News & Insight • Weekly Newsletters

21 March 2025 | Charlie Todd | William Buckhurst

That Was The Week That Was

MACRO

• The Federal Reserve kept interest rates on hold at 4.5%; however, Chairman Jay Powell acknowledged the inflationary consequences of tariffs but described them as being “transitory”. Markets reacted well, mainly because of a decision to reduce the pace of quantitative tightening (“QT”) whereby the monthly number of treasuries that will be allowed to mature and not replaced are ratcheted down to $5bn from $25bn
• Eurozone inflation underwhelmed, following a sticky few months. CPI in the Eurozone came in at 2.3% annualised in February, down from 2.5% a month earlier
• The Bank of England also held rates at 4.5%. Money markets suggest a 50:50 split for a cut in May but a full 25bps cut is still fully priced in for August followed by another in November
• Markets in Turkey declined sharply after President Erdogan’s top political rival, Istanbul Mayor Ekrem Imamoglu, was arrested by Turkish authorities. He was arrested on corruption charges. Reports indicated that authorities spent as much as $9bn to support the currency as the Lira weakened 11% against the Dollar and 10-year yields rose 2.6% to 30.7%
• The Gold price shot through $3,000/oz this week

COMPANY NEWS

• Accenture shares fell despite announcing quarterly results which showed revenues rising 8.5% in local currency terms and earnings up 7%; but it said that new work for the US government, which accounts for around 8% of its global revenues, slowed after President Trump took office in January. It did not, however, cut its guidance and said that the slowing trends in the business were very “recent”. Although they “narrowed” the lower band, they still expect 5-7% revenue growth going forward. Also, new bookings, which can foreshadow future revenue growth, fell by 3% during the quarter
• Nike beat modest earnings expectations under new CEO Elliott Hill. Its revenues of $11.27bn were less bad than expected ($11.03bn) but are still down compared to the $12.43bn a year ago. Although two thirds of their revenue comes from outside of the US, they warned of the impact of Trump’s tariffs, including a 20% duty on all goods from China. They are still optimistic on the latter
• Shares in Sodexo, the outsourcing food service provider, fell 17.2% after a profit warning as revenue growth was disappointing (3.5% vs 4.6% expected).  Guidance was also poor, with revenue growth of 3.5%, (from 6%) and margins lower. Management commented fundamentals remain strong, so it seems competitors Aramark and Compass are taking share
• FedEx sometimes finds a way not to deliver. The shares fell 5.6% as the company missed earnings estimates and management cut 2025 revenue and margin guidance. They also mentioned they were progressing on the sale of the FedEx Freight division
• After rising 20% on the back of the German defence spending uplift, QinetiQ gave all that back after issuing a profit warning, stating organic growth and margins were now forecast to be lower than expected. Next year expectations look ok but there is continued weakness in the US division which they bought. Management announced an extension to the share buyback programme of up to £200m over the next two years which has so far not helped the share price

MEGA MAGA

Three bits of mega news this week with the sad passing of boxing legend ‘Big’ George Foreman offset by the best week in ‘Big’ Dan Burn’s life, scoring a goal to win a trophy for his boyhood club (Newcastle United) and then making his Three Lions debut at the age of 32

Lastly there was a ‘Big’ Boeing Order as President Trump awarded a multi-billion contract to build the F-47, the “most lethal aircraft ever built”. One of the MAGA – Make America Great Again – trades has been that of Boeing who have struggled with several safety issues and cash flow. Earlier in the week the company’s CFO, Brian West, showed signs of optimism, noting that the cash burn in the first quarter “could be in the hundreds of millions” better than expected as working capital comes down. He also indicated that its defence division was “seeing signs of stabilisation as it moves toward recovery” while overall metrics were tracking to meet expectations

TECH WEEK

• The Mag 7 – Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA, and Tesla – have had a tough start to the year with the group having declined by 13% since January 1^st.
• Alphabet have got on the front foot to stop the decline by announcing the acquisition of Israeli cyber security company Wiz for $32bn – much higher than the $12bn quoted last year.  Alphabet shares are struggling as investors worry about a downturn in advertising – derivative of consumer spending – and the threat to its dominant search position from AI such as Perplexity AI. The latter company was rumoured to be buying US TikTok
• It was also reported by The Information that Alphabet was planning to work with Taiwanese MediaTek to help design and produce some of its AI chips
• NVIDIA shares declined as the company's conference failed to spark excitement. CEO Jensen Huang talked about full production of Blackwell GPU’s and an AI solution called Nvidia Halos. He also commended T-Mobile and Cisco
• Chinese Baidu rose 11.9% after the company launched new Ernie AI models. They apparently rival Deep Seek
• Intel is having a renaissance (warning – there have been quite a few). The shares rose following reports of the intended plans from new CEO Lip-Bu Tan, including changes to the company’s manufacturing methods and AI strategies.  There are also understood to be staff cuts to address middle management layers. He intends to purchase around $25m in stock within 30 days of starting

THE WEEK IN HISTORY

1988: Apple sends shock waves through Silicon Valley as it files a lawsuit against Microsoft. The lawsuit alleged that Microsoft stole graphic design elements from Apple’s user interface for Windows 2.03

2008: Bear Stearns, the 85-year-old investment bank, narrowly avoids bankruptcy by its sale to JP Morgan Chase & Co. at the shockingly low price of $2 per share