Focus on Micron and US non-farm payrolls

This will be the last weekly newsletter that Carlsquare produces on behalf of Vontobel. We would like to thank Vontobel and our readers for the opportunity to share our trading insights since we began producing this newsletter in 2019.

Eli Lilly and Company (also referred to here as “Lilly”) is among the largest pharmaceutical companies by market capitalisation globally. In the first six months of 2026, the company reported revenue of approximately $23 billion, reflecting growth compared with the corresponding period of the previous year, supported primarily by sales of Mounjaro and Zepbound (Insert source). Although Foundayo, the obesity pill, had a slower launch than its main rival, the oral drug Wegovy (marketed by Novo), the obesity franchise has strengthened its position overall and gained market share in the lucrative weight-loss drug market. 

Over the past five years, Lilly’s share has outperformed the US pharmaceuticals sector (as represented by the 'IHE' ETF in the graph below). However, in 2026, its performance will lag that of the overall sector, with an expected increase of around 10 per cent compared to approximately 20 per cent for the sector as a whole. Based on the company's current guidance of 'non-GAAP EPS in the range of $35.50 to $36.50', the price-earnings ratio for the current year (2026E) is 32.5–33.4x, compared to ~32.5x a year ago. Therefore, earnings growth is keeping up with the solid share price performance. The valuation remains markedly higher than that of most other 'Big Pharma' companies. This premium valuation, driven by strong growth prospects relative to the overall sector, arguably represents a potential downside risk in the event of earnings or outlook disappointments. However, there can be no assurance that these expectations will be met, and changes in earnings, company guidance, market sentiment or broader market conditions could have an impact on the share price. Investors should be aware that shares may fluctuate in value and may lose value over time.

The next test will be whether Q3 earnings on 29 October show that demand and the launch of Foundayo are increasing quickly enough to boost confidence in the outlook. In the short term, presentations at the 2026 EASD  scientific conference could also strengthen the argument for a wider cardiometabolic portfolio. The meeting runs from 28 September to 2 October. On 30 September, Lilly will present Phase 2 results for eloraTZP, a combination of the drug candidates eloralintide and tirzepatide (Zepbound).

Retatrutide, Eli Lilly’s most advanced obesity drug candidate  and an investigational triple-hormone receptor peptide, is a key milestone in the company's pipeline, with a target date of early 2027. According to Lilly, the clinical data package is complete and ready to support applications for obesity, obstructive sleep apnoea, and knee osteoarthritis pain. The company plans to submit an application for market approval in the US in Q1 2027. A timely filing would strengthen Lilly's prospects of extending its lead into the next generation of obesity medicines.

Despite global uncertainty, PMI data for both the Eurozone and the US suggest an ongoing improvement in the economic outlook during the third quarter of 2026. The PMI average 52.5stood at  in the Eurozone (up from 51.7 inQ2) and at 54.6 in the US (up from 53.9). The services sector, which largely reflects private consumption, has continued to improve this autumn. In the Eurozone, the index level reached 53.0 in September, marking the highest reading since April 2024. Leading indicators suggest positive prospects for corporate earnings in the short term. The PMI figures in the US reinforced expectations of a further key interest rate hike by the Fed in October.

Following weak demand at the 23 September auction of 5-year US Treasury notes, the yield on the five-year note settled at its highest level since 2007. Meanwhile, the yield on the 30-year Treasury note reached 5.4%, and the yield on the 10-year note rose to 5.11%. On 23 September, the likelihood of the Federal Reserve raising interest rates again at their next announcement on 28 October increased from 55% to almost 70%.

Calendar

Micron Technology, one of the world’s largest memory companies, will report its earnings later today (Wednesday 30 September). The macroeconomic news cycle begins with data on Japan’s industrial production and retail sales in August. Shortly afterwards, China's Purchasing Managers' Index (PMI) for September will be released. A few hours later, data will be released on Finland’s GDP for August, Denmark’s GDP for the second quarter and Sweden’s retail sales, as well as the weekly indicator of household consumption for August. The National Institute of Economic Research (NIESR) will present a forecast of the Swedish economic outlook. Next comes the UK's GDP for the second quarter. Germany will publish data on retail sales and import prices for August. France, Italy and Germany will report consumer price index (CPI) figures for September. The US is expected to release September's ADP private-sector employment data, as well as the final figures for second-quarter GDP, personal consumption, PCE inflation, the goods trade balance and wholesale inventories. The US is also expected to release the Chicago PMI for September, as well as weekly oil inventory statistics from the Department of Energy.

On Thursday 1 October, interim reports are expected interim reports from the Danish company Stolt-Nielsen, and from the US companies Nike and Accenture. Stock markets in mainland China will be closed on Thursday. Japan will publish the results of the Tankan survey for the manufacturing sector in the third quarter. Thursday will otherwise be dominated by the release of the September Manufacturing Purchasing Managers' Indexes (PMIs) from Japan, India, Russia, Sweden, Spain, Italy, France, Germany and the US.ill. Statistics on job cuts from Challenger and weekly jobless claims data from the US are also expected.

On Friday 2 October, the Eurozone Consumer Price Index for September will be released. Then, the US nonfarm payroll report will be expected. Consensus expectations are for 98 thousand new jobs to have been created in September. See the five-year chart of forecasts and actual outcomes below. US factory orders for August are also expected on Friday.

In the US, equities have held up relatively well against increasing yields. As can be seen in the chart below, the S&P 500 is still trading above the 20-day moving average (MA20). However, a downward break opens the way to levels around 7,600, followed by the MA100, which is currently at 7,556. If yields continue to rise, a specific trigger will likely be needed to improve the outlook for the previous high to be tested.

The tech-heavy Nasdaq-100 is trading above the EMA9 level and the 30,245 level, which is serving as the first level of support. The next step could be a break on the downside and a fall to the MA20, which is currently at 29,707.

At the time of writing, the Swedish OMXS30 index is being supported by the 20-day moving average (MA20) and the rising 50-day moving average (MA50). A fall below 3,274 and 3,225 is a possibility.

In Germany, the DAX is under pressure, trading below the falling MA20. The MA100, along with the 25,400 level, serves as support. If this level is broken, the next level to watch is around 25,000.

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence