As the benchmark index suffered its worst session for two-and-a-half years, GlaxoSmithKline (GSK) managed to stay fairly healthy yesterday thanks to an apparent setback suffered by one of its rivals.
On a day when no blue-chip stocks finished ahead, the pharma giant's relatively minor fall meant it ended up as one of the top performers. As well as being helped by risk-averse investors preferring defensive stocks, GSK also received a boost from raised hopes over the prospects for its Advair drug.
There have been concerns the group's major asthma product could be knocked by generic versions being produced, but Goldman Sachs said it now appeared likely a rival drug by Sandoz would be delayed.
As a result, scribblers from the broker said they expected "no significant generic competition to Advair in Europe through to 2014", prompting them to raise their sales expectations. The analysts also upgraded GSK's rating to "neutral" and removed the company from its "sell list", as the group fell just 18.5p to 1,311.5p, meaning it has still risen nearly 9 per cent since last month.
With the US Fed's introduction of "Operation Twist" on Wednesday accompanied by a surprisingly downbeat assessment on the country's economic situation, traders watched as the FTSE 100 spent the morning steadily sliding. "It's like Chinese water torture," moaned one, and despite stabilising in the afternoon, by the bell it was still 246.8 points behind at 5,041.61.
Even though stocks on the top-tier index had £64bn wiped off their value, City voices were nonetheless warning there could be further moves lower. "The feeling is that leaders in Europe and the US are papering over the cracks and they're not actually dealing with the underlying issues," said Westhouse Securities' Martin Dobson.
A series of troubling economic data only added to the doom and gloom, with figures from China showing a contraction in the country's manufacturing for the third straight month. This hit the miners particularly badly, leaving Vedanta Resources in last place after it plummeted 171p to 1,117p while Antofagasta and Kazakhmys dropped 141.5p to 972.5p and 119.5p to 846.5p respectively.
It also meant things were looking ugly for Burberry, as the luxury brand – whose London Fashion Week show on Monday was widely applauded – slipped back 9.81 per cent to 1,361p. The group has actually seen its share price rise by nearly two-thirds over the past year, thanks in part to its growing popularity in China.
The banks were caught in the dramatic sell-off, with Lloyds Banking Group retreating 3.65p to 32.51p, while Barclays (down 14.4p to 138.85p) and Royal Bank of Scotland (down 1.33p to 22.05p) were not far behind.
Meanwhile Inmarsat, which has been the subject of vague bid speculation in recent weeks, announced its chief technical officer Eugene Jilg had added to his stake in the company, although, despite the vote of confidence, the mobile satellite group still jumped down 27.1p to 463.1p.
There were at least some risers on the FTSE 250, where easyJet managed to soar 8.97 per cent to 340p. The company increased its profit expectations for the year, saying more and more corporate passengers were choosing to travel with the budget airline, as it also revealed it would return around £190m to shareholders.
Things were not looking so sunny for Tui Travel, however. The tour operator shifted down 6.4p to 148.5p despite saying it would match its full-year forecast, as Numis downgraded its advice to "hold" from "add".
Bearish comments from the broker were also weighing on Misys after its analyst David Toms cut his estimates for the software group. Citing "an increasingly challenging market for financial services IT", he added the company was now "more vulnerable to a slowdown", prompting it to slump 21.1p to 224p.
Investors in Betfair were being dealt a losing hand, with the online gaming group pegged back 60p to 723p after its chairman Ed Wray appeared to suggest he could be the latest in a run of executives to leave.
Down on the Alternative Investment Market, Goldman Sachs was shining the takeover spotlight on a number of the smaller oil and gas groups, claiming the recent divergence of stocks in the sector and the black gold's price meant a number of the industry's bigger names could be tempted to make acquisitions.
The broker picked out a number of explorers it said were likely to attract attention, including Rockhopper, although the Falkland Islands-focused group was knocked back 14.25p to 195.25p. Also on its list of potential targets was Bowleven, but it shifted down 7.25p to 101.25p.
Desire Petroleum, meanwhile, had its advice downgraded to "sell" and the company was driven back 1p to 18p, with speculation continuing to spread that it was nearing a possible fund raising.Reuse content