News & Insight • Weekly Newsletters

16 May 2025 | William Buckhurst

That Was The Week That Was

MACRO

• The US and China, the world's two biggest economies, said they would cut levies on each other's goods for 90 days.  Under the agreement, US duties on Chinese goods will be lowered from 145% to 30%, while China’s retaliatory tariffs on US imports will be lowered from 125% to 10%. China also removed a ban on Chinese airlines taking delivery of Boeing planes. But tensions remain high, with Xi Jinping again accusing the US of “bullying”.
• US CPI was lower than forecast for the third-straight month and expectations for US rate cuts continue to be scaled back. Headline CPI inflation rose just 2.3% in April from a year before, the lowest since early 2021, suggesting that tariffs haven’t yet made their way into higher prices.
• UK economic data was slightly better than expected as first quarter GDP growth was 0.7% vs 0.6% expected. Data showed that the growth was led by services and construction as business investment increased 5.9% in the quarter with consumer spending rising 0.2% as the private sector ended a period of stagnation.
• Oil fell after President Trump stated during his tour of the Middle East that the US and Iran were close to reaching a nuclear deal.

COMPANY NEWS

• Compass produced good quarterly results - organic revenue growth of 8.5% over the year, driven by net new business growth of 4.4%. Operating profit grew by 11.6% year-on-year.  With respect to the outlook, they left the FY25 guidance unchanged expecting high-single-digit underlying operating profit growth driven by revenue growth above 7.5% and margin progression. The shares barely budged, reflecting the full valuation.
• Sony warned that this year’s profits won’t grow at all because of tariffs. They said its operating income forecasts are for 8% growth before tariffs, and 0% growth after tariffs are included. Sony said the tariff impact on operating income will be about 100bn yen, or $680m. They also authorised a buyback of 250bn yen.
• Sumitomo Mitsui Financial fell back as results were slightly underwhelming but guidance was good
• On Holding, which owns the footwear company On Running, rose 11.8% after reporting very good results with sales rising 43% to CHF726.6m.
• Nvidia shares rose sharply on the week after saying it will sell hundreds of thousands of AI chips in Saudi Arabia, with a first tranche of 18,000 of its newest "Blackwell" chips going to Humain, an AI startup just launched by Saudi Arabia's sovereign wealth fund. Advanced Micro Devices (AMD) also rose after announcing a deal with Humain, as well as announcing a $6bn share buyback.
• Walmart beat expectations as US growth of 4.5% beat analysts’ 3.9%. It continues to benefit from low price market share gains in a margin accretive manner. They left guidance unchanged even with tariffs impacts.
• Fiserv fell by 16.2% as the CFO alluded to continuation of the muted Clover volume growth in the next quarter.
• Cranswick fell 7.1% following a report in The Telegraph that supermarkets had halted supplies from Cranswick’s Northmoor Farm following animal cruelty footage.
• Siemens shares dropped by 1% after reporting results that beat most analyst targets however they saw more growth in the lower margin segment – Mobility rather than Digital Industries. Guidance was left unchanged.
• Shares in Dicks Sporting Goods finished 14.6% lower after confirming reports that it had agreed to acquire Foot Locker in a cash or stock deal for around $2.4bn.

DESERT MIRAGE?

President Trump and Saudi Crown Prince Mohammed bin Salman touted a pledge for $1trillion in commercial deals in Riyadh on Tuesday – an impressive figure, though one that warrants closer examination, given that the $1trn figure more or less equates to Saudi Arabia’s entire GDP. We have talked about Nvidia’s deal already – another agreement that was actually signed off was the largest defence deal in history at $142bn, which give the Saudis “state of the art warfighting equipment and services from over a dozen US defence firms”.

Perhaps we are right to question the absolute number though. A previous commitment of $450bn in 2017 saw only a portion materialise. Meanwhile, Trump indicated he was ready to accept a luxury plane being offered to the US president as a gift from Qatar’s royal family, almost immediately igniting accusations of bribery and corruption.

HEALTHY RETIREMENTS

With two legends of their sphere – Indian Test Cricketer Virat Kohli and the Irish jockey Rachel Blackmore – bowing out this week we wanted to find some management reshuffles; however, Andrew Witty of United Health probably did not want to step down.

The company announced that it was removing its 2025 guidance citing greater than expected impact from new United Healthcare members, a further acceleration in Medicare Advantage usage. The company stated that it was planning to return to growth in 2026 and that it was confident in returning to normal margins next year. The company has lost half its value in two months.

The pharmaceutical sector also reacted to news that President Trump was planning on signing an executive order directing action on US drug prices, aimed at lowering drug prices by aligning them with prices paid abroad. This was to be focused on weight loss drugs. The Department of Health & Human Services would open negotiations with the drug industry and that if adequate process was not made, then it would impose “most favoured nation” policies to bring the industry to the negotiating table.

Eli Lilly – one of the key players in the obesity drug market – rose 2.9% after President Trump stated that the company was “not going to be tariffed” as it was building in the US. Elsewhere in the MedTech sector Thermo Fisher Scientific rebounded over 7%, and Zimmer rose by a similar amount having been two of the companies hardest hit by the trade war, giving earnings guidance that included the maximum impact of tariffs and would have effectively wiped out any profitable exports to China.

THE WEEK IN HISTORY

1884: The Panic of 1884 hits as railroad stocks crash amid price competition and excess capacity. Two leading commercial banks and an investment bank, Grant & Ward (in which former President Ulysses S. Grant was a partner) go bust after lending to stock speculators buying on margin.

1997: Amazon.com, Inc. goes public on the NASDAQ, offering 3 million shares at an initial price of $18 per share.