Live Markets: Is the worst over for medical equipment companies?
19/10/2023 13:19
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STOXX Europe 600 down 0.85%
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Treasuries graze 5%
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Middle East conflict weighs
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IS THE WORST OVER FOR MEDICAL EQUIPMENT COMPANIES? (1210 GMT)
Medical equipment companies have had a challenging year so far. The debate in the market is
whether the worst is over and growth will return in 2024.
There is no simple answer.
The COVID-19 revenue unwind, aggravated by biotech funding cuts and softness in the China
life sciences business, have meant companies in the sector failed to impress, HSBC analysts say.
Roche's ROG.S third-quarter sales slipped 3% as a sharp decline in COVID-19 product sales
and a strong Swiss franc, which erodes the value of overseas sales, offset the launch of a drug
against blindness.
HSBC thinks Illumina ILMN.O , Oxford Nanoporetech ONT.L , Roche and Qiagen QIA.DE have
growth potential given their exposure to genomics sequencing, companion diagnostics and
precision medicine pipeline products.
They also think earnings seem to have bottomed out for companies like DiaSorin DIAS.MI ,
while Biomerieux BIOX.PA is seeing positive earnings momentum from growth in its
non-respiratory business.
(Joice Alves)
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EM EQUITY FUNDS FACE ACCELERATING OUTFLOWS AS INFLATION SPIKES (1030 GMT)
Emerging market equity funds are on track for their third month of outflows in October,
according to a note by Jon Harrison, managing director of EM macro strategy at GlobalData TS
Lombard.
"The combination of higher global yields and a stronger dollar is driving an acceleration of
portfolio outflows from EM assets as deteriorating interest rate differentials and rising risk
aversion exact their toll," Harrison added.
This threat of the dollar and global yield is likely to intensity until higher-for-longer
rate expectations are fully priced in, the GlobalData TS Lombard note added.
Lipper data covering 28,664 emerging market funds showed a net withdrawal of $3.3 billion
from equity funds last week ending on Oct. 11, marking the largest amount in 18 weeks.
Rising oil prices, stronger dollar and higher food prices have all led to an unanticipated
jump in inflation across EM, with central banks facing growing pressure to tighten monetary
policy amid slowing growth and uncertainty regarding the Federal Reserve's rate hike path.
The dollar index =USD is headed for its third month of gains, while the yield on the U.S.
10-year Treasury note US10YT=RR hit its highest level since 2007 on Thursday.
Oil prices also see a further upside risk as supply concerns are exacerbated by tensions in
the Middle East, Harrison added.
Iran on Wednesday called for an oil embargo on Israel over the conflict in Gaza and after
the U.S., the world's biggest oil consumer, reported a larger-than-expected inventory draw,
adding to already tight supplies.
(Bansari Mayur Kamdar)
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TINA LONG GONE, BUT INVESTORS CAN'T SAY GOODBYE (1014 GMT)
For years, investors could easily justify a preference for stocks because other assets
offered paltry returns as central banks kept rates at historic lows, giving rise to the acronym
TINA, "there is no alternative".
With rates across Europe and the U.S. surging quickly over the past couple of years, it
seemed that there were a greater number of choices in the market, as bond yields surged.
But at least in the ETF world, equities continue to reign unchallenged in London trading.
Data from LSEG group shows that for the third straight month, September’s two top selling
sectors were Equity U.S. (3.81 billion pounds) and Equity Global (3.07 billion).
On the other hand, bond ETF outflows grew to £249 million.
"While this is hardly a flood, it does look like spiking Treasury yields at the long end of
the curve are spooking investors," LSEG Lipper says in a report.
The average traded value for ETFs in September was 8.03 billion pounds, which accounts for
10.03% of total London Stock Exchange average daily turnover.
(Joice Alves)
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STOXX DOWN, VOLATILITY UP (0853 GMT)
The STOXX Europe 600 .STOXX kicked off the day on the back foot with risk-off traders
driving the region-wide index down almost 1% and keeping gauges of equity volatility elevated.
The euro STOXX volatility index .V2TX , a European equivalent of Wall Street's so-called
fear gauge VIX .VIX , run close to 23 point, hitting a fresh 7-month high.
Only one out of five stocks on the STOXX were in positive territory. Meanwhile there were
big swings across single stocks as the earnings season got into gear.
Biggest positive weight was software maker SAP SAPG.DE , up 5% as investors cheered to
steady quarterly numbers and a 25% surge in orders for its cloud business. Inline sales at Roche
ROG.S sent the heavyweight Swiss drug maker down 4%.
Across country indices, Finland's OMX Helsinki 25 .OMXH25 stood out with a fall to its
lowest in three years, while the CAC 40 .FCHI in Paris tumbled to a 7-month low.
Here is your opening snapshot:
(Danilo Masoni)
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EUROPE HEADS SOUTH ON BIG EARNINGS DAY (0626 GMT)
European shares were expected to open lower on Thursday on a heavy earnings day as investors
were put off by growing Middle East tensions and rising bond yields.
EuroSTOXX50 STXEc1 and FTSE FFIc1 futures fell 0.6 and 0.5%, respectively, following
losses in Asia and as U.S. futures pointed to a softer start later on Wall Street.
Earnings were taking centre-stage. A surprise growth in Netflix NFLX.O subscribers sent
its shares up 12% in Frankfurt, while falling margins weighed on Tesla TSLA.O , down 4% in
early Frankfurt trade.
Over in Europe, Nestle NESN.S fell 2.5% in pre-market trade after posting
lower-than-expected sales growth, as higher product prices deterred shoppers and hurt volume.
Business software maker SAP SAPG.DE affirmed its full-year outlook for its key cloud
business revenue after slightly missing analyst expectations in the third quarter.
Nokia NOKIA.HE announced up to 14,000 job cuts in a new cost-reduction effort after
third-quarter sales fell by a fifth, taken down by sales of next-generation 5G equipment.
Roche's ROG.S third-quarter sales slipped 3%, hit by a sharp decline in sales of COVID-19
products and as a strong Swiss franc eroded the value of overseas sales.
In banks, Norway's largest lender DNB DNB.OL predicted a "soft landing" ahead for the
Norwegian economy, as it reported a bigger-than-expected rise in quarterly earnings.
In the UK, London Stock Exchange Group LSEG.L said it was on track to end the year towards
the upper end of its income growth targets, having established a "consistent track record" in
data and analytics.
(Danilo Masoni)
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RISK AVERSION GRIPS MARKETS (0551 GMT)
Escalating tensions in the Middle East and angst over elevated bond yields have thrown the
markets deep into risk-aversion mode, while investors are deciphering Federal Reserve messaging
around rates perhaps staying higher for longer.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS sank 1.5%, set
for its biggest one-day percentage decline since Sept. 21, while gold stayed close to its
two-month peak.
The sell-off in the bond market continued into Asian hours, with the benchmark 10-year
Treasury yield US10YT=RR at 4.949%, its highest since mid-2007.
That weighed on regional bond markets in Asia, with Japanese government bonds yields
hitting decade highs.
Meanwhile, oil prices eased on Thursday after OPEC showed no signs of supporting Iran's call
for an oil embargo on Israel, and the Biden administration broadly eased sanctions on Venezuela
to allow more oil to flow globally. Oil prices had climbed 2% in the previous session.
Futures indicated that European stock markets are due to open much lower as risk aversion
takes hold, while the European economic calendar is bare.
Against this backdrop, Fed Chair Jerome Powell will take the spotlight later in the day
(1600 GMT), with markets nervous that he may strike a hawkish tone after a series of U.S. data
pointed to strength in the economy.
Policymakers have hinted at a pause in hiking interest rates for another couple months as
they await clarity over mixed signals, including both strong economic data and signs of progress
on stubbornly high inflation.
In company news, Tesla TSLA.O CEO Elon Musk said on Wednesday he was concerned about the
impact of high interest rates on car buyers as the company missed Wall Street expectations on
third-quarter gross margin, profit and revenue.
Netflix NFLX.O , on the other hand, shattered expectations for new customers in the third
quarter, shrugging off Hollywood labour tensions that shut down a large swath of U.S.
production. Netflix makes many of its shows and movies overseas, which accounted for the bulk
of its new sign-ups.
Key developments that could influence markets on Thursday:
Economic data: UK Gfk consumer confidence for October, France business climate for Oct
Powell speech at 1600 GMT
(Ankur Banerjee)
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Spot gold price in USD per oz https://tmsnrt.rs/3M7gVyz
Brent crude oil price in USD per barrel https://tmsnrt.rs/46AFtIu
EU open https://tmsnrt.rs/3Q5Jei7
ETF flows in London https://tmsnrt.rs/3QqN2vS
Medical Equipment https://tmsnrt.rs/3FoY7XW
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