News & Insight • Weekly Newsletters

25 April 2025 | William Buckhurst

That Was The Week That Was

MACRO

The US public economic argument reached its crescendo. Fed Chair Powell was attacked again as President Trump said, “there can be a slowing of the economy unless Mr Too Late, a major loser, lowers interest rates NOW.” The President then dialled back on that rhetoric by saying “I have no intention of firing” him.

Without trying to get tariff fatigue, Japan and US are “close to a trade deal”. Japan has been targeted by the US for manipulating the Yen; however, the Japanese Finance Minister, Katsunobu Kato, stated that there were no discussions about a Yen target when he met US Treasury Secretary Scott Bessent in Washington. The Bank of Japan Governor, who is also in Washington, commented that he will carefully monitor the data and make policy decisions accordingly and “pay particular attention to data related to the mechanisms through which tariffs may have an impact”.

Chinese tariffs are slightly different due to the trade imbalance between the two countries. Treasury Secretary Scott Bessent described the situation as unsustainable and that he expects it to de-escalate. The Wall Street Journal reported that China tariffs were likely to come down to 50-65% from the current 145%. Bessent stated that the administration was looking at multiple factors beyond tariffs, while a full trade deal could take 2-3 years.

US economic data released was mixed as the April Manufacturing PMI was 50.7 vs 49.0 expected versus the Services PMI of 51.4, below consensus. They quoted that any beneficial effect of tariffs is offset by heightened economic uncertainty while the services economy is slowing amid weakened demand growth, notably in terms of exports such as travel and tourism.

COMPANY NEWS

There should be no surprise as to which main words AlphaSense have logged on management analyst calls so far in this reporting season. ‘Tariffs’ and ‘Trump’ have been mentioned 569 and 88 times (from 58 and 5 last year) whilst ‘uncertainty’ has grown to 486 (from 284).

Takeaway: Deliveroo confirmed that it had received a possible takeover offer from DoorDash at 180p, (above the 147p price on Friday) valuing the company at £2.5bn.

Shares in Marks & Spencer fell 9% over the week after being on the receiving end of a cyber-attack and, as a result, having to cancel online orders.

With the oil price down 12% this year, it was no surprise that the results of oil service companies Halliburton and SLB (previously known as Schlumberger) were slightly soggy. The former fell 5.57% lower after reporting in line results but the margin was below expectations. SLB reported adjusted earnings of 72c a share on revenue of $8.5bn which was in line and the share reaction was muted, however they have declined 17% since March.

Thermo Fisher Scientific shares marked time even though results were slightly better than expected, with the only real negatives being the margin and the cut in guidance due to Chinese tariffs. Medical devices peer, Danaher, had better results as management said "Revenue, earnings, and cash flow exceeded our expectations” as “our team also continued to execute very well, leveraging the Danaher Business System to accelerate innovation, drive share gains, and deliver meaningful productivity improvements".

ITM Power announced two positive changes to its full-year guidance, increasing the sales by 30% due to additional contractual obligations having been fulfilled and associated revenue now recognised, and stating that it had been net cash generative in the second half.

Shares in US railroad company, Union Pacific, finished 2% lower on results that missed slightly primarily due to the slowdown of transporting cars.

Consumer staple companies such as P&G, Unilever, Reckitt Benckiser and Nestle showed slight growth in the face of frugal customers with most keeping guidance relatively upbeat even with tariffs.

Boeing are getting their house in order. Losses in the quarter were less than expected and revenue was better, while the backlog ended at $544.74bn.

DEFENCELESS DEFENSIVES

Defence companies have performed well on the back of Trump insisting the world spends more rather than relying on Uncle Sam for protection – it is not surprising as some of the biggest defence companies are also based in the US.

However, both Northrop Grumman and RTX (previously known as Raytheon) both fell short of expectations. The former fell 13% after reporting results and cutting guidance. Sales in the Space Systems, Aeronautics Systems and Defence Systems units were all lower than forecast. They also noted that they recognised a charge of $477m due to overruns with it B-21 programme. RTX shares fell 9% but kept its full year guidance but outlined the tariff impact on some of the specialist metal imports.

Conversely UK defence company Babcock upgraded guidance and is now the best large UK performer this year.

TECH UPDATE

Shares in the largest company in Europe, SAP, which provides enterprise software, rose 10.6% after reporting results that overall were slightly better than expected but more pleasingly left full-year guidance unchanged. With the shares having performed so well, any downgrades due to “uncertainty” would have sent the shares lower.

Tesla results were again pretty untidy, but the Musk effect then took over with the shares up over 25% in the week. The market got excited by his commentary that there will be “millions of fully autonomous Tesla’s on the road” by the middle of next year and that he will be at DOGE part time.

Shares in IBM (International Business Machines) fell 7% on results that were above expectations, however the company said some of its federal contracts were suspended, while an uncertain economy poses a further threat to its consulting business (which they had recently pivoted towards). The 15 government contracts amounted to roughly $100m, a small portion of its consulting backlog.

Alphabet, owner of Google and Waymo, had better than expected results and the shares rose slightly. Search showed 10% growth, ahead of the 7% expected as analysts had suggested more of a slowdown. It announced a dividend increase of 5% and another buyback of $70bn.

Intel shares fell by 7% on results as the market felt the renaissance was not happening as quickly as it liked. Revenue missed expectations but management were on the front foot, stating that earnings will break even and that there will be further operational cost cutting.

THE WEEK IN HISTORY

1867: The end of the Tokugawa shogunate, as the 14-year-old Emperor Mutsuhito assumes the Japanese throne. This marks the point at which Tokyo ends about 250 years of self-imposed isolation and opens for foreign trade

1968: the first decimal coins are issued in the UK (5 & 10 new pence, replacing shilling and two-shilling pieces). A major public information campaign was launched to prepare the British public for the changeover, including television programs and films like “Granny Gets The Point”