News & Insight • Weekly Newsletters

18 April 2025 | William Buckhurst

That Was The Week That Was

MACRO

The public spat between President Trump and Fed Chair Powell continued. Trump wants the Fed to cut rates, but Chair Powell stated that the Fed wanted to wait for more clarity for the time being. He commented that the economic impact of tariffs was likely to be larger than expected and could be more persistent. It was likely to at least generate temporary inflation and that the Fed must ensure that price hikes do not lead to ongoing inflation. Conversely the ECB cut rates again by 0.25% to 2.25%

US economic data released last week was mixed but retail sales continued to grow, at 1.4% month-on-month. Data showed that 11 of 13 categories posted growth in the month and were led by an increase in car purchases and other electronic goods, potentially due to pull forward of demand ahead of tariffs

Trump commented that he would open investigations into the semi-conductor and pharma sectors, starting the two-month clock on potential tariff action. He also announced that Nvidia would receive “all necessary permits” which would be expedited following the company’s commitment to US investments. In the tit-for-tat trade-offs, the Chinese government had ordered its airlines to stop taking deliveries of Boeing aircraft and parts

UK March CPI was 0.3% month on month as yearly and services inflation was slightly lower and therefore better than expected. The slowdown was led by cheaper computer games and lower fuel prices, but inflation is likely to increase shortly as higher energy, water bills and council taxes take effect. Elsewhere the UK’s unemployment rate was unchanged at 4.4%, while quarterly employment increased 206k vs 170k expected

COMPANY NEWS

• Are people drinking less? Heineken would say so, but the shares still bubbled up 5% after the company reported first quarter results that matched sales expectations but the growth of 0.9% was better than expected. The beer volume decline of 2.1% was also better than feared. Pernod Ricard quarterly sales missed lowered expectations putting more pressure on the liquor sector
• ABB, the automation specialists, announced mixed numbers as quarterly orders beat by 3% but sales missed by 3%. Their guidance was maintained. It also plans to spin off its robotics division via a share distribution, with a separate listing during 2026
• Bunzl shares fell 25% after stating that its first quarter profit was below expectations while cutting its 2025 guidance citing America challenges. They now expect flat revenues, lower margins and as a result paused their share buyback programme for the rest of the year
• The large European luxury brands reported this week and there was a changing of the guard as LVMH fell by 6% and was usurped by Hermes as the most valuable company. LVMH’s results missed expectations with revenue declining by 3% in the first quarter against the +1.1% expected as all divisions were worse than forecast and geographically the US failed to save other areas this time around. Hermes, on the other hand, continued to grow at 7% and all divisions (bar watches) and geographies continued to grow. Moncler reported a better than expected +4% as sales were robust in Asia (+6%) including an acceleration in Japan but slightly weaker elsewhere. Revenue of €829m was just ahead
• Johnson & Johnson reported results that beat consensus estimates but divisionally both MedTech and Orthopaedic units were below forecasts. The company left guidance unchanged but commented it was analysing the impacts of the import investigations
• US banks continued to report. Goldman Sachs closed up slightly after reporting good results that were mostly above consensus estimates. Although Fixed Income and Investment Banking were both slightly lower than forecast, Equities and return on equity were better. Management commented that its investment banking backlog was up. Citigroup also closed up as results were above consensus estimates in all divisions. Bank of America was better than both as management commented that business clients had been performing well and that consumers had healthy credit quality

ELI LILLY PILLY

Eli Lilly had a very good week as one of its rivals decided to discontinue an obesity drug trial. Pfizer announced that it was halting development of its obesity pill Danuglipron due to high rates of nausea and vomiting and a patient suffering liver damage in a trial and that it would not advance the drug to the final stage of testing and would instead invest in earlier stage treatments for obesity.

Further good news followed as Lilly’s own once-daily pill, Orforglipron, met their expectations for safety and tolerability, glucose control and weight loss. CEO David A. Ricks suggested that if approved, “it could be readily manufactured and launched at scale for use by people around the world".

TECH UPDATE

The market is working out (again) that the semiconductor sector is cyclical. Two of the largest companies in the sector, ASML and TSMC both reported:

ASML fell 5.2% after reporting first quarter results. Its first quarter bookings declined 44% to €3.94bn vs €4.82bn expected with net sales in line with consensus estimates while operating income was €2.74bn, slightly higher than forecast. Although both gross and operating margins were better than expected, the company guided to the next quarter’s net sales and gross margins that were below consensus. They believe that AI continues to be the primary industry growth driver and that 2025 and 2026 will be positive years.

TSMC first quarter sales of $25.5bn were already known, up 35% but there were still positive surprises as gross margin was 0.7% ahead of consensus. They kept the full year guidance but upped the near-term outlook, suggesting that sales would be $28.4-29.2bn, up +13% quarter on quarter, well ahead of $27.2bn consensus

Intel closed up 2.89% after announcing that it had agreed to sell a 51% stake in its programmable chips division Altera to Silver Lake at a valuation of $8.75bn, around 50% less than it paid for the company 10 years ago, as part of its plan to spin off non-core assets

Shares in Nvidia fell 6.9% after announcing it would report up to $5.5bn in inventory write-downs in the current quarter linked to commitments for its H20 chip after the Trump administration blocked the sale of the chip into China and that it would now require a license to export the product to China “for the indefinite future.” AMD also dropped 7.4% on the announcement