Trump takes a jab at pharma

US President Trump announced 100% tariffs on branded pharmaceutical products on Thursday. However, the reaction from many of the biggest pharma stocks in the US and Europe was muted, after Trump said that companies which have built, or are currently building, plants in the US would be exempt from the levies. EU officials also believe drug exports will be protected from the 100% tariff after already agreeing a 15% rate with the US president months ago.

Sticking with the US, the PCE price index showed consumer prices rose by 2.7% in the 12 months to August, up from 2.6% in July. Weekly jobless claims data also showed that the number of Americans filing new applications for unemployment benefits fell from 232,000 to 218,000 having been expected to rise to 235,000.

The US gross domestic product rose by 3.8% annually in Q2 in the Commerce Department’s final estimate, much higher than the 3% growth rate that was initially reported.  In the euro area, the flash consumer confidence indicator climbed to -14.9, beating forecasts of -15.2.

The Eurozone composite PMI reading increased from 51 to 51.2 in September, representing a 16-month high for business activity growth. This was despite weakness in France and was supported by a particularly strong showing in the services sector as manufacturing activity fell.

The UK composite PMI fell more than anticipated to 51 from a one year high of 53.5 in August. The US reading also missed expectations, falling to 53.6 in September from 54.6 in the month previous. 

Equities

Global stocks finished up 0.2% in euro terms and down -0.4% in local terms last week. Year-to-date global markets are up by 3.2% in euro terms and up by 16.5% in local terms. The US market, the largest in the world, finished up at 0.2% in euro terms and down -0.3% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.2% last week. The German equivalent finished at 2.7%. The Irish 10-year bond yield finished at 3.0%. The Euro/US Dollar exchange rate finished at 1.17, whilst Euro/GBP finished at 0.87.

Commodities

Oil finished the week at $66 per barrel and is down -18.9% year to-date in euro terms. Gold finished the week at $3,760 per troy ounce and is up 26.8% year-to-date in euro terms. Copper finished the week at $10,143 per tonne and is up 3.7% year-to-date in euro terms.

The week ahead

Tuesday 30th September

US consumer confidence data for August is reported.

Wednesday 1st October

Eurozone CPI inflation data goes to print

Friday 3^rd October

US non-farm payrolls report for September is released