News & Insight • Weekly Newsletters

06 June 2025 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

Trump continues to alienate himself and this time he fell out with Elon Musk as he described the Big Beautiful Bill as a 'disgusting abomination' and 'massively increased the already gigantic budget deficit to $2.5trn’. Senate Minority Leader Chuck Schumer said, 'Even Elon Musk who's been part of the whole process, and is one of Trump's buddies, said the bill is bad.' 

2%s. The European Central Bank cut interest rates by 25bps, taking the main deposit facility rate to 2.0% following May inflation coming in at 1.9% versus 2.0% expected and below the ECB target of 2%. The ECB stated that concerns over tightening financial conditions had eased and that most measures show inflation would sustainably settle at 2%. Markets are also pricing in one further cut by the ECB this year.

China responded back to the US, accusing them of violating the recent agreement and unilaterally introducing new discriminatory restrictions, including new guidelines on AI chip export controls, curbs on chip design software sales to China and the revocation of Chinese student visas.

The EU announced that it would curb Chinese medical device access to public procurement contracts over €5m.

COMPANY NEWS

• The B in the eight BATMMAAN companies – Broadcom, Alphabet, Tesla, Meta, Microsoft, Amazon, Apple and Nvidia – Broadcom, fell 5% after reporting results that met expectations, but the lack of upgrades failed to live up to the hype. Revenues were up 20% and there was positive commentary around increased AI demand of hyperscalers, networking and VMware. 
• Alcoholic drink company results continue to be very poor. Brown Forman (Jack Daniels) finished materially lower after reporting fourth quarter results that missed consensus expectations with the key figures of organic sales falling 3% versus the 4.1% growth expected. Remy Cointreau was slightly better as the results were in line (still bad) and shares were therefore up slightly. Operating income declined 29% to €217m (missing by €0.5m). Most companies decided to withdraw guidance due to the tariff uncertainty.
• The trade in MAGA stock, Boeing, has been very good since Trump was inaugurated however the Chinese are not playing the same game, as they are ordering from main rival Airbus. Shares finished 2.25% higher after reports indicated that discussions were underway for 200-500 wide and narrowbody aircraft. Airbus has been increasing its market share in China, helped by a final assembly line in Tianjin for its A320 family of aircraft.
• Meta Platforms has reached an agreement to purchase nuclear power from Constellation Energy to run its data centres from its Illinois nuclear plant
• Lululemon fell 20% after reporting results that were broadly in line with expectations but saw the company cut guidance citing a very uncertain backdrop for consumer spending. Lululemon has also tended to rely on the female consumer. It has been noted that Nike have recently upped their efforts in this space – see their Superbowl advertisement for details.
• As we have mentioned before there is increased pressure on Japanese companies to increase the standard of their corporate governance. Toyota unveiled several measures to boost the share prices of some of their underlying holdings, but the market reaction has been muted.  Toyota Industries fell 12% following disappointment at the price Toyota (top company) was offering to buy out the company.
• The previous management team of Melrose set up Rosebank and finally announced their first acquisition – ECI (electrical component systems supplier) for $1.9bn. They will raise £1.1bn in a share issuance.

EXPENSIVE LESSON

Further action in the property sector as Unite Group (apt name!) have bid 107p per share (£705m) for smaller rival Empiric Student Property. Estimated NAV is 118p so this is perhaps an early low-ball bid as this followed earlier news around Unite selling assets at a 1% discount to NAV.

It exchanged contracts to sell a portfolio of nine properties (3,656 beds) for £212m (Unite share £140m). The assets are in Aberdeen, Leicester, Leeds, Nottingham, and Sheffield and are 19 years old, versus the Unite’s 13-year average, making them prime candidates for disposal. It continues to sharpen its focus on higher ranked universities with stronger long-term rental growth prospects. Since 2022, the company has now sold 12,000 beds, recycling over £700m into its core markets and if the above bid is successful, we look forward to seeing how they trade their new assets.

HEALTHY ACQUISITIONS

The lack of pipelines for the large pharmaceutical companies combined with a poor financing market for the cash needs of biotechnology companies should lead to some merger and acquisition action in the sector. There were two of scale this week.

America’s Bristol Myers Squibb announced a deal with BioNTech. for as much as $11.1bn to license a next generation cancer drug. BioNTech will receive $1.5bn upfront and $2bn in instalments through 2028 with the company also eligible for as much as $7.6bn in milestone payments with both firms splitting costs and profits equally.

French Sanofi announced that it had agreed to acquire US biotech firm Blueprint Medicines for $129 per share in cash, equating to $9.1bn. Blueprint shareholders will also receive one non-tradeable Contingent Value Right (CVR) entitling the holder to receive two potential milestone payments of $2 and $4 for the achievement and development of a pipeline drug, putting the total value at around $9.5bn. Sanofi stated that the deal would be financed with a combination of cash and new debt.

THE WEEK IN HISTORY

1933: President Roosevelt orders all US citizens to turn in their gold. From 1879 anyone could demand that the government swap their cash for gold at a fixed rate of $20.67 per ounce. In turn, this meant that the money supply was dependent on gold. The dollar was devalued 40% over the next year.

1985: R.J. Reynolds Industries, the nation's second-largest cigarette maker, agreed to acquire Nabisco Brands Inc., the fourth-ranking food company, in a deal of $4.9bn.