The 4 week winning streak of US markets ended this week when investors were rattled by the news that Moody’s downgraded the US government’s credit rating, citing concerns over fiscal stability and the nation’s long-term debt trajectory.
US assets across the board have outperformed the rest of the world since the Global Financial Crisis on being perceived an ‘exceptional market’ (consistently high returns vs abnormally low risk). Given the anti-growth policy choices of the Trump administration this ‘US exceptionalism’ appears to now be over, with Moody’s credit downgrade a symbolic moment in this change of narrative.
It’s worth also noting that UK April inflation rose to 3.5%, above economist forecasts of 3.3% (and above the 2.6% in March) driven mainly by a sharp rise in household bills. This likely rules out a June Bank of England interest rate cut with markets now expecting only one more cut (to 4.0%) in the rest of 2025. Despite the inflation data, the year-to-date outperformance of the UK stock market vs US has widened this week.
Spotlight stock
Each week we want to shine a spotlight on a stock which is new on our platform.
Ecora Resources (ECOR LN £150m market cap)
Ecora Resources is a royalty mining company with a diversified portfolio of Critical Minerals, such as copper and cobalt, which are vital for global electrification.
A royalty mining company doesn’t own mines or do the actual mining but instead invests in mines by buying royalties and shares the revenue. This means Ecora benefits from rising commodity prices and higher production of mines whilst having no exposure to rising operating costs.
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