2024-03-07 18:20

Shares jump on rosy early trial data for new obesity drug Other weight-loss pills doing well in trials like rival Lilly's Obesity drug market to be worth $100 bln by 2030 Novo to also expand focus to cardiovascular disease treatments Wegovy to get nod for China sales as soon as this year COPENHAGEN, March 7 (Reuters) - Novo Nordisk (NOVOb.CO) , opens new tab on Thursday surpassed Tesla Inc (TSLA.O) , opens new tab in market valuation after the maker of the popular weight-loss drug Wegovy announced positive early trial data for a highly anticipated new obesity drug. Shares surged more than 8% to record highs, shooting Novo Nordisk up in global rankings to the 12th most valuable company from 14 previously, after it told investors a Phase I trial of the pill version of experimental drug amycretin showed participants lost 13.1% of their weight after 12 weeks. That compares to a weight loss of about 6% after 12 weeks and 15% after 68 weeks in trials for Wegovy, its blockbuster obesity drug. Investors welcomed the news as indicating Novo had more in its pipeline beyond its hugely successful Wegovy. Its shares have soared since launching the weekly injections in the United States in 2021. Novo's shares have risen more than three-fold since June 2021 when it launched Wegovy in the United States, last year becoming Europe's most valuable listed company, ahead of LVMH. On Thursday, its market valuation reached $566 billion, ahead of Tesla and Visa (V.N) , opens new tab, according to LSEG data. "Novo has made clear that the amycretin molecule likely will form the foundation of the company's rapidly growing pipeline," said Guggenheim analyst Seamus Fernandez. Nearly half of Novo's current valuation is based on the company's pipeline of new experimental drugs such as amycretin, according to calculations by Berenberg analysts last week. Markus Manns, a portfolio manager at Union Investment in Germany and Novo shareholder, said the early read-out also compared favourably with other weight-loss pills in development, such as rival Eli Lilly's (LLY.N) , opens new tab orforglipron. Lilly's mid-stage trial showed its experimental pill led to 14.7% weight loss after 36 weeks for people who were obese or overweight. The U.S. drugmaker's shares slipped on the upbeat Novo update while shares in Zealand Pharma (ZELA.CO) , opens new tab, which is testing a similar treatment, jumped more than 9%. Wegovy belongs to a class of drugs known as GLP-1 agonists, originally designed to treat type 2 diabetes, that have been shown to reduce food cravings and empty the stomach more slowly. Following the success of these drugs, companies are working on other promising weight-loss therapies such as amycretin which targets a hormone called amylin in the pancreas that affects hunger. Wegovy was the first of a new group of highly effective weight-loss drugs to be launched. Novo and Lilly are so far the leaders in the obesity drug market, forecast by analysts to be worth $100 billion by 2030. HEART DISEASE Novo Nordisk Chief Executive Lars Fruergaard Jorgensen said the obesity drug roll-out will be dominated by injectable medicines, with oral versions introduced later in higher-priced markets. Pills require large amounts of active ingredients, making them costly to produce. Earlier in the day, he also announced the company was expanding its focus on diabetes and weight-loss therapies to include cardiovascular disease treatments. The change comes after the drugmaker last August said a large study had shown Wegovy also had a clear cardiovascular benefit, boosting efforts by the company to move Wegovy beyond its image as a lifestyle drug. "Any company that is so heavily exposed to one therapeutic area needs to try to develop other pillars to stand on," said Wolfgang Lickl, portfolio manager at KB-Vermögensverwaltung. "The sheer success in diabetes and obesity will make that difficult, but the cardiovascular field makes sense because of the many synergies," he said. Following the August trial, Novo has been trying to convince sceptical medical insurers that the long-term benefits of Wegovy are enough to reduce the overall burden on healthcare systems and the cost of treating heart disease in overweight and obese people. It expects Wegovy to be approved for sale in China as soon as this year, which would be its second-biggest market after the United States. https://www.reuters.com/business/healthcare-pharmaceuticals/novo-nordisk-present-early-stage-trial-data-new-diabetes-drug-investor-meeting-2024-03-07/

2024-03-07 18:16

WASHINGTON, March 7 (Reuters) - Federal Reserve Chair Jerome Powell said on Thursday the U.S. central bank was "not far" from gaining the confidence it needs in falling inflation to begin cutting interest rates. "I think we are in the right place," Powell said of the current stance of monetary policy in a hearing before the Senate Banking Committee. "We are waiting to become more confident that inflation is moving sustainably down to 2%. When we do get that confidence, and we’re not far from it, it will be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession.” The comment showed Powell's faith that recent higher-than-expected inflation readings and other strong economic data won't interrupt the ongoing decline in price pressures that took root last year. The Fed chair has been reluctant to declare the inflation battle finished, and cautioned in testimony to the Senate panel, as he did Wednesday before the House Financial Services Committee, that further progress back to the Fed's 2% target was not assured. The most recent data showed headline inflation, as measured by the Fed's preferred Personal Consumption Expenditures price index, at 2.4%, with a related measure of underlying inflation at a slightly higher 2.8%. But both have been "coming down sharply since the middle of last year," Powell said. "We've got a ways to go on that, but we've made a lot of progress." Yields on 2-year Treasury notes fell slightly after Powell's remarks, and investors firmed bets that an initial Fed rate cut would occur in June. The central bank next meets on March 19-20, and will issue a new policy statement as well as updated rate and economic projections that should shed more light on policymakers' expectations for the year. Powell's appearance before the Senate committee and a House panel on Wednesday, as is often the case in the twice-yearly round of hearings, was dominated less by monetary policy and more with an ongoing debate about Fed bank regulatory proposals, as well as a host of other issues, including housing policy and whether the Fed would issue a central bank digital currency. But Powell's update on monetary policy kept intact the sense that the central bank is nearing the point where the current policy rate of interest, held at a more than 20-year high since July in a range between 5.25% and 5.5%, will be lowered in the months ahead. Pressed at the start of the hearing by the panel's chair, Ohio Democrat Sherrod Brown, on why the Fed was not quicker to cut rates "to prevent workers from losing their jobs," Powell said that was a top-of-mind concern, while nodding also to the economy's resilience. "We're well aware of that risk, of course, and very conscious of avoiding it," Powell said. "If what we expect and what we're seeing - continued strong growth, strong labor market and continuing progress in bringing inflation down - if that happens, if the economy evolves over that path, then we do think that the process of carefully removing the restrictive stance of policy can and will begin over the course of this year." https://www.reuters.com/markets/us/feds-powell-says-aware-policy-risks-workers-cuts-depend-inflation-2024-03-07/

2024-03-07 18:12

March 7 (Reuters) - Small business continued to recover last year from the hit they took for the pandemic while facing financial challenges tied to higher interest rates and still hard-to-find workers, according to a report released Thursday by the 12 regional Federal Reserve banks. “A majority of firms said that higher interest rates were affecting their business in some way, most often in the form of increased debt payments,” according to the latest Small Business Credit Survey, with it adding “firms experienced challenges with rising costs and paying operating expenses in the year leading up to the survey.” The report, released by the Cleveland Fed, was based on a survey of just over 6,000 firms with fewer than 500 employees, conducted between September and November last year. The survey horizon captured firms’ sentiments in the wake of what had been a very aggressive campaign of central bank rate rises aimed at cooling inflation. Those actions lifted the central bank’s target rate range from near zero levels in the spring of 2022 to the current setting of between 5.25% and 5.5% with the July hike. With inflation pressures easing, the Fed is almost certainly done with rate increases and is eyeing cuts this year, although it’s unclear when that might start and how far the Fed will go. That outlook suggests that some of the financial and inflation pressures small firms faced last year will probably ease over time. The report noted, “firms were much more likely to expect increases than decreases in revenue and employment in the coming year, though they were more optimistic pre-pandemic.” The report found that almost all responding firms faced financial challenges last year, with the most common issue being tied to rising costs for goods and services as well as higher wages. That said, some 77% of firms flagged rising costs as a problem, which was down from 81% who said the same thing in 2022. In terms of debt, the report found that last year the share of small businesses with outstanding debt held steady, but those who borrowed had more debt to manage. The report said 39% of firms had more than $100,000 in outstanding debt, up from 31% who were in the same position in 2019. The report also said 34% of respondents said making debt payments was a challenge and 54% of firms tied higher rates to increased debt costs. https://www.reuters.com/markets/us/fed-report-says-small-businesses-faced-financial-inflation-challenges-2023-2024-03-07/

2024-03-07 18:02

March 7 (Reuters) - Foreign investors have resumed purchases of Egyptian treasury bills after a long absence, three bankers said, as results posted by the central bank showed local currency one-year bills nearly three times oversubscribed at an auction on Thursday. The central bank results showed one-year T-bills worth 87.8 billion Egyptian pounds ($1.78 bln) had been sold at an average yield of 32.303%, a day after the bank raised interest rates by 6% and let the pound depreciate sharply against the dollar. Egypt received total bids worth 254.0 bln Egyptian pounds ($5.15 bln) for the one-year T-bill auction, the results showed. In a sixth-month auction, the central bank said it had sold 14.2 billion Egyptian pounds ($287.9 million) worth of T-bills with an average yield of 31.837%. The Egyptian pound value of one-year T-bills sold on Thursday was significantly higher than at weekly auctions since the start of the year, when the average yield had been between 26.607% and 29.913%. The value of six-month bills was higher than all but one of the previous auctions this year, where an average yield of 26.001%-28.579% was offered. Foreign investors submitted bids across the two auctions worth $2.26 billion, of which the central bank accepted $825.2 million, according to figures supplied by a banker. The central bank data does not differentiate between foreign and local buyers. Purchases of T-bills by foreign investors, also known as the carry trade, were a major and volatile source of foreign currency inflows for Egypt until investors pulled back from the trade at the outbreak of the Ukraine war two years ago. Foreign investors convert dollars into Egyptian pounds to buy T-bills with tenors of three months to one year and take advantage of Egypt's high interest rates, which they expect to then reconvert into foreign currency and repatriate. Egypt had said it intended to reduce dependency on carry trade foreign currency and vulnerability to external shocks. ($1 = 49.4000 Egyptian pounds) https://www.reuters.com/business/finance/foreign-investors-return-egyptian-t-bill-auction-after-devaluation-bankers-say-2024-03-07/

2024-03-07 17:36

ECB lowers 2025 inflation forecast to 2% Lagarde reinforces traders bets for June move ECB could be first major cen bank to cut rates LONDON, March 8 (Reuters) - Investors are increasingly confident the European Central Bank may lead global peers with a rate cut in June as new economic projections put on-target inflation in sight. Markets took Thursday's ECB revisions as further confirmation that interest rate cuts would start soon. The ECB lifted its key rate to a record 4% in its fastest paced hiking cycle in its history, from July 2022 to last September. Policymakers now see inflation, which surged to a peak over 10% in 2022, falling to its 2% target next year, rather than in 2026. Germany's interest rate sensitive two-year bond yield fell as much as 10 basis points (bps) to a three-week low as market rate cut expectations rose. European stocks (.STOXX) , opens new tab rallied 1%, the euro briefly slipped. Traders became more confident that cuts would start in June, seeing over a 90% chance, from 85% earlier on Thursday. ECB chief Christine Lagarde emphasised the bank would have seen a lot more data in June. Lagarde "was as explicit as she could be for a June rate cut", said Danske Bank chief analyst Piet Christiansen. Markets now see the ECB lowering rates by just over 95 bps this year, versus just over 90 bps before the meeting. Another source of comfort was relative optimism on wage growth, which the bank has singled out as the single most important factor determining whether it can cut rates. "The ducks are lining up", said Seema Shah, chief global strategist at Principal Asset Management, which manages $700 billion, noting Lagarde's comment that wage growth was moderating. Confidence in a June cut also marks the latest victory for policymakers, who just weeks ago were trying to tame trader bets on speedier rate cuts. After January's ECB meeting investors had expected 140 bps of rate cuts this year commencing in April, now they expect nearly two less moves. Germany's benchmark 10-year bond yield is nearly 30 bps higher than at the start of 2024, meaning tighter financial conditions. The risk to all the optimism, of course, is what economic data shows. And while acknowledging slowing wage growth, the ECB said wages were still keeping price pressures high. "There is a clear road map so anything that goes in the opposite direction of this would be disruptive for markets," said Gilles Moec, chief economist at insurer AXA Group, citing an acceleration in wages of inflation, especially from the services sector, as examples. WHO FIRST? As conviction grows the ECB will likely move in June, focus also turns to whether it will cut before the U.S. Federal Reserve, in what would be an unusual move. Currency traders will be watching closely as relative interest rates are a key market driver. The dollar was broadly soft on Thursday, meaning that a post-ECB fall in the euro was brief. Traders on Thursday saw a similar chance of the ECB and Fed cutting rates in June. But they have started to flag the risk that the Fed might not be able to cut rates at all this year if the world's largest economy holds strong. And they don't doubt the ECB can move first given a much weaker economy. Still, some economists reckon moving before the Fed could dampen how much the ECB cuts overall. "Where uncertainty remains is in terms of the pace of easing once the rate cutting cycle starts," said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management. Ducrozet expected an ECB pause in July after a June cut, then 25 bps reductions per meeting from September while a weaker economy relative to the U.S. might require further easing in 2025. "That's where the potential for market re-pricing looks greater," he added. For now, what may be more significant for euro zone markets is the spillovers from swings in U.S. rate cut expectations and Treasuries given that euro zone and U.S. bonds have moved in tandem at a record pace recently. "We import a lot of this tightening and easing from the U.S," said Danske Bank's Christiansen. "So, this repricing we've seen in rates is actually coming more from the U.S. rather than a repricing on European fundamentals." https://www.reuters.com/markets/europe/markets-see-clearer-ecb-rate-cut-roadmap-inflation-fog-lifts-2024-03-07/

2024-03-07 17:27

WASHINGTON, March 7 (Reuters) - Federal Reserve Chairman Jerome Powell significantly downplayed the possibility of the central bank issuing its own digital currency, and said if it ever came to pass, the government would play a limited role. Testifying before Congress Thursday, Powell said policymakers were "nowhere near" taking action on adopting such a tool. “People don’t need to worry about a central bank digital currency, nothing like that is remotely close to happening anytime soon," he told the Senate Banking Committee. He added that the Fed has no interest in establishing accounts for individuals that would compete with the banking system, and it would not support any Fed monitoring of personal financial transactions. "If we were to ever do something like this, and we’re a very long way from even thinking about it, we would do this through the banking system, the last thing...we the Federal Reserve would want would be to have individual accounts for all Americans," he said. BASEL CHANGES At the same hearing, Powell said that bank regulators will be taking a deliberate approach to overhauling a contentious plan to raise large bank capital. He said he anticipates the central bank will consider changes to the so-called "Basel III endgame" proposal over the course of 2024, noting it was more important to get the rule right than complete it quickly. Powell echoed comments he made a day prior in separate congressional testimony, noting that he anticipated broad and material changes to the proposal, which was unveiled in July and has been subjected to relentless industry opposition since. The proposal would overhaul how roughly three dozen of the nation's largest banks gauge their risk, and in turn how much capital they have to hold as a cushion against losses. Members of the Senate Banking Committee from both parties aired concerns about the proposal, including how it could impact the affordability of mortgage lending and whether it could push riskier activity into less-regulated portions of the financial system. Powell said regulators were "well aware of and focused on those issues," but did not offer specifics on potential tweaks. However, Senator Elizabeth Warren criticized Powell, arguing that he should defer to Vice Chair for Supervision Michael Barr, the Fed's top regulatory official who led drafting of the original proposal. But Powell defended his stance, saying Barr has the power to bring proposals forward but he and other Fed board members are free to consider those plans independently when they vote. When proposed, Powell aired concerns about the proposal but voted in favor of advancing it. “When I do monetary policy, I have one vote," he said. "It’s not different for the Vice Chair for Supervision." https://www.reuters.com/markets/us/powell-says-fed-not-remotely-close-central-bank-digital-currency-2024-03-07/