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- [00:02]
A
Good morning and welcome to Julius Baer's Moving Markets podcast. I'm your host, Roman Canciani. Today is Tuesday 28th July. One of the most exciting areas of health research today is the study of the gut microbiome and its impact on how we age and stay healthy. Later in the podcast, Dr. Damian Ng from our Next generation research team joins me to discuss the why gut health is attracting growing attention from both scientists and investors too. But first, let's turn to the latest developments in financial markets with Helen Frear from our product and investment content team. Good morning, Helen.
- [00:46]
B
Good morning, Roman.
- [00:48]
A
Well, I think we need to start with the situation in the Middle east again after President Trump suspended his latest campaign of airstrikes against Iran over the weekend. What's the latest here, Helen?
- [01:00]
B
Well, yes, so as you said, Roman, Trump paused airstrikes over the weekend. But then there were reports yesterday of drone attacks originating from Iran backed groups targeting Saudi Arabia, Jordan and Iraq. Trump then said yesterday that the US Was having good talks with Iran and there was a chance of a deal. But yes, I think we can all feel the potential for further escalation is undeniable.
- [01:26]
A
Okay, so a pretty fragile situation. How did financial markets react initially?
- [01:31]
B
The pause in hostilities triggered a relief rally. Oil prices plummeted. Brent crude fell nearly 9% yesterday, settling at its lowest level in over a week. And actually, as the pause in fighting has held, oil prices have extended their losses this morning. But I guess the drone attacks yesterday then served as a reminder of the underlying instability. So that sort of tempered the enthusia enthusiasm in markets, meaning that equity markets in the US were mixed. The Dow Jones closed up 0.5%, the S&P 500 was basically flat and the Nasdaq lost 0.2%, weighed down by the fall in semiconductor stocks. So there's a bit of nervousness around valuations in the tech space and investors are awaiting earnings reports from some of the major players like Microsoft, Amazon and Apple this week. Also notable yesterday was Nvidia, which fel 5%.
- [02:30]
A
What was the story with Nvidia then?
- [02:32]
B
Yes, so Nvidia is reportedly set to offer roughly $250 billion in financing guarantees to OpenAI for a colossal new data center project in Ohio aiming to secure future demand for its chips. And it's estimated that this will cost more than $500 billion overall. Nvidia also lost its status as having the largest market capitalization yesterday to Apple with Nvidia shares losing 5%. Mentioned while Apple closed at a record high.
- [03:04]
A
We saw Some encouraging economic data released yesterday regarding US Capital goods orders. Could you elaborate on this for us?
- [03:13]
B
Yes. So that was a bright spot. Core capital goods orders, which are a key indicator of business investment, rose substantially in June, which suggests that businesses are continuing to invest.
- [03:26]
A
And what about earlier in the day in Europe? What were the highlights in trading day here in Europe?
- [03:32]
B
The Stoxx 600 was broadly flat, with losses in technology offsetting gains elsewhere. The news that China had begun producing its own advanced chipmaking equipment that has long been dominated by ASML really hit ASML shares yesterday. They closed down 8.4%. Travel and leisure stocks were some of the biggest winners of the day because lower oil prices obviously improves the outlook for airlines. Of the major European indices, the J German DAX was the best performer, closing up just over 1%. And this could be partly due to the IFO Business Climate Index, where data came out yesterday showing a third consecutive monthly increase in German business sentiment.
- [04:19]
A
Let's talk about fixed income. What's been happening with bond yields in reaction to the latest geopolitical news?
- [04:26]
B
Well, lower oil prices eased some inflation concerns and this meant bond yields dipped yesterday, but they have been trending upwards. Overall, concerns about inflation fueled by potentially higher oil prices are driving expectations that the Federal Reserve might need to tighten monetary policy. So all eyes will be on the outcome of the Fed meeting tomorrow. Fed funds futures traders are currently pricing in a 38% chance of a hike tomorrow. That's up from about 16% a week ago.
- [05:00]
A
And what's the story in Asia this morning? I think markets there are also feeling the uncertainty in this specific for earnings results, right?
- [05:08]
B
Yes, I think that is clear. Semiconductor stocks in Asia are sliding today, mirroring the weakness we saw in the US with the exception of Australian and Indian equities this morning. It's a sea of red in Asian markets. South Korea's Kospi was down almost 11% when I last looked, dragged down by some of the index heavyweights. Samsung, which is down about 13%, and SK Hynix, which has lost almost 14%. There are also some pretty big falls among the semiconductor stocks in Japan. So the Nikkei is down more than 4%.
- [05:45]
A
Finally, looking ahead, what key events are coming up that we should be looking out for?
- [05:50]
B
Well, as I talked about briefly before, tomorrow's Fed meeting is going to be key. Obviously the rate decision, but also the messaging. The PCE data release follows then on Thursday, and that will also be significant. Beyond that, earnings season is in full swing. Around a third of S&P 500 companies are due to report quarterly results this week, including major tech companies Meta and Microsoft tomorrow, and then Amazon and Apple on Thursday. And we should also keep an eye on the bank of England and bank of Japan announcements later in the week. And it seems investors are bracing themselves for the Fed's rate decision and the upcoming earnings futures in both the US And Europe were in the red when I looked a few minutes ago. That's it from me. Back to you, Roman.
- [06:40]
A
Thank you very much, Herm, for that comprehensive market update. When we talk about financial markets in our daily wraps, we often focus on technology, latest data or the economy. But today we want to dive a bit deeper, namely into the world of health science. The growing understanding of the gut microbiome and its impact on healthy aging and immunity and even brain function. That may sound a bit niche for investors, but it isn't. It's a topic that is generating excitement among researchers and creating new opportunities across the healthcare sector. Thus, I'm delighted to bring in Damien Ng from our Next Generation Research. Good morning, Damien.
- [07:24]
C
Good morning, Homan.
- [07:26]
A
So, healthy aging has traditionally been associated with genetics, exercise and nutrition. Why are researchers now paying so much attention to gut health as another important factor?
- [07:38]
C
Right. You know, for many years, healthy aging was primarily linked to factors such as genetics, physical activity, and diet. Those pillars remained essential. But scientists are increasingly recognizing that the gut microbiome may also play a significant role in how we age. The gut microbiome consists of trillions of microorganisms that live in our digestive system and interact with many functions throughout the body. Recent research from the University of Hawaii found that differences in gut bacteria explained roughly 15% of the variation in how quickly people's bodies change over time. Some bacterial species were associated with slower biological aging, while others were linked to a faster pace of decline. What makes these findings particularly interesting is that unlike genetics, the microbiome can be influenced by by lifestyle choices, diet, exercise, sleep, stress management and even social environmental factors can affect the health of the microbiome. This means that there may be practical ways to support healthier aging by improving gut health. As researchers learn more about the relationship between the microbiome and aging, many now view gut health as an important contributor to long term resilience, healthspan and quality of life.
- [09:05]
A
Many people still think of the gut as simply part of the digestive system. How does the gut microbiome influence wider aspects of our health and well being?
- [09:17]
C
Now, one of the most fascinating discoveries in recent years is that the microbiome affects far more than digestion. In fact, scientists often describe the gut as one of the body's most influential systems because of its close connection to metabolism, immunity, and even brain function. Researchers frequently refer to the relationship between the gut and the brain as the gut brain axis. Through a complex network of biochemical sickness, the microbiome can influence appetite, food cravings, inflammation, energy balance, and aspects of mood and cognitive function. So this growing understanding is opening up new opportunity possibilities in healthcare. Instead of simply treating disease once it appears, researchers are exploring ways to improve health outcomes through microbiome focused interventions, preventive nutrition, and personalized approaches to well being.
- [10:15]
A
And how do current obesity trends around the world reinforce the importance of gut health and preventive healthcare?
- [10:23]
C
Right now, according to the World Health Organization, obesity has become one of the most significant public health challenges of our time. In 20, around 2.5 billion adults were overweight, including approximately 819 million people living with obesity. In total, more than 1 billion people worldwide are now living with obesity, and adult obesity rates have more than doubled since 1990. What is particularly concerning is that obesity is no longer limited to a handful of countries or regions. It is affecting populations across both developed emerging markets and is increasingly being seen in younger age groups. Groups, even countries traditionally associated with healthy eating habits are facing challenges. In parts of southern Italy, for example, childhood overweight and obesity rates have reason significantly. As dietary patterns have shifted away from more traditional Mediterranean eating habits, so many researchers believe that processed foods is a major contributor. These foods often contain high levels of sugar, refined carbohydrates, unhealthy fats, and addictives that may negatively affect the microbiome. Because diet is one of the strongest influences on gut bacteria, the obesity epidemic highlights why prevention and healthy lifestyle habits are becoming such important priorities.
- [11:50]
A
Why do experts increasingly argue that prevention needs to begin in childhood rather than later in adulthood?
- [11:58]
C
Yes, you know, one of the most important lessons from microbiome research is that prevention cannot start too late. The microbiome begins developing early in life and continues evolving throughout childhood and adolescence. A child's diet, physical activity levels, sleep patterns, stress, exposure, and environment all influence how the microbiome develops. So the urgency of prevention becomes clearer when we look at the broader public health picture. So According to the WHO, more than 390 million children and adolescents age 5 to 19 were overweight in 2022, including about 160 million living with obesity. So at the same time, healthcare systems around the world are facing growing burdens from obesity, type 2 diabetes, cardiovascular diseases, and dementia. These health conditions account for a large share of healthcare spending and often developed gradually over many years. So by encouraging healthy habits early and supporting a healthy microbiome from childhood, there is potential to reduce the risk of chronic disease later in life. That approach benefits not only individuals and families, but also healthcare systems and society as a whole.
- [13:20]
A
Now, from an investment perspective, what opportunities does the growing focus on prevention and gut health create with the future Health theme?
- [13:29]
C
The increasing emphasis on prevention represents one of the most important shifts taking place across healthcare today. Historically, healthcare spending has focused largely on diagnosing and treating disease after symptoms appear, but there is growing recognition that preventing illness is often more effective, less costly and better for long term outcomes. As we search into the microbiome, metabolic health and healthy aging continues to advance the opportunity that extends well beyond traditional pharmaceutical companies. Potential beneficiaries could include diagnostic companies that help identify health risks earlier, digital health platforms to support behavior change, nutrition businesses focused on healthier products, and companies developing tools for personalized healthcare. There may also be opportunities in areas such as preventive screening, remote monitoring, healthy aging technologies, and data driven healthcare solutions to help individuals make better lifestyle decisions. Ultimately, businesses that can help people stay healthier for longer while reducing the economic burden of chronic diseases may be well positioned to benefit from this long term structure.
- [14:50]
A
A trend right Many thanks Damien for this very interesting and comprehensive look at one of the most interesting parts in healthcare.
- [14:58]
C
Thank you very much Roman for having me here.
- [15:03]
A
Well, and that brings us to the end of today's episode. Many thanks to Helen and Damien for joining us this morning and thank you for tuning in. If you've enjoyed today's episode and haven't yet subscribed, don't forget to do so. And if you have a moment, please consider leaving us a review on your preferred podcast platform. Be sure to join us again tomorrow Wednesday, when Lucia Ciachulovic will be your host. She'll be speaking with more of our colleagues about what's moving markets. Until then, have a great day and goodbye for now.
- [15:42]
D
The information and opinions expressed in this podcast constitute marketing materials and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.