Personal Wealth Management Monday Espresso Podcast

Monday Espresso Podcast - 27th October 2025

Rory Dowie: [00:00:00] Good morning Today is Monday, the 27th of October, and I'm Rory Dowie, Global Equity Portfolio Manager. Today I'm delighted to be joined by Nick Warmisham. Nick is one of our Equity Analysts, and he covers Emerging Markets in Japan. So firstly, Nick, good morning.

Nicholas Warmisham: Good morning, Rory.

Rory Dowie: Nick, can you give the listeners an update on what was going on in markets last week?
Nicholas Warmisham: Yeah, of course. A generally green week for equity markets. Japan was leading the way up just under 4% with Japanese equities rebounding on the back of the formation of the new government that is expected to be pro growth more than that later. Closer to home, the UK also had a solid week up over 2%. This was supported by the oil price rising. Whilst Europe and the US were up around 1%. Looking at the year to date figures, the picture is very good. UK and Europe are up 17% and 15% respectively.

The US is up 15% in USD terms, but in GBP is only up 7% due to weakness in the US dollar. And emerging markets is still leading the way up and astonishing 28%.

Rory Dowie: Yeah. So as you say, there Nick. Very, very strong year [00:01:00] sort of risk assets so far. So equity markets being very solid. Obviously we've had a couple of years in a row of sort of double digit returns in 2025 so far.

Looks to be going the same way. I guess you mentioned a few regions there. I guess we can get into Japan in a little bit, but perhaps starting close to home with the UK. I think the FTSE 100 hit all time highs last week. You know, what was driving that?

Nicholas Warmisham: Yeah, well ultimately that was due to announcements out of the US.
The US announced new sanctions taxing Russia's to largest oil producers, Rosneft and Luk Oil over the war in Ukraine. This would limit oil supply, which in turn drove crude oil prices sharply higher as such, oil rallied 8% over the week and is now sitting at $66 a barrel. Now the UK market has some large energy companies, stocks like Shell and BP, for example.

Both of them bounced higher on the news up around 6%, and that really helped to drive the UK markets higher.

Rory Dowie: Yeah, so as you say, the UK generally a market which you know, has higher exposure to commodities, more so than that of [00:02:00] Europe and the US. So yeah, clearly the oil price, helping to lift some of the sentiment in those energy names in the UK.

I guess moving on to Japan, we spoke a couple of weeks ago about the incoming Prime Minister Sanae Takaichi that we were waiting to see if a government could be formed. Has there been any update this week in Japan on that front?

Nicholas Warmisham: Yeah, it has been quite the ride for Takaichi so far. Although her background as a heavy metal drummer does prepare for this sort of volatility.

Initially, she was an outside choice for the LDP leadership position. However, her strong conservative approach and focus on growth saw the party rally behind her. J ust as markets was soaking in the prospects of Japan having its first female prime minister, a spanner was thrown in the works. The 26 year coalition between the LDP party and the Komeito party collapsed.

This was driven mainly by ideological differences between Takaichi's right-leaning policies and Komeito centrist position. However, within short order, a new coalition was formed with the Japan Innovation Party or JIP for short. This coalition put the LDP back into a position of strength. And saw Takaichi [00:03:00] win the premiership comfortably.

Following this confirmation markets rallied with the anticipation of how Japan can perform under the leadership of a pro-growth Prime Minister in the form of Takaichi.

Rory Dowie: Yeah, so really markets taking that positively in Japan. Really hoping those positive sort of fiscal and monetary policy kind of changes might come under Takaichi, I guess.

And I guess it's that market getting ahead of those policies that will hopefully come down the line. I guess, close to home, third quarter earnings seasons. Hard not to mention it, I suppose any notable companies that reported this week, Nick?

Nicholas Warmisham: Yeah. Well, Tesla reported definitely one of the more notable names.
A couple of key points. They posted record revenues of $28.1 billion for Q3 beating expectations. That was largely thanks to a surge in EV sales in the US as buyers rushed to take advantage of an EV tax credit before it expired. On the profit side, though things were a bit softer. That shortfall was driven by higher research and development costs and tariffs on imported parts.

Tariffs alone were a $400 million headwind this quarter. To help offset softening demand, Tesla introduced cheaper versions of the model 3 and model Y. These new standard variants came with fewer features and about $5,000 knocked off the price. The energy business was a bright spot with storage deployments up 81%. A strong showing that's often overlooked. So overall it's a mixed bag. Shares dropped around 4% after hours, as although investors like the revenue beat, the margin pressure and fading tax credit, raise some eyebrows.

Rory Dowie: Yeah, absolutely. And I guess this is one of the key debates about sort of AI as well at the moment in the market.

You know, obviously there's a huge amount of revenue growth going on, but you know, at what cost is this going to be profitable? And obviously the open AI deal that we spoke about a couple of weeks ago, that is slightly different. But again, with Tesla, you know, obviously they have demand for their cars, but it's just can they sell those profitably?

And as they're continuing to invest in new things like the kind of robots and automation like that. So yeah, again, that's one of those themes going on. So thanks that Nick, the very helpful. I guess anything for the week ahead that our listeners should look out for?

Nicholas Warmisham: Yeah, well, we're really getting into the meat of it this week.

We have four of the Mag seven reporting. They come in the form of Apple, Amazon, Alphabet, and Microsoft. We will update listeners next week on these earnings.

Rory Dowie: Brilliant. Thanks Nick for coming on the show. Hope for our listeners found that insightful, and as always, wishing you all a great week ahead.