- Biotech shares surged again, up 9% in four sessions
- US President Donald Trump's healthcare reform bill is affecting markets
- London set to lose more financials to Frankfurt and Dublin
- Fixed-income volatility is subdued
By Clemens Bomsdorf
While it seems fixed-income markets "are in summer mode already“, as Saxo’s fixed-income trader Michael Boye puts it, stocks have been more volatile.
Shares of biotech companies rallied strongly recently and are now up 9% in the last four sessions. "We have broken above key resistance levels in biotech,“ says Peter Garnry, Saxo's head of equity strategy.
The reason for the leap in biotech stocks is the US healthcare reform bill, which, according to a piece in the New York Times, overall "will benefit the wealthy and young adults, but hurt larger numbers of people who are old or poor." In the Senate, which has to vote for the bill, Republicans have only a slight majority, but so far four senators have said they dislike the healthcare plan. So it remains unclear whether it will pass, and changes are possible.
Gilead Sciences remains a top pick among stocks in the sector for Garnry.
In the financial sector, Morgan Stanley said it is likely to follow Goldman Sachs in choosing Frankfurt as trading hub, while Dublin will get the fund business. Other bad news for the UK includes a comment by the EU27 leaders, which, in Garnry’s view, will make a hard Brexit more likely.
Today marks the anniversary of the Brexit referendum. Since such big news are rare these days, volatility in the bond markets is low.
“Volatility in fixed-income markets is quite low at the moment, it seems like markets are settling into summer mode,” says Boye.
The next big trigger could be the German election, says Boye, but this will not take place before September 24.
Signs of a stabilising oil price support bond yields.
Today’s flash PMIs from Europe and the US will be watched, but impact is unlikely to be big.
Biotech shares are up due to US health care reform plans. Photo: Shutterstock
Clemens Bomsdorf is a consulting editor at TradingFloor