US stock indices are showing only minor movements ahead of the market opening. The Dow Jones Industrial Average is down 0.8% at 53,013 points, having already lost some ground on Friday. The Nasdaq 100, a technology-heavy index, is up 0.1% at 29,568 points, benefiting from strong gains in semiconductor stocks before the weekend.
The rising oil prices are exerting pressure on market sentiment, adding to fears of higher interest rates. A barrel of Brent crude, with November delivery, is trading above $98, just shy of the psychologically significant $100 mark. The price of West Texas Intermediate (WTI) crude has also increased significantly. Traders attribute this to the Huthi militia's attacks on Saudi Arabia, which has led to a halt in production at some facilities near the Yemen border.
Anastasia Amoroso from Partners Group suggests that markets are likely in a 'digestive phase' following significant adjustments in central bank policies worldwide. This could lead to a partial retracement of recent stock gains or at least a period of consolidation.
The oil price increases are expected to benefit US oil majors like Exxon Mobil and Chevron, which have seen pre-market gains of over 1% each.
Dow Jones Futures are down 0.8% from the previous day, while S&P 500 Futures are down 0.3%. Nasdaq Futures show no change. The SMI remains in the red, down 1.3%.
The SMI is down 1.3% at 14,094.20 points, while the Mid-Cap Index SMIM is up 0.6% at 3,081.94 points. The SPI is down 0.9% at 19,881.15 points. Other European markets are also in the red, though not as severely as the SMI.
Novartis is pulling the SMI down, with its shares falling 9.8%. The drug candidate Del-desiran, intended for the treatment of a rare muscle disease, failed to meet its primary endpoint in a Phase III study. Vontobel describes this as a significant setback for the pipeline. Earlier in the week, disappointing study data on Pelacarsen had already caused Novartis shares to drop 3.2%.
Based on market capitalization, these losses could set a record daily loss for Novartis. Over 24 billion Swiss francs in market value have been lost so far - more than during the Euro minimum rate removal or the COVID-19 crash.
Nestlé is supporting the SMI, with its shares up 2.7%. In the SMI, there are 9 winners and 11 losers.
In the broader market, Sandoz has presented new growth targets until 2030 and aims to further expand its biosimilar business. Oerlikon has also announced new medium-term targets, which UBS views positively. The targets of over 2 billion Swiss francs in revenue and a net EBITDA margin of over 20% by 2030 are slightly above market expectations but considered realistic.
Ascom is gaining significantly after securing a large order from Norway. The order, valued at around 80 million Swiss francs over seven years, is seen as a major success for the company by ZKB. SoftwareOne is also seeing strong gains, supported by a significant increase in target prices by Kepler Cheuvreux. According to the responsible analyst, the company is clearly on track with its turnaround.
Other gainers include Galderma and Gurit, which are benefiting from positive analyst comments and target price increases.
On the other side, Burkhalter is giving back the gains from the previous day. Technology stocks like VAT, Inficon, and Comet are under particular pressure.
Tensions around the Strait of Hormuz are continuing. While hopes for a possible corridor for tankers persist, they are still facing military risks. The price for Brent crude has risen above $99 per barrel, the highest level since mid-July, and the $100 mark is within reach.
A trader notes that the market remains heavily influenced by oil prices and interest rates. As long as the situation in the Middle East does not improve and energy prices remain high, risk appetite is likely to remain limited. Looking ahead, the focus will be on the ECB's interest rate decision on Thursday. An increase of 25 basis points to 2.5% is considered likely, and the signals regarding the further course of monetary policy will be of particular interest.
Novartis shares are plummeting on Tuesday. At 9:45 AM, the shares are down over 10% at 112.54 Swiss francs, widening their previous day's losses (-3.2%). This represents the highest losses for the pharmaceutical company since 2020. The shares had reached a new record high of 132.68 Swiss francs the previous week.
After the disappointing study results for Pelacarsen were announced on Monday, Del-desiran also failed to meet its primary endpoint. The confirmed medium-term sales guidance provides little help.
The SMI is also down 1.4% on Tuesday. It opened the day with a 1.0% decline. As on Monday, Novartis (-8.8%) is pulling the SMI down. The drug candidate Del-desiran, intended for the treatment of a rare muscle disease, failed to meet its primary endpoint in a Phase III study. Disappointing study data on Pelacarsen had already caused Novartis shares to drop 3.2% the previous day.
The SMI is led by Nestlé (+2%), Roche (+0.8%), and Givaudan (+0.7%). In the broader market, Sandoz (+4.3%) has presented new growth targets until 2030 and aims to further expand its biosimilar business. Oerlikon (+0.8%) has also announced new medium-term targets, which UBS views positively.
