Market Quote: U.S. Equities, U.S. Government Shutdown, GLP-1 Drug Trial
Author: The editor's desk
November 17, 2023
Members of AGF’s Investment Management Team weigh in on the week that was in global financial markets.
Bull-ish
“Equity markets have been on a nice run so far this month and may be further aided in the near term by seasonal trends, which are historically strong this time of year.
Still, investors need to remain somewhat cautious. While expectations are growing that the U.S. Federal Reserve (Fed) is done raising interest rates this cycle, there is still the possibility that it won’t cut rates as soon – or as often – as many market participants anticipate.
We believe more volatility should be expected if key U.S. economic indicators like inflation and the unemployment rate don’t shape up to the Fed’s liking and they raise rates again and/or maintain their key lending rate at its current level for longer.”
Kicking the Can
“Investors may have dodged a bullet earlier this week when U.S. Congress passed a measure to avoid a government shutdown later tonight and spare the country still another humiliating budget fiasco – at least until early in the New Year when the latest new deadlines are set for getting the country’s books in order.
We believe people are sick of the shutdown threats and welcome a reprieve from the shenanigans, even if it’s temporary. Yet the inability of Congress to negotiate a more permanent deal leaves some very serious funding issues unresolved, including the possibility that aid to Ukraine and Israel stalls this winter. This could send a signal to China and other global powers that Washington cannot keep its commitments.”
Trial run
“For investors in healthcare stocks, all eyes this past weekend were on the highly anticipated results of a Phase 3 trial for one of the GLP-1 drugs currently in market that mimic the action of a hormone called glucagon-like peptide 1. The trial confirmed a 20% reduction in major adverse cardiovascular events (MACE) from using the drug, but also included positive details on diabetes prevention, as well as a reduction in heart attack and cardiovascular death, all within the context of a favorable safety profile given the study’s large size.
The overall results are largely in line with expectations and may help underpin broader healthcare insurance coverage for GLP-1 drugs in the treatment of obesity.
Meanwhile, for the medical device sub-sector – which had been under significant pressure because of the perceived GLP-1 threat on surgeries – the study served as a clearing event that may alleviate some near-term headline risk in certain names. Notably, another set of recent data further supports the combined utilization of specific devices alongside GLP-1 drugs.”
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The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
Commentary and data sourced from Bloomberg, Reuters and company reports unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of November 16, 2023 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.
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Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
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