal and passionate customer base, built on exclusivity and racing heritage, Ferrari is using the additional time to further develop its EV offering, particularly to address the challenge of battery technology, which currently lacks the sustained power required for high-performance vehicles. This trend is not unique to Ferrari, other luxury automakers are also adjusting their EV strategies; Lamborghini has postponed its EV launch until 2029, while Maserati has cancelled plans for an electric version of the MC20.

Turning to Europe, and in contrast to the United States, three interest rate cuts were announced within 24 hours. The Swiss National Bank, Sweden’s Riksbank, and Norway’s Norges Bank each trimmed rates by 25 bps (0.25%). Despite the coordinated timing, each central bank is responding to different economic conditions. Switzerland has entered a period of deflation, with inflation falling to -0.1%, largely due to the strength of the Swiss franc. In Sweden, the krona has also appreciated significantly against the US dollar this year, and with inflation nearly flat, Riksbank Governor Erik Thedéen saw room for monetary easing. For Norway, this marks the first interest rate cut since 2020.

The Bank of England (BoE) met on Thursday and, as markets anticipated, held interest rates steady at 4.25%. Notably, three of the nine policymakers voted in favour of a 25bps (0.25%) rate cut, more than initially expected. Following the meeting, BoE Governor Andrew Bailey stated that interest rates remain on a gradual downward path and acknowledged early signs of softening in the labour market. He emphasised that the Bank would continue to adopt a “gradual and careful” approach, citing elevated global uncertainty and ongoing geopolitical tensions as factors that could influence future decisions. Similar to the US, investors have priced in two 25 bps (0.25%) cuts by the end of the year.

The ongoing conflict in the Middle East has put upward pressure on oil prices, with Brent crude oil rising above $77 a barrel this week. If we were to see the Strait of Hormuz shut, then it’s likely oil prices would spike further. Approximately 20 million barrels of oil and petroleum products pass through the Strait of Hormuz daily therefore any closure will lead to severe disruption in the delivery of oil.

For gaming enthusiasts, the Nintendo Switch 2 has officially become the most successful console launch in history, surpassing Sony’s PlayStation 5 release in 2020. The console sold over 1.1 million units in the US and 3.5 million units globally within just four days, setting a new sales record. Nintendo’s shares have surged 40% year-to-date.

 

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 – 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.

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