Before the bell: all eyes on Tesla results

Investors are taking profits, especially in pharmaceutical stocks. Corporate earnings are better than expected, but markets remain pessimistic due to higher oil prices.

On Wall Street, both the S&P 500 and the Nasdaq lost 0.6%. Concerns about the situation in the Middle East and the higher oil price had more impact on markets than solid corporate results. Microsoft (+1.5%) and Cisco (+2.3%) went against the tide, while UnitedHealth Group (+7%) moved higher after the health insurer raised its annual guidance. In Europe, losses averaged 0.9%. Novo Nordisk (-4.2%) and Bayer (-3.3%) fell even more. Fastned gained another 5.1%. Since the start of the year, the Dutch charging station operator is already up 46%. The Bel20 lost 1.5%. Melexis (+2.8%) stood out positively after announcing a partnership with the Chinese robotics company OYMotion. argenx (-3%) and UCB (-4.6%) dropped sharply.

In Tokyo (-0.8%) and Hong Kong (-1.3%), investors are extending the pessimism seen on Wall Street. SoftBank Group (+6.1%), Lenovo (+4.5%) and Geely (+1.9%) are posting gains, while Alibaba loses 3.5%. Later today, Boeing and IBM will publish results. After the close, it will be the turn of Tesla and Texas Instruments. AkzoNobel, Randstad and Vopak will also report today, as will L’Oréal. In Brussels, Cofinimmo and Recticel provide updates. At Proximus, a dividend of 0.3 euro per share goes ex today, and shareholders of Compagnie du Bois Sauvage gather this morning for the annual general meeting.

Big Amazon versus big pharma

If you look for the biggest losers yesterday, you quickly end up with pharmaceutical companies. In the Dow Jones Industrial Average, Merck (-3.9%) recorded the largest loss, while Eli Lilly lost 1.8%. Novo Nordisk dropped 4.2%, and in Brussels argenx (-3%) and UCB (-4.6%) were in free fall. This is no coincidence. Investors are reacting to the plans of Amazon (+0.7%). The tech giant now wants to push aggressively into the distribution of medicines. Amazon announced yesterday that it will launch a nationwide GLP-1 treatment program via One Medical and Amazon Pharmacy. This puts Amazon in direct competition with the consumer platforms of Eli Lilly and Novo Nordisk. It is, of course, also competition for Hims & Hers (-4%). Amazon is powerful enough to force producers into lower prices and margins. That explains the pessimism in the markets. I do think this is mainly bad news for pharmacies, and that producer margins will remain very high.

Recticel: strong growth in March

The insulation specialist saw its revenue in the first quarter increase by 6.1% from 158.4 million euro to 168.1 million euro. Management is honest enough to admit that this is mainly due to acquisitions. Lower raw material and selling prices had a negative impact on the figures. But there is also a bright spot. By the end of February, both volumes sold and revenue began to rise sharply. That is genuine “organic” growth, not driven by acquired revenue. “Everything is on track,” management says. The evolution at Recticel is, of course, entirely determined by the climate in the construction and renovation sector. Sooner or later, that sector must improve. But on Monday we still heard from a banker that mortgage rates will be increased. That is not good. We remain in the valley a bit longer, but I am convinced we will climb out of it sooner rather than later. You know our buying candidates in the sector.

Did you know…

that Recticel is one of the oldest companies on the Brussels stock exchange? Its origins date back to 1778, when the company was founded in Wetteren as a gunpowder factory.

This article was translated from Dutch and was originally published on Spaarvarkens.be.