Barclays: The pharma sector is very out of favor for tariffs
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Yahoo
27 minutes ago
- Yahoo
Apple leads surge in global tech shares after Trump tariff relief
(Reuters) -Global technology stocks advanced on Thursday in a relief rally after the latest tariff salvo from U.S. President Donald Trump largely exempted industry heavyweights from his threat to impose 100% levy on chips and semiconductors. Trump said the new tariff rate would apply to "all chips and semiconductors coming into the United States," but would not apply to companies that had made a commitment to manufacture in the U.S. or were in the process of doing so. Apple's stock rose 3.3% in premarket trading after Trump's announcement on Wednesday that the company will invest an additional $100 billion in the U.S., a move that could help it sidestep potential tariffs on iPhones. U.S.-listed chipmakers advanced broadly, with Advanced Micro Devices up 2.5%, Intel gaining 2.1% and Nvidia up 1.1%. "A major uncertainty has been removed and investors can finally move on," UBS analysts said in a note. Semiconductor manufacturing equipment supplier Applied Materials and chipmakers Texas Instruments, GlobalFoundries and Broadcom - Apple's partners in the investment effort - climbed between 0.8% and 10.1%. European chipmakers also joined the rally, with ASML, ASMI and BE Semiconductor Industries climbing about 3% each. Germany's Infineon said it could not speculate on possible semiconductor tariffs, as no details have been disclosed yet. Its shares were up 0.6%. Trump's latest on semiconductor tariffs seemingly rules out Taiwanese chip contract manufacturer TSMC, which makes chips for most U.S. companies, including Nvidia, as it has factories in the U.S. "The market remains keen to buy TSMC on dips. Investors also believe they need to remain positioned in AI - with or without tariffs," UBS analysts said. TSMC shares closed almost 5% higher to hit all-time highs, while Samsung Electronics and SK Hynix climbed 2.5% and 1.4%, respectively. South Korea's Samsung and SK Hynix will also not be subjected to 100% tariffs on chips, the country's top trade envoy said. Samsung has invested in two chip fabrication plants in Austin and Taylor, Texas, while SK Hynix has announced plans to build an advanced chip packaging plant and research and development facility for artificial intelligence products in Indiana. Since stepping into the White House in January, Donald Trump has made several tariff threats, specifically on semiconductors, aimed at reshaping the supply chain of the industry and spurring domestic production. "The (100% tariff) figure fits Trump's approach of 'open high, negotiate down' and the final figure could be similar to reciprocal tariffs to limit inflation in consumer goods, given that many have chips," said Phelix Lee, senior equity analyst at Morningstar. Not everyone has come out of the latest blitz on the right side, with the Philippines and Malaysia looking to find out more details about the tariff rate. Dan Lachica, the president of the trade body for the Philippine semiconductor industry, said 70% of its electronics exports are semiconductors and the new tariff rate would be "devastating". Philippine stocks were down 0.1% after falling as much as 0.9% during the day. Malaysia's trade minister said the country has reached out to U.S. counterparts for clarity on the tariffs. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27 minutes ago
- Yahoo
Analysis-Struggling US healthcare stocks endure rough 2025 but draw some bargain hunters
By Lewis Krauskopf NEW YORK (Reuters) -Woes for U.S. healthcare stocks have worsened this year driven partly by Trump administration policies, although some investors are betting that the beaten-down shares are now becoming too much of a bargain to pass up. The S&P 500 healthcare sector -- which includes pharmaceutical companies, biotechs, health insurers and medical equipment makers -- has slumped 5% in 2025, lagging the over 7% gain for the overall index. Pressure to bring down U.S. prescription drug prices to overseas rates, tariffs targeted at pharmaceuticals and cuts to areas such as health research funding and Medicaid are among the Trump administration actions clouding the outlook for the shares this year, investors said. Regulatory obstacles are compounding issues, including expiring drug patents and setbacks for bellwethers including UnitedHealth Group. "You have got this constant overarching political and regulatory overhang that doesn't really seem to subside with any administration," said Jared Holz, healthcare sector strategist at Mizuho Securities. "When you have so much nebulousness around the sector, it turns people off rather than invites them to the party." In another sign of the group losing favor, healthcare exchange-traded-funds have seen 12 consecutive months of net outflows as of July for a total outflow of $11.5 billion in that time, more than for any other sector, according to State Street Investment Management. The performance picture is even dimmer over a longer period. While shares of massive technology companies pushed the benchmark S&P 500 up over 50% the past three years, the healthcare sector is little changed in that time. That gap has put the 60-stock sector at nearly its biggest discount to the broader market in 30 years, which some investors hope is an inflection point for the battered group. "The valuation is extremely cheap and the relative performance is at an extreme," said Walter Todd, chief investment officer at Greenwood Capital, whose healthcare holdings include diversified giant Johnson & Johnson and medical device maker Stryker. "So at this point, it seems like a pretty decent setup to get some outperformance." The price-to-earnings ratio for the healthcare sector, based on earnings estimates for the next year, has fallen to 16.2 times from nearly 20 a year ago, according to LSEG Datastream. Meanwhile, the S&P 500's rally to records has driven the index's P/E ratio to over 22 times -- giving the broader market a significant premium over the healthcare sector. 'BAD NEWS IS PRICED IN' Some high-profile healthcare names are at even cheaper valuations. For example, Merck is trading at a forward P/E of 8.7, against its long-term average of 14.5, while fellow drugmaker Bristol Myers Squibb trades at 7.4 against its average of 15.8, according to LSEG. Year-to-date, shares of both Merck and Bristol Myers are down roughly 20%. The group is drawing bets from some value investors such as Patrick Kaser, portfolio manager at Brandywine Global, whose portfolio is overweight the sector including owning shares of CVS Health and European drugmakers GSK and Sanofi. "Our perspective is a lot of this bad news is priced in and then some," Kaser said. "To bet against the sector from here, you're essentially continuing to bet on the valuation gap, which is already large, continuing to widen." The group's decline means the total market value of the S&P 500 healthcare sector is about $4.8 trillion, not much higher than the $4.3 trillion value of Nvidia, the semiconductor company that has symbolized the artificial intelligence boom. Indeed, some investors said a shift in capital away from Nvidia and other massive tech companies could spark healthcare shares. Such a move appeared to occur in the first quarter, investors said, when the healthcare sector rose 6% while declines in tech and megacap stocks dragged indexes lower. Fears of an economic downturn also could help healthcare shares, at least on a relative basis. The group is often viewed as a defensive area in rockier economic times. Economic fears flared following last Friday's weaker-than-expected employment report, while some strategists say the market could be due for a pullback after surging over 20% since its April lows. "During the first quarter, healthcare did great even as tech rolled over, as the fears of an economic slowdown got to more economically sensitive stocks," said Chris Grisanti, chief market strategist at MAI Capital Management, adding he expects healthcare "will perform better in a more difficult market." More clarity on regulatory issues, including tariffs, also could support healthcare, investors said. But some value investors are hesitant to dive into the group. Michael Mullaney, director of global markets research at Boston Partners, said he is wary some healthcare shares could be "value traps," preferring to overweight areas including industrials or financials. "There's been just so much of an overhang in the sector," Mullaney said. "There are better places to go with cleaner stories." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
27 minutes ago
- CNBC
Euro hits fresh highs on peace talks in Ukraine, BoE in focus
The euro hit a fresh 1½-week high against a weakening dollar on Thursday as investors monitored Ukraine peace talks and shifted their focus to the Bank of England's policy meeting later in the session. The U.S. dollar remained under pressure amid growing concerns over partisanship creeping into key U.S. institutions. Initial U.S. jobless claims, due later in the session, will be closely watched following last week's disappointing nonfarm payrolls report, which triggered a dovish repricing of the Federal Reserve easing path and a slide in the greenback. The euro rose 0.14% to $1.1677, its highest level since July 28, with a possible peace deal in Ukraine seen as a positive driver for the single currency. Ukrainian President Volodymyr Zelenskiy said he planned contacts with Germany, France and Italy on Thursday to discuss progress toward peace. "Sectors to benefit (from a peace deal) should be European consumers, growth-sensitive and construction-related sectors," said Mohit Kumar, economist at Jefferies. "It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies." Sterling was steady ahead of a BoE policy announcement, with markets widely expecting another rate cut. Markets will watch the expected three-way voting split for any signal that the central bank might change its guidance on a "gradual and careful" easing path. "We suspect conviction levels are low in the supposed consensus view that rates can only go down and pressure affected currencies," said Geoff Yu, strategist at BNY, after warning that markets may be too complacent about stagflation risks. "The Bank of England will kick off what we expect to be a new run of cuts through August and September in Europe, but over-committing to easing risks policy error and prolonging stagflation," he added. The Swiss franc rose 0.20% to 0.8047 versus the dollar , even as Swiss President Karin Keller-Sutter returned from Washington empty-handed after a trip aimed at averting a crippling 39% tariff on the country's exports to the U.S. "While we still believe that a deal will ultimately be reached, it is likely to be far more expensive than Switzerland had hoped," said Michael Pfister, strategist at Commerzbank. Last week, U.S. President Donald Trump fired the official responsible for the labour data he did not like, and focus is centring on his nomination to fill a coming vacancy on the Fed's Board of Governors and candidates for the next chair of the central bank. The dollar index, which measures the greenback against a basket of major peers, dropped to a fresh 1-1/2-week low at 98.00, down 0.20% on the day. Fed funds futures are now pricing in a 94% probability of a 25 basis point cut at the Fed's September meeting, up from 48% a week ago, according to the CME Group's FedWatch Tool. In total, traders see 60.5 basis points in cuts this year. The president said on Tuesday he would decide on a nominee to replace outgoing Fed Governor Adriana Kugler by the end of the week and had separately narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four. China's yuan firmed slightly, supported by a stronger official midpoint and upbeat Chinese trade data.
