EU HEALTHCARE: Healthcare: Week in Review
4 bps wider on average this week – in line with the overall market. We had earnings from eight companies. Becton Dickinson and Eli Lilly were the worst performing equities (-17% and -11%) with Novo Nordisk and Smith & Nephew posting gains of 13% and 10% respectively.
- Becton Dickinson had reasonably solid quarterly numbers with 6.0% growth at constant currency. But guidance was light with Organic revenue expected to grow by just 3.0% to 3.5%: 1% below previous guidance. This is not terrible for bondholders particularly as the company reiterated its intention to reduce leverage from 2.9x to 2.5x (no timeframe) but the equity market was unimpressed. We would caution that the company may be forced to be more friendly to shareholders given the fall. Bonds +6 weaker on the week although tighter by 2bps immediately after results.
- Eli Lilly also fell post numbers but mainly because it has a high P/E ratio that requires a steady stream of good news. Unfortunately, the CVS chain of pharmacies removed Zepbound from its favoured list and included Wegovy (Novo Nordisk).
- Smith & Nephew had revenue up +3.1% and guided to +5% for full year. SNLN 29s are now 20bps tighter year-to-date. The company has pressure from Cevian Capital to improve performance.
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GILTS: Futures Through Trendline Resistance
Gilt futures trade through both trendline resistance (92.42) and yesterday’s high (92.45) alongside the extension of the rally in U.S. Tsys, with “Liberation Day” risks continuing to underpin core global FI markets.
- Next resistance noted at the 61.8% retracement of the March 4-27 move lower (92.55), followed by the Mar 20 high (93.01).
- Yields ~4bp lower across the curve. March lows remain intact, with many of the benchmark yields comfortably off last month’s lows.
EQUITIES: US Cash Opening calls
US Cash Opening calls, similar to Futures, Cash indices will Open in the red, but will also be above Yesterday's lows.
- Calls: SPX: 5,583.9 (-0.9%); DJIA: 41,716 (-0.7%/-274pts); NDX: 19,210.3 (-1.2%).
CANADA: Ontario Premier-'Can Take Tariffs To Zero If Trump Ends Tariff War'
Speaking on CNBC, Ontario Premier Doug Ford says "We would take tariffs to zero if Trump ended his tariff war. And we told him this". Adds that he wants to see Canada exporting more critical minerals to the United States. Ford: 'Lets get back to a USCA (US-Canada) deal, not a USMCA (US-Mexico-Canada) deal'.
- During the interview, Ford refuses to be drawn on the federal election, neither endorsing opposition Conservative Party of Canada (CPC) leader Pierre Poilievre nor PM Mark Carney's Liberals. Ford hails from the Progressive Conservative Party of Ontario, which ostensibly is ideologically linked to the CPC.
