News & Insight • Weekly Newsletters

25 July 2025 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

Markets rallied as Donald Trump announced a trade deal with Japan and speculation that a similar deal would be reached with the European Union. Japanese imports to the US will incur a 15% tariff compared with the 25% level Trump had threatened to levy from 1^st August.

The US Composite PMI rose to 54.6, driven by a surge in the Services PMI to 55.2, while the Manufacturing PMI slipped to 49.5, back into contraction territory. This bifurcation highlights a two-speed economy – services-led resilience versus manufacturing softness.

The US labour market still looks resilient as Initial Jobless Claims beat forecasts – claims falling for a sixth straight week, the longest stretch of declines since 2022. Despite President Trump’s protestations, interest rate probability suggests that the Federal Reserve will maintain its current rates with odds standing at 96% for a hold and 4% for a 25bps cut at the July 30^th meeting.

The ECB left interest rates unchanged but is still expected to cut by a further 25bps in September.

COMPANY NEWS

• IBM delivered stronger than expected results and raised its forecast for full year cashflow. However, the shares fell as Software, its closely watched (and fastest growing) division (40% of annual revenues), reported sales up 10% to $7.39bn slightly below analysts’ average estimate. Overall, revenue for the quarter increased 8% year-on-year to $17bn.
• Thermo Fisher, which makes laboratory equipment and other life sciences products, posted better than expected results and boosted its guidance, citing lower expected impacts from tariffs. The shares have been weak for some time following a reduction in Covid- related testing revenues (c. 20% of revenues at their peak) and weakness in China (c. 10% of total revenues).
• LVMH’s year-on-year group sales were down 4% over the quarter. But its core fashion and leather goods business reported a particularly steep decline. Organic sales in that division (which makes up around half of group revenues) fell by 9% year-on-year as Europe was hit particularly hard by less US tourists triggered by the weaker dollar. Sales in Japan were also weak as less Chinese tourists shopped in Japan. US sales were flat year-on-year. However, the shares rose as higher- than-expected profit margins were a sign the group has become more pragmatic and efficient under the leadership of CFO Cecile Cabanis.
• Reckitt Benckiser beat expectations and raised guidance. They now anticipate like-for-like net revenue growth to be above 4% in 'Core Reckitt' brands – which include Dettol, Nurofen and Lysol – this year, an increase from the previously estimated 3 to 4%. Its core business grew faster than expected. They announced a new share buyback. Gross margins were higher than expected.
• Freeport McMoran reported better than expected results but said that it is still waiting for further details on President Trump’s proposed 50% copper tariffs.
• Equinor closed down on the week after reporting second quarter results. Revenue beat analysts’ estimates but profits underwhelmed. The company left full year capex guidance unchanged as management commented that oil & gas production was expected to grow 4% for the year and that they continued to progress their portfolio in renewables.

MEME IT TO WIN IT

Just as we start to worry about stretched valuations and lofty market levels, the “meme stock” craze roars back into town. So-called meme stocks - stocks that surge in price due to social media hype rather than company fundamentals - are at the forefront of this frothy market behaviour.

Retailer Kohl’s, camera firm GoPro, fast-food chain Wendy’s and doughnut maker Krispy Kreme each staged rapid rallies this week, driven by abrupt surges in trading volume. Kohl’s finished the week up 32%, GoPro was up 66% and Krispy Kreme was up 41% prompted by nothing much more than social media chatter and a short squeeze.

ALPHABET SOUP

Alphabet posted a second consecutive quarter of double- digit growth in both profit and revenue. Profits rose by 19% year-on-year to $28.2bn, ahead of analysts’ expectations. Total revenue rose 14% to $96.4bn for the quarter.

The closely watched core search and advertising business grew 12% to $54.2bn of revenue, ahead of expectations, and soothing investor concerns that AI chatbots are taking market share from Google. They reported that their Gemini AI app was also growing with more than 450m monthly active users, up from 350m last quarter (Open AI is still ahead on an estimated 800m). It is experimenting with targeted ads in its AI features, and chief business officer, Philipp Schindler, said “we see monetisation at approximately the same rate”

Cloud computing revenues, which is still a comparatively small part of their business compared to Microsoft and Amazon, rose by 32% to $13.6bn as demand for data centres to train and run AI models continues to escalate.

However, concerns around over-investment, and the time it will take to generate returns on that investment, gather pace: second-quarter capital expenditure almost doubled to $22.4bn from $13.2bn last year and the company forecast it would reach $85bn this year, $10bn more than previously forecast.

GRILL SEEKER

It’s prime barbeque season and the price of beef has never been higher. New US government data released this week showed that the average price of an uncooked steak jumped 8% higher over the last year reaching a record $11.49 per pound. US cattle inventory is down after years of dry weather conditions have made it harder for ranchers to feed their cattle. Meanwhile the US government has suspended Mexican cattle imports to limit exposure to a flesh-eating fly, the New World Screwworm. Stock up on your rib-eyes now!

THE WEEK IN HISTORY

2012: Ratings agency, Moody’s, lowered Italian government debt to two notches above junk status over fears that contagion from a possible Greek euro exit and a Spanish banking collapse could drive Italy further into crisis.

2016: Verizon announced that it would purchase Yahoo for $4.83bn. The deal was part of a pivot Verizon was making to bolster its online ad business to complete with the likes of Google and Facebook. Two years later, Verizon would write the acquisition down to almost worthless.