News & Insight • Weekly Newsletters

11 April 2025 | Charlie Todd | William Buckhurst

That Was The Week That Was

MACRO

“Fake news” to not so fake news. Markets initially rallied very strongly earlier in the week following headlines that President Trump was considering a 90-day delay to tariff implementation. The headline led to the S&P rallying over 8% off the lows before falling again when the White House immediately called the headlines “fake news.” On Wednesday, after less than one day of the tariffs being in place, Trump announced that he had authorised a 90-day pause on non-retaliating countries, along with lowering the reciprocal rate immediately. The adverse movements in the Treasury market may have forced his hand

US tariffs on Chinese goods compounded over the week finishing at 145%. Conversely, China announced they will raise tariffs on all US imports to 125% - stating they would no longer hike anymore because at this point the excessively high numbers are "economically meaningless"

US inflation data released yesterday came in lower than expected. March CPI was -0.1% on the month vs 0.1% expected with year-on-year CPI of 2.4%, slightly below consensus estimates; while core inflation was 0.1% and 2.8% m/m and y/y respectively both lower than forecast

Halifax reported UK house prices declined 0.5% in March following a 0.2% decline in February to an average of £296,699

Due to global certainty, and further questioning of the dollar being the world’s reserve currency, gold hit all-time highs again

COMPANY NEWS

• The US banking sector kicked off Q1 reporting season with JP Morgan and Morgan Stanley’s trading revenues both beating expectations. CEO of the former, Jamie Dimon, warned the economy faces "considerable turbulence" on the conference call. In the bank’s annual shareholder letter earlier in the week he wrote on tariffs that “the quicker this issue is resolved, the better because the negative effects increase cumulatively over time” whilst “we are likely to see inflationary outcomes, not only on imported prices but on domestic goods, as input costs rise, and demand increases”
• After losing out to Boeing on a recent defence contract, Lockheed Martin compounded matters by missing earnings expectations, sending shares meaningfully lower
• Tesco shares have held up well in this sell off but fell 6.2% after reporting in line full year results. They also announced a further share buyback totalling £1.45bn
• Levi Strauss moved 24% on decent results, from rising 16% after hours to finishing the next day down 8%. Management left guidance unchanged and commented they were taking a cautious approach to incorporating tariffs into guidance but were reviewing tariffs with “urgency but not being overly reactive.”
• The trade war is already impacting suppliers of Amazon, with reports indicating that they had cancelled orders for products made in the Far East without warning
• Shares in Walmart finished 9.6% higher after confirming its quarterly and full year sales and operating income are unchanged. Walmart noted that the range of outcomes had widened but also noted that it would aim to keep prices low and try to gain market share
• JD Sports closed up 9.5% after issuing a trading statement that was in line with the range given in January while also announcing a new £100m share buyback. Management commented that recent and full year trading was in line with expectations while this guidance excluded potential impact from tariffs
• Shell shares fell 4.5% after the company lowered its gas guidance, blaming unplanned maintenance in Australia and adverse weather. They also stated their Gas trading division to be in line with the last quarter, despite an impact from expiring hedging contracts while Chemicals & Products trading was expected to be better

BOND CORNER

• The US yield curve twist steepened significantly, with US 2-year Treasury yields falling 5bps to 3.86% while 30-year yields rose by 13bps to 4.87%. A better-than-expected 30-year US Treasury auction eased fears about long-term Treasury demand yet failed to halt the move higher in yields.
• There has been much talk of China selling US Treasuries in retaliation to the trade war. In fact, most data points suggest that China has been steadily selling Treasuries since around 2011 to diversify its foreign exchange reserves into other currencies, with gold having been a notable beneficiary of this moves.
• Statista data suggests that Japan is the largest overseas holder of US Treasuries, closely followed by China.

GOOD HEALTH

Technology and healthcare have been the best two sectors over the long-term to invest in. One sub-sector of the latter, Managed Care, rallied following the release of updated pricing information by the Centers for Medicare and Medicaid Services – the largest payer for healthcare services in America. They announced they would implement a 5.06% rate update compared to the previous proposal of 2.23% and much better than the 3% the market was expecting. Beneficiaries such as UnitedHealth, CVS and Humana rose 5.4%, 5.9% and 10.7% respectively.

One other sub-sector, Pharmaceuticals, underperformed again as President Trump announced that he would be imposing tariffs on pharmaceutical drugs to encourage pharma companies to produce more in the US. In reaction, Swiss Novartis announced plans to invest $23bn in America following similar moves from Eli Lilly and Johnson & Johnson.

PROPERTY DEVELOPMENTS

• We have noted a lot of consolidation in the property space, particularly those REITs – Real Estate Investment Trusts – trading on a wide discount to their measured NAV.
• Last week there was a counter bid by PHP plc on Assura which this week was rejected as the board accepted the KKR/Stonepeak offer. PHP is considering its options…
• Late in the week we had the official approach from LondonMetric Property to Urban Logistics REIT on what would be its latest deal. The former was listed on the AIM market in 2007 as London & Stamford Property and then merged with Metric Property in 2013. Under CEO, Andrew Jones, they have been particularly busy buying A&J Mucklow in 2019, CT Property in 2023 and LXI REIT in 2024. There are good synergies between the two companies in their last mile logistics assets.

THE WEEK IN HISTORY

1720: The South Sea Bill receives Royal Assent, allowing South Sea Company shares to be sold to the public. £2m worth of South Sea shares were offered for sale one week later.  Demand was so strong that shares for the South Sea Company sold out within an hour

1917: Following the sinking of the SS Aztec, President Wilson delivers a message to Congress which declares war against Germany. US stocks had peaked in November 1916 and hit a bottom a year later, falling 34% peak to trough