Weight Loss Drugs vs. Fast Food in the Finance Markets

Welcome back to another week in trading. Today, we’re investigating the impact of weight loss drugs on fast food stocks. Yes it’s an actual thing!

Fast food company stock performance

One thing you’ll notice about all of the following stocks is that they’ve suffered a drop over the last 12 months, but picked up of late. The general trend over the last year across all three is level at best.

#1 McDonald’s (MCD)

Price change YoY: -2.46%

In case you didn’t know, McDonald’s is the world’s largest restaurant chain, serving over 69 million customers daily in over 100 countries. McDonald’s has been in business for over 60 years and is one of the most recognisable brands in the world.

Source: Google

#2 Yum! Brands (YUM)

Price change YoY: +3.74%

You might not have heard of Yum! Brands, but it’s actually massive, with over 50,000 restaurants in over 150 countries. You’ve probably heard of its owned-brands, though. The company owns and operates KFC, Taco Bell, and Pizza Hut.

Source: Google

#3 Starbucks (SBUX)

Price change YoY: +11.75%

Starbucks is the world’s largest coffee chain, with over 32,000 stores in over 80 countries. It’s been in business for over 50 years now and employs a whopping 402,000 people.

Source: Google

Weight loss company stock performance

You’ll now see that the stocks in the following pharma companies have been much more consistently positive over the last 12 months.

#1 Novo Nordisk (NOVO-B)

Price change YoY: +62.50%

Novo Nordisk specialises in creating drugs to treat diabetes and other chronic diseases. It’s known for insulin products, such as NovoLog and Tresiba. Novo Nordisk is also a leader in the development of new oral diabetes medications. The company produces the much hyped weight loss drugs Ozempic and Wegovy.

Source: Google

#2 Eli Lilly

Price change YoY: +11.75%

Eli Lilly is a pharmaceutical company that produces insulin drug Humalog. It’s also a leader in developing new diabetes and cancer drugs.

Source: Google

Picking apart the relationship

It’s not too difficult to understand the relationship between these two industries. Firstly, and most obviously, they both compete for the same customers. Secondly, weight-loss drugs are often designed to help suppress appetite, negating the desire to buy fast food — or any food for that matter.

The growing popularity of weight loss drugs is clearly impacting fast food stocks. The charts above show that while fast food stocks are largely on the up over the last year, the rate of this increase is very slow relative to that of the drug companies. Strong performance in the latter will therefore impact that of the former, and it seems to be playing out exactly like that.

Top fundamental events this week

Here’s what’s coming up this week in the markets. Spoiler: Friday looks busy!

Monday

● CAD — Ivey PMI s.a

Tuesday

● CNY — Chinese Balance of Trade

● AUD — RBA Interest Rate Decision

Wednesday

● USD — Fed Chair Powell Speech

Thursday

No major events are scheduled.

Friday

● GBP — Manufacturing Production MoM; Manufacturing Production YoY; GDP MoM; GDP Growth Rate YoY Prel; GDP Growth Rate QoQ Prel;

● EUR — ECB President Lagarde Speech

● USD — University of Michigan Consumer Sentiment Index

Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.

Speak soon!

The Contentworks team