FTSE 100 inches lower as healthcare drags; miners rise

By Shashwat Chauhan and Shristi Achar A

(Reuters) -London’s FTSE 100 edged lower on Monday, with AstraZeneca leading falls in healthcare shares, while gains in miners on hopes of policy stimulus in China limited declines.

The blue-chip FTSE 100 lost 0.1%, while the more domestically focussed FTSE 250 midcap index rose 0.5%.

AstraZeneca tanked 8%, recording its worst day since March 2020 as analysts said the benefits from its experimental datopotamab deruxtecan lung cancer drug may not be as pronounced as hoped.

Further weighing on the healthcare sector, Smith+Nephew fell 5.8% as Credit Suisse cut its price target on the medical products maker.

Pharmaceuticals and the medical equipment sector lost 5.4% and 4.7% respectively.

Industrial metal miners advanced 3% as prices of base metals rose, buoyed by improved sentiment. [MET/L]

Metals prices climbed on hopes China would respond with more decisive policy measures to boost its economy after a private sector survey showed that China’s factory activity growth slowed in June.

Also boosting the sub-index, Anglo American advanced 4.3% after the company’s unit De Beers Group and the Botswana government agreed on a new diamond sales deal.

Energy stocks added 2%, with oil prices rallying after top exporters Saudi Arabia and Russia announced supply cuts. [O/R]

The UK’s FTSE 100 posted a quarterly decline in the April to June period after reaching record highs earlier this year, with commodity prices volatile and still-high inflation prompting more monetary policy tightening.

Meanwhile British two-year government bond yields rose to their highest since June 2008 on expectations of higher Bank of England rates.

“As interest rates rise, the market will increasingly fret about the likelihood of the UK economy slipping into negative growth, and this is likely to see earnings valuations lowered,” said Stuart Cole, chief macro economist at Equiti Capital.

A survey showed the pace of decline in Britain’s manufacturing sector steepened in June.

(Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Rashmi Aich and Jan Harvey)