FTSE 100 slips as healthcare giants overshadow Fed-driven rally

A man walks through the lobby of the London Stock Exchange. — Reuters pic
A man walks through the lobby of the London Stock Exchange. — Reuters pic

LONDON, July 12 ― London's main index skidded for the sixth straight session yesterday as investors sold off healthcare stocks after Washington withdrew a rebate rule aimed at lowering drug prices, and a Fed-fuelled rally fizzled out.

The FTSE 100 shed 0.3 per cent, while the mid-cap FTSE 250 capitalised on a rise in sterling to add 0.1 per cent.

The US government scrapped one of its most ambitious proposals for lowering prescription medicine prices, backing down from a policy that would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.

“Overall, we view this outcome as a modest negative for the major pharmaceutical group,” JP Morgan analysts wrote, adding that the move had removed a “potential positive catalyst” for the sector.

Pharmaceutical heavyweight AstraZeneca was by far the biggest drag on the blue-chip index, while peer GlaxoSmithKline also fell.

The Trump administration's move wiped out gains the market had posted earlier, as it cheered dovish comments from the US central bank that reinforced bets of an interest rate cut and lifted broader sentiment.

Losses were stemmed by shares of homebuilders, which enjoyed their best day in nearly a month after a survey revealed the housing market had shown tentative signs of recovery in June.

Barratt, Britain's biggest housebuilder, surged 5.2 per cent on its best day in more than eight months.

Reckitt Benckiser added 2.4 per cent after it agreed to pay up to US$1.4 billion (RM5.76 billion) to resolve all US federal investigations in connection with the sales and marketing of Suboxone Film by its former unit Indivior.

“With this settlement, management draws a line under an issue that would, at best, have resulted in additional cost/distraction/uncertainty and could, at worst, have led to much more costly and protracted legal proceedings,” Deutsche Bank analysts said.

Indivior soared as much as 41 per cent after it raised its annual profit and revenue forecast in a separate statement as Suboxone lost market share at a slower pace than expected.

The small-cap drugmaker's stock pared gains after Washington's move to kill the drug rebate rule, and ended 7 per cent higher.

The pound firmed after the Fed's indications of an interest rate cut weakened the dollar and helped the mid-cap index outperform the main bourse.

Diploma was the stand out mid-cap gainer after an earnings-accretive acquisition of fluid sealing products supplier Virginia Sealing Products.

The world's oldest tour operator, Thomas Cook, climbed more than 10 per cent after peer and Jet2 owner Dart Group reported higher annual earnings as Britons booked more holidays. Dart shares were 4.5 per cent higher. ― Reuters

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