US medtech stocks fall as Trump administration opens import probe

U.S. medtech stocks fell on Thursday after the U.S. Commerce Department opened a probe into imports of medical devices, pressuring shares across the sector.

Analysts said the investigation may weigh on companies with globally sourced supply chains and create a modest overhang for the stocks.

Companies like GE HealthCare, Becton Dickinson, Stryker, Insulet, Intuitive Surgical and ResMed were among the worst performers on the S&P Health Care Equipment index, down between 4% and 11%.

Abbott slipped 1.6% and Medtronic fell 2.3%, while the S&P Health Care Equipment index dropped 2% on the day.

Medtech shares have been volatile this year amid supply chain disruptions, cost inflation and softer demand in some international markets.

The medtech index has seen a modest 2.3% rise this year versus a 12.5% rise in the broader S&P 500 index.

Needham analyst Mike Matson said the probe “creates a new overhang for the already-beleaguered sector, but the actual impact of any new tariffs depends on companies’ ability to pass through the costs to customers.”

Earlier this month, the Secretary of Commerce launched a Section 232 investigation under the Trade Expansion Act of 1962 to assess how imports of personal protective equipment, medical consumables, and medical devices impact national security. The department said it would make recommendations within 270 days.

“We look forward to continuing our work with the Administration...to strengthen our already-robust and uniquely American industry,” said CEO Scott Whitaker of medtech association AdvaMed.

Section 232 allows the President to restrict imports if they are found to “threaten to impair” U.S. national security.

While the list of products covered is broad, “we don’t think it’s right to hit the panic button”, J.P. Morgan analyst Robbie Marcus said in a note.

Shares in healthcare and industrial sectors across Europe also dipped.

Global debt hit a record high of $337.7 trillion at the end of the second quarter, driven by easing global financial conditions, a softer U.S. dollar and a more accommodative stance from major central banks, a quarterly report showed on Thursday.

The Institute of International Finance, a financial services trade group, said that global debt rose over $21 trillion in the first half of the year to $337.7 trillion.

China, France, the United States, Germany, Britain, and Japan recorded the largest increases in debt levels in U.S. dollar terms, though some of that was due to a waning dollar, the IIF found.

The U.S. currency has weakened 9.75% since the start of the year against a basket of major trading partners.

“The scale of this increase was comparable to the surge seen in H2 2020, when pandemic-related policy responses drove an unprecedented buildup in global debt,” the IIF said in its Global Debt Monitor.

Looking at debt-to-GDP ratios - an indicator of the ability to repay debt by comparing to what is being produced - Canada, China, Saudi Arabia and Poland saw the sharpest increases. The ratio declined in Ireland, Japan, and Norway, the report found.

Overall, the global debt-to-output ratio continued to move slowly lower, standing just above 324%. However, in emerging markets the ratio hit 242.4% - a new record after a downward revision on the last report in May.

Total debt in emerging markets rose by $3.4 trillion in the second quarter to a record high of more than $109 trillion.