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(Sharecast News) - Drug companies were a downer on Monday on concerns about the effect for the industry of US political consensus over lowering prices, while housebuilders led in early trade but subsided fairly steeply as the day progressed.
The pharmaceuticals sector was down for the second session in a row after the US Democratic party unveiled three new bills aimed at lowering drug pricing: one that would peg prices to the median of a basket of other countries, another to refine the Medicare system and the third to allow US re-importation from Canada and other OECD markets.
"With drug pricing high on both President Trump's and the newly energized Democrats' agendas, these proposals have the potential to be the start of a reform that both could agree on," said Credit Suisse's pharma team. However, while the analysts said the Democrats' proposals are probably a step too far for Republicans, "clearly this topic is not going to go away".
Assuming price cuts of 10-25% over different programs, AstraZeneca looks the most exposed, CS said, but this reflects its current low profitability.
AZN shares were down 3.3%, while GlaxoSmithKline was down 2.4%, Hikma down 3.2% and Invidior down 3.1%. Dechra and BTG remained positive.
Housebuilders were in the red by the afternoon, having earlier been the leading light.
Initially the sector contained some of London's standout gainers, such as Berkeley, Persimmon, Taylor Wimpey and Barratt Developments. Sparking the gains was a note from JPMorgan Cazenove where analysts upped their stance on the UK sector to 'overweight' from 'underweight', after strategists said their caution on UK sectors, also including real estate, banks and retailers had mostly evaporated, saying they now believe it is time to "selectively re-enter" these areas.
While the political backdrop is "likely to remain volatile", the strategists see the probability of a no-deal Brexit having "sufficiently reduced" and, with the bank's economists expecting UK growth momentum to firm up and equity valuations having significantly underperformed over the past few years, they believe "the risk-reward for the UK domestic plays has improved", with many strong balance sheets and highly attractive dividend yields.
Top performing sectors so far today
Industrial Metals & Mining 4,609.16 +0.93%
Real Estate Investment Trusts 2,730.71 +0.30%
Food & Drug Retailers 3,667.50 +0.25%
General Industrials 5,355.18 +0.16%
Technology Hardware & Equipment 966.97 +0.16%
Bottom performing sectors so far today
Pharmaceuticals & Biotechnology 13,950.75 -2.82%
Oil Equipment, Services & Distribution 11,814.38 -2.38%
Automobiles & Parts 6,794.77 -2.16%
Software & Computer Services 1,787.78 -1.93%
Mobile Telecommunications 3,332.44 -1.88%
FTSE 100 (UKX) 6,870.99 -0.68%
FTSE 250 (MCX) 18,367.26 -0.94%
techMARK (TASX) 3,337.32 -1.64%
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 229.90p 1.86%
Land Securities Group (LAND) 848.60p 1.85%
Ocado Group (OCDO) 876.20p 1.74%
Coca-Cola HBC AG (CDI) (CCH) 2,541.00p 1.28%
Barclays (BARC) 159.16p 1.23%
Evraz (EVR) 489.50p 1.12%
London Stock Exchange Group (LSE) 4,368.00p 1.04%
easyJet (EZJ) 1,177.00p 1.03%
WPP (WPP) 888.00p 0.98%
Legal & General Group (LGEN) 245.30p 0.78%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 6,265.00p -4.06%
AstraZeneca (AZN) 5,528.10p -3.22%
GVC Holdings (GVC) 696.50p -3.20%
Pearson (PSON) 998.40p -2.83%
Sage Group (SGE) 592.20p -2.60%
Next (NXT) 4,636.00p -2.54%
GlaxoSmithKline (GSK) 1,490.60p -2.27%
Wood Group (John) (WG.) 574.80p -2.24%
Intertek Group (ITRK) 4,939.00p -1.97%
Antofagasta (ANTO) 820.60p -1.87%
FTSE 250 - Risers
JD Sports Fashion (JD.) 427.60p 7.93%
Stobart Group Ltd. (STOB) 166.40p 3.48%
Just Group (JUST) 98.75p 3.35%
Intu Properties (INTU) 112.57p 2.57%
Ferrexpo (FXPO) 208.20p 2.06%
Civitas Social Housing (CSH) 105.00p 1.94%
RPC Group (RPC) 689.60p 1.68%
Renishaw (RSW) 4,142.00p 1.57%
EI Group (EIG) 202.50p 1.55%
Dechra Pharmaceuticals (DPH) 2,312.00p 1.31%
FTSE 250 - Fallers
Premier Oil (PMO) 73.40p -7.61%
Pagegroup (PAGE) 431.80p -7.14%
Sanne Group (SNN) 533.00p -6.00%
Computacenter (CCC) 1,010.00p -5.61%
Countryside Properties (CSP) 314.20p -4.79%
Vivo Energy (VVO) 128.00p -4.31%
Hays (HAS) 141.00p -4.21%
OneSavings Bank (OSB) 364.59p -3.95%
Softcat (SCT) 656.00p -3.53%
Dixons Carphone (DC.) 127.15p -3.53%
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