Research Market strategy
By Swissquote Analysts
Published on 25.06.2021
Morning news

Eli Lilly Stock Jumps, Biogen Drops on Alzheimer's Treatment Approval

Topic of the day

Eli Lilly shares jumped 7.3% in premarket trading after the drug maker said it received breakthrough therapy designation for its Alzheimer's treatment from the Food and Drug Administration. The move is meant to expedite the development and review of the experimental treatment. Rival Biogen, whose own drug was approved earlier this month, lost almost 9% during the last 5 days. The stock has soared since the FDA gave its stamp of approval for an Alzheimer's drug from Biogen earlier this month. So far the stock price has increased over 50% this year, compared with the S&P 500's roughly 13% advance. The Biogen drug would be the first new treatment for the disease in decades. But the FDA approval has been mired in controversy, with the agency's own statisticians saying there was insufficient evidence to support approval.

Swiss stocks

A strong Ifo business climate index from Germany and easing interest rate concerns drove up the stock market in Switzerland on Thursday. The SMI briefly jumped above the 12,000 mark and ultimately closed 0.8 percent higher at 11,994 points. This brought the index to 78 points closer to its all-time high. All SMI stocks closed in the plus. 33.56 (previously: 30.47) million shares were traded. Despite the prospect of continued low interest rates, Credit Suisse were at the top of the table with a premium of 2.8 percent. Analysts at Berenberg had raised the papers of the major bank "Buy". Otherwise, defensive growth was again in strong demand. Luxury goods stocks recovered across Europe from the previous day's setback, with Swatch and Richemont up 1.5 and 1.2 percent, respectively. Givaudan, a more defensive chemicals stock, was up 1 percent. ABB is apparently looking into spinning off its process automation business, with the share price up 1.4 percent. Roche (up 0.7 percent) was supported by the U.S. Food and Drug Administration's acceptance of a request for priority review of a treatment for an eye condition. Among small caps, Tecan surged 10.8 percent. The laboratory equipment supplier is expanding its commercial reach and presence in the U.S. and Asia with the acquisition of Paramit Corporation. Market participants assessed the purchase price positively. A capital increase and expansion of the portfolio was well received by New Value (up 13.5 percent).

International markets

Europe

Banks led European stocks higher on Thursday as bond yields recovered. The Stoxx Europe 600 rose 0.9% to 457 points with gains for lenders including KBC Group and the Bank of Ireland. In Paris, the CAC 40 and the SBF 120 have taken 1.2% each. In Frankfurt, the DAX 30 gained 0.9%, while in London, the FTSE 100 advanced 0.5%. Europcar Mobility Group jumped 12.9% after Volkswagen confirmed it was considering acquiring a majority stake in the car rental group. Europcar had indicated on Wednesday evening that it had recently received an "expression of interest regarding a possible operation" on its capital, which its board of directors rejected. "Discussions could be held, which the company does not intend to comment on, unless legally obliged to do so," the car rental company, whose share price rose by 9.5% on Wednesday, had stressed. Coface gained 6.2% after the Berenberg bank started to follow the share at the purchase with a price target of 12.4 euros. L'Oreal (+2.3%) announced the creation of a European zone for its activities, which will be headed by Vianney Derville, currently CEO of the Western Europe zone. Carrefour (+0.7%) said Thursday that it has begun a review of the critical size of its international subsidiaries. "As part of the preparation of its future strategic plan, Carrefour has initiated a reflection on the critical size of its international subsidiaries and possible movements of consolidation, alliance or disposal," said a spokeswoman for the retail group to the agency Agefi-Dow Jones. German industrial conglomerate Siemens (-1.2% in Frankfurt) said its business continued to grow positively in the current third quarter of its 2020-2021 fiscal year and confirmed its annual outlook including the effect of the Varian Medical Systems takeover.

United States

The S&P 500 jumped to a fresh high after President Biden and a group of senators agreed on a $1 trillion infrastructure plan. The S&P 500 added 24.65 points, or 0.6%, to 4266.49. The Dow Jones Industrial Average added 322.58 points, or 1%, to 34196.82. The tech-heavy Nasdaq Composite rose 97.98 points, or 0.7%, to 14369.71, also a record. Stocks have risen this week and market volatility has collapsed, reflecting investors’ easing concerns about higher inflation and tighter monetary policy. The news of the infrastructure plan helped drive a broad-based rally that lifted everything from construction stocks to Tesla. Caterpillar shares jumped $5.55, or 2.6%, to $219.34. Construction-aggregates producer Vulcan Materials leapt $5.57, or 3.3%, to $175.90. And in one sign of investors’ return to growth stocks, Tesla shares rallied, gaining $23.25, or 3.5%, to $679.82.

Asia

In Tokyo, the Nikkei index rose by 0.8 percent to 29,113 points, similar to the neighboring stock exchanges. The best performance is currently the Hong Kong HSI with a plus of 1.1 percent. The South Korean Kospi continues to rush from record to record and has exceeded the mark of 3,300 points for the first time. Eisai is down around 3 percent in Tokyo after the U.S. Food and Drug Administration announced its intention to accelerate its review of a competing Alzheimer's drug from Eli Lilly.

Bonds

Treasury yields were mixed Thursday, amid a rally in U.S. equities that saw the Nasdaq Composite and S&P 500 index climbing toward record closes. Investors also pored a parade of U.S. economic reports and parsed developments centered on a bipartisan infrastructure spending proposal in Congress. The 10-year Treasury note yielded 1.486%, at virtually unchanged levels at 3 p.m. Eastern Time on Wednesday.

Analysis

Berenberg raises Pernod target to EUR 206 (196) - Buy
Deutsche Bank starts SIG Combibloc with Buy - Target 29 CHF
Berenberg raises CS Group to Buy (Hold)/Target CHF 11 (9.50)

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