News & Insight • Weekly Newsletters

15 August 2025 | William Buckhurst

That Was The Week That Was

MACRO

Deal or no deal? Sadly, Alaska talks ended without a ceasefire.

Against negative expectations that the UK economy would tread water in the second quarter, it surpassed expectations, expanding by 0.3% (0.1% was expected). This suppressed recession worries (for now) and puts the UK on course to become the second fastest growing economy in the G7 (after claiming the top prize in Q1-25) and has weathered US tariffs and tax hikes well. As a result, the market delayed rate cut expectations.

UK wage growth figures showed a 5% rise in average earnings. With inflation at 3.6%, this therefore translates to a modest increase in real wages.

US inflation came in at 2.7%, which in turn led the market to price in a Fed rate cut at the next meeting in September. Like President Trump, Treasury Secretary, Scott Bessent put more pressure on future cuts, suggesting the central bank should be open to a 0.5% reduction (double the usual cut). Businesses are clearly passing on cost increases from tariffs more slowly than expected, providing a short-term bump to sentiment.

In China new loans shrunk for the first time in 20 years which led to worries about the world’s second largest economy.

COMPANY NEWS

Spirax Group showed some signs of life following its post-pandemic slump. Shares rose 15% on results.

Poor results from Applied Materials and a disappointing outlook (even with lower than low expectations) led to the shares falling around 15% and affecting other semi-conductor equipment peers.  The company is probably more exposed to China than others but worries about future fab spending was in focus.

Network tech specialists, Cisco, had good results but could not quite meet elevated expectations.

Balfour Beattie announced a sharp acceleration in growth as pretax profit rose 18% to £132m in the first half, from £112m a year ago. Revenue climbed 16% to £4.52bn from £3.89bn. Its dividend was up 11%.

Centrica, alongside Energy Capital Partners, is acquiring 50% of the Grain LNG terminal in Kent – largest in Europe – from National Grid for £1.5bn.

The turnaround in hydrogen specialists, ITM Power, under Dennis Schulz continues as numbers were slightly better than their recent trading statement, with cost controls and year-end cash figure a highlight. The US market is obviously muted now due to the powers that be, but this is more than offset from growth on the continent, particularly Germany.

Alphabet was approached by private company Perplexity to buy Google's Chrome browser for $34.5bn funded by venture capital investors. Interestingly, the figure is greater than the $18.5bn that Perplexity itself was valued at in July.

The update from UK Housebuilder Persimmon this week was better than expected with guidance slightly higher than this year (11,000 to 11,500 homes to be sold, an increase from 10,664 in 2024) but mood music around the sector remains muted.

Eggs on Toast. After luxury jeweller Fabergé, was sold by Gemfields to SMG Capital for $50m it was interesting to hear that Kingsmill owner, AB Foods, has approached Hovis for a £75m sandwich.

BATTERING GALES

In some company meetings we have heard there is very little demand for offshore wind in the US (Vestas did disclose one order recently, however). This was confirmed as shares in Danish sustainable energy company Orsted fell 30% after announcing a rights issue to fund the completion of the Sunrise Wind and the Revolution Wind offshore projects, which it had previously intended to sell during construction. The cash raised will also buffer the balance sheet that has become particularly breezy. The fundraising will be backed by the Danish Government, which owns half of Orsted. Rasmussen Errboe, the company's CEO commented “we are in an extraordinary situation with the adverse market development in the US on top of the past years' macroeconomic and supply chain challenges”. Shares are down 85% since the ESG peak of January 2021. Blast!

MARKET MUSINGS

The AI theme has been front and centre of the rise in share prices in the technology sector, with companies related to the increased compute benefitting.

Worries about the potential applications of this intelligence has started to hit other sectors, such as software. In Europe, shares in SAP (software for business operations) and Nemetschek (for architects) were down by 7% and 11% respectively. Sage (for HR) declined by over 5% taking them down to their lowest level this year. In the similar sector, Intuit (for personal and corporate tax) also fell.

It is a concern that has also hit management consultancy stocks such as Gartner and Accenture. One fund manager we know quoted an analyst suggesting they had become “AI roadkill”. Although there are other consultants that are private, such as McKinsey, Bain, and divisions within the Big Four accountants, Accenture and Gartner are listed and therefore liable to market moves.

As Robin Milway of the US Arbrook Fund says, “the very reason executives hire a huge pool of outsourced talent is this provides not only flexible capacity when IT projects are running late or over budget, but it offers a scapegoat. Recent results for large peers such as Cognizant or Infosys show no signs of their business model being disintermediated by AI. Critically what they do reiterate, however, is that corporate spending on IT still remains muted and it has done so for a couple of years now. This we see as the overriding issue.”

Elsewhere, there were signs that the healthcare sector has reached the bottom of its trading range and to put the cherry on top, Warren Buffett's Berkshire Hathaway bought $1.6bn worth of shares in UnitedHealth Group in the second quarter. UnitedHealth shares rose 10% but also pulled up the rest of the sector.

THE WEEK IN HISTORY

1920: Charles Ponzi is arrested. Ponzi’s now infamous scheme was to sell large quantities of prepayment coupons for postage from countries with weaker economies than those in the US, which he promised to redeem for US stamps, resulting in significant profits to investors. 

1982: global stock markets bottom before starting one of the longest and most sustained bull runs in history.  On August 17, 1982, the Fed announced measures to inject liquidity into the banking system, and US interest rates began to fall sharply.