- FTSE 100 opens flat, housebuilders in focus
- S&P 500 rallies 2.3% led by the chip sector
- Bitcoin rallies 10%
- Brent oil set for first weekly gain in five weeks
- Eli Lilly crushed Q2 street consensus
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
After all the turmoil this week, the FTSE 100 went into today’s session only down 0.4% for the week and opened broadly flat today – barely a blip on the screen for long-term investors. We rarely get to say the UK’s been a benefactor of its low-tech exposure, but that’s certainly been the case this week. It’s a quiet day for earnings, but housebuilder Bellway has delivered the sector’s latest set of positive results. With UK rates coming down, mortgages are getting more affordable, cancellation rates are easing, and there’s generally more of a buzz about housing stocks.
US markets rallied as investors piled back into stocks, and every sector finished in the green, led by chip stocks, which have been under the cosh of late. There wasn’t a whole lot of breaking news, but jobless claims were better than expected, and that was enough for markets to latch on to – any positive economic data and the bulls will take it and run. In company news, Eli Lily rallied close to 10% after raising full-year guidance, more on this below. On the flip side, it was a tough breakup for Bumble with the growth outlook given a significant chop, and Warner Bros lost its shine after writing down the value of its cable content by over $9bn.
Bitcoin bulls are back in action, sending the token 10% higher to $61,000. This remains an enigma: Where were the diversification benefits? The so-called ‘safe-haven’ properties disappeared this week, tanking along with the rest of the risk-on market during the worst of it on Monday, and rallying on the back of the same positive economic news that’s lifted stocks.
Brent crude oil is hovering around the $79 mark, set to make its first weekly gain in the last five weeks. Yesterday’s single piece of positive US economic data, the jobless number, has driven a small mean reversion for oil, which has been largely trending lower in the past month.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Eli Lilly crushed second-quarter analyst estimates yesterday even after upgrading guidance earlier in the year. Zepbound for obesity and Mounjaro for diabetes are flying off pharmacy shelves. And with Zepbound is just scratching the surface after an FDA approval late last year. Lilly is tackling manufacturing constraints head on. Both brands have been removed from the FDA’s shortage list. This and emerging clarity around the launch schedule in overseas markets prompted another upgrade.
2024 revenue is now expected to rise about 35% to $46bn at the mid-point of guidance, some way faster than arch-rival Novo Nordisk. But the race winner will only emerge when Zepbound comparisons normalise. Key to that is unlocking supply bottlenecks and here Lilly has the edge for now, but Novo is also investing big in its production capabilities.
Outside of the GLP 1 space Lilly is also seeing strong growth for its Breast Cancer drug Verzenio, and hopes are high for the newly approved Alzheimer’s medicine Kisunla. That’s all reflected in a significant valuation premium to the shares. One speed bump to be mindful of is growing political pressure to bring down the prices across the GLP-1 class.”
