13 May 2025
Global markets showed mixed results last week, with the US equity market ending lower after a strong performance in the previous week, when the S&P 500 rebounded above its early April decline following President Trump’s reciprocal tariff announcement. The losses were partly offset this week by positive de-escalation developments with China. It was confirmed yesterday, following talks in Geneva, that the two countries would reduce tariffs on each other’s goods for at least the next 90 days. The additional levies imposed by the US on China earlier this year will be lowered to 30%, while China’s tariffs will decline to 10%.
The Federal Reserve ("Fed") decided to keep interest rates unchanged at 4.5%, as expected. The Fed stated that economic activity continues to expand at a solid pace, providing reassurance after the previous week’s distorted Quarter 1 (“Q1”) gross domestic product (“GDP”) figure. However, uncertainty about the economic outlook and inflation persists. Fed Chair, Jerome Powell, acknowledged that the Fed’s dual-mandate goals of maximum employment and price stability are at odds with the economic policies pursued by the Trump administration. The Fed remains in a "wait and see" mode, assessing incoming data to determine its next move. The market is pricing in a less than 0.7% cut in US interest rates this year.
The Institute of Supply Management ("ISM") reported its Services Purchasing Managers' Index ("PMI") for April, which rose to 51.6%, up from March’s 50.8%, marking the 10th consecutive month of expansion. Meanwhile, ISM’s Manufacturing PMI showed a contraction for the second consecutive month in April, as demand and production slowed and companies continued to reduce staff amid uncertain economic conditions.
European equities ended the week higher, marking a fourth consecutive week of gains, supported by signs of potential tariff de-escalation between major economies. Year-on-year earnings have exceeded expectations, despite being negative. The UK’s FTSE 100 closed the week slightly lower, despite investor sentiment being buoyed by a limited trade agreement with the US on British cars and steel exports, while maintaining the general 10% baseline tariff. Under the new terms, British exports of steel and aluminium will be exempt from tariffs, while the first 100,000 British cars exported to the US annually, representing most of such exports, will face a reduced 10% tariff. This agreement provides the UK relief from the 25% tariffs on cars and metals previously set by the Trump administration. The deal lowers the average tariff on UK exports from 11.2% to around 8.5%, though still well above the 1% level prior to recent trade tensions.
The Bank of England ("BoE") reduced its key rates by 0.25% to 4.25%. While the market had widely anticipated this cut, the more-hawkish-than-expected vote split, five to four, reduced odds of a third rate cut this year. The committee maintained its emphasis on "careful" and "gradual" policy adjustment, disappointing markets hoping for a dovish pivot. Analysts now expect the next rate cut in August rather than June, with a terminal rate of 3.5% by year-end. Growth projections were revised upwards for 2025 from 0.75% to 1% but revised downwards for 2026 to 1.25% from 1.5%.
Endeavour Mining, a multinational gold mining company, saw its shares rise 7.3% last week following strong Q1 2025 results. The company produced 341,000 ounces of gold at a reduced cost of $1,129 per ounce, keeping it on track to meet its full-year guidance. Endeavour also posted record free cash flow of $409 million, up 53% from the previous quarter, and net earnings of $219 million, a 99% increase over the same period. The rise in gold demand, driven by growing policy uncertainty under the Trump administration, has led to higher gold prices, making it an attractive option for retail and institutional investors alike.
International Airlines Group (“IAG”), a UK-based multinational airline holding company, saw its shares rise 6.5% last week. The company reported operating profits of €198 million for the first three months of the year, up from €68 million in the same period last year. This growth was driven by higher passenger revenues, particularly in business and first-class long-haul flights, along with lower fuel costs. IAG has posted record profits since the pandemic, benefiting from strong travel demand. However, concerns about potential demand softness due to Trump’s trade policies are emerging. IAG continues to invest in growth, ordering 53 wide-bodied planes from Boeing and Airbus to bolster its long-term strategy.
Centrica, the UK-based energy and services company, saw a 6.5% drop in its share price last week. Centrica’s energy division is expected to meet the lower end of its adjusted profit range due to warmer than usual spring weather, which has led to reduced energy demand. On a more positive note, the company reported organic growth in customer numbers across both its residential and business energy supply divisions. Centrica also announced plans to increase its full-year dividend to 5.5 pence per share, signalling confidence in its financial position.
Market Commentary prepared by Walker Crips Investment Management Limited.
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No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
The value of investments can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise. Investors may get back less than invested.
