The release of the US Consumer Price Index (CPI) report last week still indicated a persistent high level of core service inflation in the US.
US headline inflation increased by 0.4 per cent in September and slightly above the market expectation of 0.3pc.
The core goods inflation dropped by 0.4pc in September and down 3.2pc on an annualised basis but core services - excluding energy - increased by 0.57pc on the month and running high at 5.7pc on a year-to-date annualised basis.
The US consumer sentiment dropped to the lowest level since May as indicated by the Michigan consumer sentiment index, which decreased by 7pc from September to October.
One year expected business conditions dropped substantially by 19pc as the market is concerned over the impact of inflation to the economy in the short run.
However, the market is not expecting the negative conditions to persist for long as the long run business condition expectations remain relatively unchanged.
In Australia, CSL and ResMed shares were under significant Ozempic-induced selling pressure last Thursday. Novo Nordisk released a round of strong trial results for Ozempic. Also, there's a potential new application of Ozempic on chronic kidney diseases.
Novo Nordisk released a round of strong trial results for Ozempic.
- Christopher Hindmarsh, JBWere Limited
Following the media release, ResMed was down 5.26pc on Thursday, closed the day at $22.17 and on the same day, CSL lost 6.3pc with a closing price of $238.24.
The drug was designed to treat type 2 diabetes but has been proven effective in weight loss treatments.
As the market inferred the correlation between lowering obesity level and its positive impact on sleep apnoea patients, investors have been concerned about the potential loss of revenue for ResMed. ResMed COO Robert Douglas acknowledged the success of Ozempic on the June investor call but also stated there are many contributing factors to sleep apnoea and obesity is just one of them.
The potential new application of Ozempic on chronic kidney disease mainly impacted CSL through its Vifor segment, which accounts for about 15pc of CSL group revenue. CSL CEO Paul McKenzie commented on the CSL Capital Markets Day on Monday that "when we look at who was included in the clinical trial, how it affects our business, we really just don't see it being material".
Despite the strong trial results and the surge in demand, the practical application of Ozempic is challenged by its supply shortage. Novo Nordisk advised the Therapeutic Goods Administration that supply in 2023 and 2024 will be limited.
- This article does not take into account the investment objectives, financial situation or particular needs of any particular person. Before acting on any advice contained in this article, you should assess whether it is appropriate in light of your own financial circumstances or contact your financial adviser. Christopher Hindmarsh is an adviser at JBWere Limited. JBWere Limited AFSL 341162.
