5 May 2025 | Weekly Snapshot

Did you know?

Warren Buffett stepped down as Berkshire Hathaway’s CEO over the weekend, in front of nearly 20,000 investors at the 2025 Annual Meeting.

Two highlights of his career include:

• 55 years as CEO of Berkshire Hathaway. Berkshire has grown to become one of the 10 largest companies on the S&P500
• A 55,000-fold increase on investor capital over his journey at Berkshire, when the S&P500 returned 39-fold over the same journey, or an annualised return of 19.9% for Berkshire vs 10.4% in the S&P500

Did you know that his most profitable investment was BYD? On the advice of his late investing partner Charlie Munger, Buffett bet big on the genius of BYD founder Wang Chanfu in 2008 with a $232 million investment in what became the Chinese success story of the electric vehicle market. The value of that stake soared to more than $9 billion before Buffett began selling it off.

Market Movements

The Australian market was higher by 3.1% last week with broad gains across all sectors. Listed property was the standout (up 5.3%), whilst some laggards played catch-up, including Mineral Resources (up 15%). Block (previously Afterpay) was one of the worst performers (down 25%) due to falling subscribers. The USA’s S&P500 was higher by 2.9%, which was led by info tech (up 4.1%) and communications services (up 4.0%). Microsoft (up 11%) and Meta (up 9%) both reported strong results, with earnings up 18% and 37% respectively for the quarter (vs same quarter 12 months ago).

Key economic headlines reflected overall softness, including:

• Australia 1Q ‘25 headline inflation 2.4% y/y and core inflation 2.9% y/y
• U.S. 1Q ‘25 GDP -0.3% q/q
• China PMI manufacturing falls to 49.0

After earlier turmoil, some stability has returned to markets by the end of the April month and, remarkably, the S&P 500 was only down 0.7% for the month, despite a 10% drop in the two days following “liberation day.” The economic outlook remains uncertain however, as economists, policymakers, and investors assess the impact on corporate profits in response to the Chinese import tariffs into the USA. Australian equities outperformed those in the U.S. during the month, achieving their best performance relative to the U.S. since August 2022.

Portfolio Movements

Meta earnings up 37%, shares rise 9% for the week.

• Meta Platforms reported a better-than-expected Q1 with earnings up 37% to $16.64 billion. Earnings per share (EPS) of $6.43 was a decent beat on the $5.23 expected. Revenue of $42.31B up 16% year-over-year was also ahead of the $41.34B expected.
• 2025 capital expenditures are expected to come in the range of $64 billion to $72 billion, up from its prior outlook of $60 billion to $65 billion reflecting additional data centre investments to support artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware.
• CEO Mark Zuckerberg “Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty,”

Apple earnings increase 8%, shares fall 2% for the week

• Apple has reported Q2 EPS of $1.65 slightly ahead of the $1.62 expected and an increase of 8% vs the same quarter last year. Q2 revenue of $95.36B was also ahead of the $94.54 expected. The dividend was raised and a new $100B share repurchase was authorised.
• CEO Tim Cook said, “Today Apple is reporting strong quarterly results, including double-digit growth in Services,” adding “Our March quarter business performance drove EPS growth of 8% and $24B in operating cash flow, allowing us to return $29B to shareholders”
• Apple expects overall revenue to grow “low to mid-single digits” on an annual basis during the current quarter which is on the softer side. And also expects tariffs to add $900 million to its costs for the current quarter. Noting tariff developments beyond that are “very difficult” to predict.

Amazon reports earnings growth of 62%, shares up 1% for the week

• Amazon.com has also reported a strong Q1 result with EPS of $1.59, which was a decent beat on the $1.37 expected and an increase of 62% vs same quarter last year. Q1 revenue increased 9% year on year to $155.67B, which was a slight beat on the $155.15B estimate.
• CEO Andy Jassy said “We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences,” adding “From Alexa+ to another delivery speed record for our Prime members, to our new Trainium2 chips and Bedrock model expansion that make it easier for AWS customers to train models and run inference more flexibly and cost-effectively, to our first Project Kuiper satellites successfully launching into low earth orbit in our quest to provide broadband access to hundreds of millions of households in rural areas without it today—we’re continuing to find meaningful ways to make customers’ lives easier and better every day.”

The Week Ahead

• Monday 5 May: USA S&P Global US Services PMI for April expected to be 51.2 versus previous 51.4, S&P Global US Composite PMI for April expected to be 51.2 no change from previous.
• Tuesday 6 May: USA ISM Services Index for April expected to be 50.3 versus previous 50.8 and Trade Balance expected to be -$136.7 trillion v. -$122.7 previous. Australia Building Approvals expected to fall -1.8% in March v -0.3% February
• Wednesday 7 May: China Caixin China PMI Services expected to be 51.8 in April v. 51.9 in March.
• Thursday 8 May: USA FOMC Rate Decision expected to hold rates between current upper and lower bounds of 4.5% to 4.25%, Initial Jobless Claims expected to be 230k down from 241k the previous week and continuing claims expected to be 1,892k v. 1,916k the previous week. United Kingdom Bank of England Bank Rate expected to be reduced to 4.25% from current 4.5%.
• Friday 9 May: USA Wholesale Inventories MoM expected to be +0.5%, no change from April reading. China PPI YoY expected to be -2.6% in April v. -2.5% in March, CPI YoY for April expected to be 0.1% compared with -0.1% in March, and Money Supply M2 YoY expected to be 7.1% in April v. 7.0% in March