The market is discounting a longer war

Eli Lilly has established itself as a leader in the lucrative weight-loss drug market. Its flagship products, Mounjaro and Zepbound, have experienced phenomenal growth. In the fourth quarter of 2025, Lilly's revenue surged 43% to $19.3 billion, largely due to strong sales of these two drugs. Consequently, Eli Lilly has swiftly gained market share from Novo Nordisk's Ozempic and Wegovy products.

The most significant near-term catalyst for Eli Lilly's stock is likely the anticipated approval and launch of its oral glucagon-like peptide-1 (GLP-1) drug, orforglipron. The company has submitted orforglipron for regulatory approval in the U.S., Japan, and the EU for the treatment of obesity and type 2 diabetes. The FDA is expected to make a decision in the second quarter of 2026, and some reports suggest that the PDUFA date is April 10, 2026. Phase 3 trials of orforglipron have demonstrated superior glycemic control compared to oral semaglutide in head-to-head trials. Interestingly, while "Wegovy in a pill" has been a very successful launch for Novo Nordisk in the U.S., subscription data so far suggests that it has not yet cannibalized obesity injectables. Instead, the introduction of oral obesity drugs appears to have accelerated market volume growth, at least in the short term. Furthermore, the expansion of Medicare coverage for obesity drugs, expected to begin in July 2026, will increase the number of patients who can access Lilly's products, which could lead to increased revenue.

Based on the company’s current guidance of a "non-GAAP EPS in the range of $33.50 to $35.00," the price-earnings ratio for 2026E is 25 to 26 times, compared to approximately 34 times in March 2025. Although the valuation has decreased, it remains significantly higher than that of most other "Big Pharma" companies. This premium valuation, which is arguably driven by strong growth prospects relative to the sector overall, poses a potential downside risk to the stock if general market turbulence persists.

Since the 80+ percent rally between August 2025 and January 2026, the Eli Lilly share price has fallen by about half. It is currently trading slightly below the MA200 level, at just under $900 per share. This level is a crossroads for Eli Lilly. Will its shares stage a comeback, or will it embark on a negative long-term negative trend? The expected near-term news flow will likely influence its direction.

Over the past month, there has been a strong negative correlation between the stock market and  the oil price. The same applies to market interest rates. We expect this situation to persist until there are clear signs of a decrease in hostilities between the United States and Iran.

On Wednesday, April 1, the macro news feed will focus on March manufacturing PMI reports from Japan, Sweden, Spain, Italy, France, Germany, the Eurozone, the United Kingdom, Brazil, and the United States. Also from the United States are the following: - ADP private employment in March, retail sales in February, business inventories in January, and weekly oil inventories from the Department of Energy.

On Thursday, April 2, Volvo Cars will release its car sales figures for March. In terms of macro reporting, the following are scheduled: the Challenger job cut statistics for March in the United States are scheduled, as well as the February trade balance and the weekly initial jobless claims data.

Good Friday falls on Friday, April 3 this year. It is a holiday in most European countries, as well as in Australia, Canada, Hong Kong, India, Latin America, New Zealand, Singapore, South Africa, and the United States. Some macro figures are scheduled for release this Friday, including the Service Purchasing Managers' Index for March from Japan, China, and the United States. France will publish its industrial production figures for February. The U.S. will release its nonfarm payroll figures for March (see the graph below).

Surging oil prices due to escalating tensions between the U.S. and Iran, as well as disruptions around the Strait of Hormuz, have negatively impacted overall sentiment. As the chart below shows, the S&P 500 closed Monday's session near the 6,340 support level. The next support levels below that are 6,275 and 6,200. Oil prices have since pulled back in response to de-escalation signals of de-escalation, which should relieve some pressure on equities. The first resistance level is around 6,475.

As of Monday’s close, the NASDAQ-100 had fallen 9.1% year-to-date, compared to the S&P 500’s 7.3% decline. This underperformance reflects, in part, the sharp sell-off of semiconductors triggered by Alphabet's compute-efficiency AI research, which forced a devaluation of chip stocks. The index finished near the 22,900-support level, with the next downside levels at 22,400 and 22,000. The first level of resistance sits around 23,585.

In response to de-escalation signals and falling oil prices, the OMXS30 is up 0.4%, though it is trading into resistance near 2,900. Breaking above that level would put the MA100 at 2,944 in play, with the MA20 at 2,979 as the next level.

Meanwhile, the DAX in Germany is trading down 0.3%. The index needs to recover the EMA9 level of 22,732 before the resistance level of 22,825 comes into play. Support sits at 22,200 and 21,700 on the downside.

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