London midday: Clinton remarks send pharmaceutical shares, equities lower
UK equities were dragged lower by pharmaceutical shares on Thursday following remarks from US presidential candidate Hillary Clinton on cutting prices of medication.
Clinton joined senators Susan Collins and Claire McCaskill in highlighting US-based Mylan's 480% hike in the price of its EpiPen epinephrine product since the company acquired it in 2007.
Sending signals about the potential direction of drug policy if she wins the presidential race, Clinton called on Mylan to drop the price of EpiPen, which has leapt from $100 for a two-pack in 2007 to around $600 today.
Her comments on Mylan hit shares of sector peers including FTSE 100 listed drug makers Hikma Pharmaceuticals, Shire and AstraZeneca.
Analyst Mike van Dulken at Accendo Markets said Clinton's comments serve to “strike fear into the hearts of healthcare groups and their investors everywhere”.
“As always, the industry remains between a rock and a hard place, treading the fine line between balancing the costs of clinical success (and failure) with the economic laws of supply and demand, all the while trying (often in vain) to satisfy demanding stakeholders without appearing to view the sick as merely a commercial opportunity."
Meanwhile, investors are also exercising caution ahead of the Federal Reserve’s annual conference in Jackson Hole on Friday. The market is hoping Fed Chair Janet Yellen will offer hints on the timing of the next interest rate hike in her speech at the event.
“This event has often been used to warn about upcoming policy changes and whether that is the next hike or a more dovish Fed, we’ll have to wait and see,” said Craig Erlam, chief market analyst at Oanda.
“After all the build up to the event, I wouldn’t be surprised if Yellen once again keeps her cards very close to her chest and the whole things becomes something of an anti-climax.”
In economic data, UK gross mortgage lending fell in July as house purchase activity slowed in the aftermath of Britain’s vote to leave the European Union. The Council of Mortgage Lenders said gross mortgage lending dropped 0.9% year-on-year and 0.1% month-on-month in July to £21.4bn compared to £21.5bn in June.
Elsewhere, German business confidence unexpectedly deteriorated in August, according to a widely-followed survey. The Ifo Institute’s business climate index fell to 106.2 from 108.3 in July, missing expectations for a reading of 108.5.
Still to come, US durable goods orders and initial jobless claims at 1330 BST followed by Markit’s US services purchasing managers’ index at 1445 BST.
In corporate news, building materials group CRH was top of the leader-board as it raised its half year dividend after making more progress with its deleveraging and reporting the early stages of an economic recovery in Europe.
ITV rallied after withdrawing its proposed acquisition of Entertainment One, refusing to up its offer for the Peppa Pig owner after its initial bid was rejected, potentially leaving the door open for rumoured private equity bidder KKR. Entertainment One’s shares slumped on the news.
Challenger banks Aldermore and Shawbrook got a boost as Bank of America Merrill Lynch lifted its recommendations on the stocks to ‘buy’ from ‘neutral’.
Just Eat shares were under the cosh as Barclays downgraded the stock to ‘equal weight’ from ‘overweight’ and raised its target price to 630p from 550p. Barclays said it has upgraded its estimates and price target to reflect its strong first half results but believes the outperformance of the shares is not enough to keep its ‘overweight’ rating.
Market Movers
FTSE 100 (UKX) 6,814.51 -0.31%
FTSE 250 (MCX) 17,861.94 -0.85%
techMARK (TASX) 3,466.34 -0.97%
FTSE 100 - Risers
CRH (CRH) 2,558.00p 3.60%
Marks & Spencer Group (MKS) 344.90p 2.04%
ITV (ITV) 205.10p 1.64%
Sky (SKY) 871.00p 1.40%
United Utilities Group (UU.) 980.00p 1.14%
Imperial Brands (IMB) 4,050.00p 1.10%
Severn Trent (SVT) 2,416.00p 0.96%
WPP (WPP) 1,797.00p 0.96%
National Grid (NG.) 1,072.50p 0.85%
Unilever (ULVR) 3,554.00p 0.78%
FTSE 100 - Fallers
Shire Plc (SHP) 4,814.00p -4.20%
Glencore (GLEN) 176.75p -3.94%
Hikma Pharmaceuticals (HIK) 2,143.00p -3.82%
Dixons Carphone (DC.) 374.20p -3.31%
Taylor Wimpey (TW.) 163.30p -3.09%
Hammerson (HMSO) 573.00p -2.96%
Persimmon (PSN) 1,873.00p -1.99%
AstraZeneca (AZN) 4,994.00p -1.69%
Anglo American (AAL) 835.10p -1.59%
Prudential (PRU) 1,358.50p -1.56%
FTSE 250 - Risers
Shawbrook Group (SHAW) 222.10p 8.71%
John Laing Group (JLG) 247.50p 4.74%
Aldermore Group (ALD) 153.60p 4.49%
Playtech (PTEC) 937.50p 4.22%
OneSavings Bank (OSB) 286.50p 3.32%
Smurfit Kappa Group (SKG) 1,875.00p 2.63%
Spire Healthcare Group (SPI) 351.40p 2.45%
Investec (INVP) 475.90p 2.26%
Essentra (ESNT) 523.00p 2.15%
Ibstock (IBST) 178.20p 1.83%
FTSE 250 - Fallers
Entertainment One Limited (ETO) 218.10p -13.04%
Hochschild Mining (HOC) 257.10p -9.47%
Allied Minds (ALM) 383.30p -6.28%
Just Eat (JE.) 540.50p -5.01%
Carillion (CLLN) 284.20p -4.05%
BTG (BTG) 610.50p -3.63%
Acacia Mining (ACA) 525.50p -3.31%
Restaurant Group (RTN) 404.50p -3.11%
Indivior (INDV) 310.10p -2.97%
Marshalls (MSLH) 305.60p -2.95%