FTSE 100 fell 0.4% to 7,586 after a long Easter weekend with pharma and retail shares dragging the index down leaving “little to excite investors” according to Russ Mould, Investment Director, AJ Bell.
Commodity stocks provided some support for the index despite Brent crude falling 1% to $112 a barrel on Tuesday, shaking off concerns of disruption at production facilities in Libya.
Shell and BP shares gained 1.8% to 2,231p and 1.4% to 404p, respectively, as oil remains above the $110 mark.
JPMorgan has also raised Shell and BP’s price target to 2,850p and 500p respectively.
Mining Stocks
Mining and oil shares reaped the benefits of a rotation to shares that will thrive in an inflationary environment.
Mining companies such as Antofagasta, Glencore, Endeavour Mining, Anglo American and Fresnillo shares all gained on the FTSE 100 on Tuesday.
Antofagasta shares lifted 1.4% to 1,700p whilst Ferguson increased 1.5% to 10,170p followed by Glencore gaining 1% to 532p.
Endeavour Mining, Anglo American and Fresnillo shares increased between 0.3%-0.7% to 2,047p, 4,198p, and 806p respectively.
Rolls-Royce shares gained nearly 2% to 95p despite JPMorgan cutting the group’s price target by nearly a half from 140p to 75p.
Rolls-Royce Chairman, Paul Stein told Reuters that the group is likely to receive UK regulatory approval by mid-2024 and generate grid power by 2029, on Tuesday.
Tesco shares were amongst the risers as the supermarket store gained 1.4% to 269p after Berenberg gave it a buy recommendation while reducing the price target to 320p from 327p.
Amongst FTSE 100 losers are Reckitt Benckiser shares which have been tumbling 4% to 5,831p and Intertek Group with shares trading down 3.3% to 4,913p.
Scottish Mortgage Investment Trust lost 3% as US tech stock trading negatively in the pre-market.
ITV shares fell 3% to 74p after Berenberg cuts ITV to a sell recommendation from a hold recommendation with a revised price target cut by half to 64p.
Pharmaceutical Stocks
GlaxoSmithKline dropped 1.5% to 1,746p despite the announcement of the US FDA accepting the company’s application for the review of daprodustat.
Daprodustat is used on patients for the treatment of anaemia of chronic kidney disease.
GSK described the FDA review acceptance as a major milestone after winning regulatory submission acceptance by the European Medicines Agency and the approval of Duvroq, the same drug under a different name, in Japan.
AstraZeneca announced the “priority review” from the FDA for lung cancer antibody drug conjugate Enhertu on Tuesday morning.
Enhertu is developed jointly with Tokyo-based Daiichi Sankyo and AstraZeneca to focus on tumours with mutations of the growth-promoting protein HER2. The conjugate showed a 54.9% tumour response rate.
AstraZeneca shares were trading down 1% to 10,437p despite the news of the priority review of Enhertu.
Pearson shares decreased 1% to 764p after the education publisher announced that its decade old online learning partnership with Arizona State University will come to an end in 2023.
Pearson said the contract expiration will have a minor earnings impact in 2022 and 2023, and that its financial projection for 2022 has not changed.
Prudential shares dropped 1% to 1,057p despite SocGen raising Prudential’s recommendation to buy from hold as it increased its price target to 1,375p from 1,450p.
Growth Forecasts
In other news, the World Bank has cut its growth forecast for 2022 from 4.1% to 3.2% due to increased commodity price pressures as a result of the Russia-Ukraine war.
The pandemic is making a comeback in China with increasing covid cases and city wide lockdowns which has led to March retail sales performing below expectations. However, Q1 2022 GDP growth was 4.8% ahead of expectations for the country.
The IMF’s latest economic forecasts are due at 2pm today which is likely to cause turmoil in the markets.