Daily Brief - 17 Apr 2024

Fed stays tough on interest rates to fight inflation

In a recent announcement, Philip Jefferson from the Federal Reserve emphasised the need to keep interest rates high to control ongoing high inflation.

He mentioned that while there has been some progress, challenges like a 2.7% increase in key inflation measures show that prices are still rising too fast. Jefferson believes that combining high interest rates with a strong job market will help bring inflation down to the desired 2%.

For investors, this means adjusting to a period of high rates that could affect stocks and bonds. The Fed aims to provide stability and clear guidance in these uncertain economic times, helping businesses and investors make better plans.

Bain Capital plans Kioxia IPO post financial struggles

Bain Capital is preparing to launch an IPO for Kioxia Holdings to help manage a large $5.8 billion loan repayment due this June. After buying Kioxia, previously known as Toshiba Memory, for $18 billion in 2018, Bain has faced financial hurdles with the company losing money for two consecutive years.

These losses have put Kioxia at risk of not meeting the conditions of their 900 billion yen loan. In response, Kioxia has introduced a restructuring plan that aims to return to profitability by March 2025, targeting earnings of 130 billion yen.

This IPO move is seen as a critical strategy for tech companies in similar financial straits, potentially influencing broader market lending and investment practices.

Johnson & Johnson tops earnings with strong cancer drug sales

Johnson & Johnson has surpassed Wall Street's earnings predictions this quarter, largely thanks to robust sales from its cancer drugs, Darzalex, which made $2.69 billion.

Despite facing biosimilar competition due to a patent expiry, the company successfully maintained robust sales for its psoriasis treatment, Stelara, and skillfully managed market challenges in the U.S. and abroad.

This demonstrates Johnson & Johnson’s skilled management of patent expirations and its strong position in the pharmaceutical market, likely attracting investor attention.