One Knightsbridge Capital Monday Espresso Podcast

Monday Espresso Podcast - 30th June 2025

[00:00:00] Raj Manon: It's Monday, the 30th of June, and the final day of the second quarter. I'm Raj Manon, Head of Investments at Marlborough, and we'll be reviewing the key market moves and economic data releases from last week. Today I'm joined by Rory Dowey, Lead Portfolio Manager for our global equity strategies. Rory, the quarter began with some volatility around Liberation Day.

[00:00:25] Raj Manon: How did markets perform in the last full week, before the quarter end?

[00:00:30] Rory Dowie: Yeah, good morning, Raj. It certainly feels a long time ago, Liberation Day, doesn't it? But I guess the good news is from then we're really in a very different place, and last week was continuing what we've seen over the last month or so.

[00:00:41] Rory Dowie: It was another very, very strong week for markets. The US was up about 2%. Europe, one and a half, but really leading the way was Japan and emerging markets up around 3 to 4%. Actually, if you look at the US, we are now nearing all time highs and the Nasdaq, which is the tech heavy part of the US market managed to achieve that feat on Thursday.

[00:01:02] Rory Dowie: What was driving that? Really it was a deescalation of the situation in the Middle East, which we spoke about last week. Whilst Iran had targeted US military bases in Qatar on Monday, they had actually given warning to the Qatari's that they were going to do so. What that meant is it enabled the US to prepare ahead of time, and actually that meant Trump saw that attack as an overall deescalation of the war in the Middle East.

[00:01:24] Rory Dowie: So really that helped to buoy equity markets as well. And actually we saw a bit of a reversal of what we saw the week before. We spoke last Monday about how crude oil was up about 13% on the previous Friday. And actually on that deescalation news, crude oil dropped about 7%. So that helps release those concerns around supply chain disruptions and again, lower oil prices are generally seen as positive for global growth, and then obviously equity markets as well. On Friday, we also had news that the US and China had confirmed further details on a trade framework. And so again, you know, we know that's been in the works, but you know, some comments there coming outta both sides.

[00:01:59] Rory Dowie: Also, we saw Howard Lutnick, the US Commerce Secretary. He commented that the White House has imminent plans to reach agreements with around 10 major trading partners. So again, progress, we think on the trade deal side of things too.

[00:02:12] Raj Manon: Thanks Rory. So understandably a good week for equities when you take into consideration, we had easing geopolitical tensions.

[00:02:19] Raj Manon: Falling oil prices and renewed optimism around global trade. But what about the economic data?

[00:02:26] Rory Dowie: Yeah, so we had a flurry of economic data last week. Firstly, in Europe we had some inflation data that was, you know, a bit of a non-event, if I'm honest. It did tick up a little bit in France and Spain, but not really enough to concern markets at all.

[00:02:39] Rory Dowie: French inflation rose 0.8% in June, and that was, you know, up off the four year low of 0.6% that we saw in May. So yes, a little bit of a rise, but nothing too meaningful there. And then as in Spain, inflation came in at 2.2%, which was in line with expectations. And again, European central bank officials, they're reiterating that, you know, they can keep that 2% inflation targets later on in the year.

[00:03:02] Rory Dowie: So again, optimism around rate cuts in Europe and now in the US we had some, you know, remarks from Federal Reserve officials. Including the governor, Michelle Bowman. She suggested that, you know, rate cuts may be coming if these inflation pressures remain constrained. There's some dovish sentiment there, so that on the back of the falling oil price from the deescalation in the Middle East, that was a positive and it led to a decline in the 10 year treasury yield.

[00:03:26] Rory Dowie: That fell to 4.3% and it's easy to remember just one month ago we were up at 4.6. So as I say, rate cut expectations seem to be kind of increasing in the US and markets are now kind of expecting that first one may come in September. Last week we also saw Nike release their results. They're always one of the very, very last companies to report their earnings.
[00:03:45] Rory Dowie: And actually we start Q2 earnings in just a couple of weeks. That's how late they are. And really, it was actually quite positive out of Nike. They've really struggled over the past couple of years. You know, firstly, they had lagging retail sales. There wasn't too much innovation within their kind of assortments of kind of products.

[00:04:00] Rory Dowie: But actually this quarter it was quite good. They guided for their sales to be down mid single digit. Whilst it was down, that was a sequential improvement from the 12% we saw last quarter. So I think investors are starting to hope that, you know, maybe we're seeing a bit of a bottoming in Nike sales and actually now, you know, with the investments they've been making in product innovation, we might start to see a bit of kind of top line inflection and a bit of a return to growth going forward.

[00:04:24] Rory Dowie: So that was good. The stock was up 10% on Friday on the back of that, and that was generally quite good out of Nike.

[00:04:30] Raj Manon: And so with the quarter coming to a close and a new round of data on the horizon, what are you keeping your eye on as we head into the second half of the year?

[00:04:37] Rory Dowie: Yeah, absolutely, Raj. I think as you said, and there's not tons going on in markets in terms of corporate earnings, but as I said, there are some more economic data across the US and Europe.

[00:04:46] Rory Dowie: You know, you said it at the start, we are almost a quarter on from liberation day, which means we're also not far off this 90 day pause in tariffs finishing, and that's expected to finish on July the ninth. So we're gonna be watching that very closely and what that might mean for markets. You know, are we going to get an extension to help push through more trade deals, or might we see those tariff rates returning a bit more earnest, might they drive some more uncertainty and volatility in market. So that's one of the key debates we'll be watching over the next week or two. And, but as I say, we expect to see some more trade deals as well.

[00:05:17] Raj Manon: Thank you, Rory. Thank you for joining me today. And thank you to our listeners for listening in.

[00:05:22] Raj Manon: As always, if you do have any questions, please send them in. And most of all, we hope you all have a great week.