The FTSE 100 index closed up last night, buoyed by pharmaceuticals that were given a boost from a Morgan Stanley note supporting AstraZeneca.
The UK’s top blue-chip index closed up 0.4 per cent, at 6,420.93 points.
Shire led the pack higher, closing 2.35 per cent up at 4,745p per share, while GlaxoSmithKline ended the session two per cent higher at 1,378p per share. AstraZeneca’s share price rose 1.48 per cent at 4,582.50p.
“AstraZeneca has underperformed dramatically over the past year, but looks set to reap the rewards of heavy investment, at an attractive valuation,” Morgan Stanley said in the note.
GlaxoSmithKline had its target price lifted by the broker, while AstraZeneca was double upgraded to “overweight”.
“Healthcare stocks led gains on the UK benchmark with AstraZeneca, GlaxoSmithKline and Shire three of the four biggest risers after broker upgrades,” said Jasper Lawler, an analyst at CMC Markets.
He added: “UK pharmaceutical stocks sold off in August with concerns over price gauging at US biotechs, but the merger of Pfizer and Allergan has rekindled takeover talk at more attractive price levels. Shire is reportedly preparing a new takeover offer for US rival drugmaker Baxalta.”
Meggitt also fell 3.1 per cent to 375p per share before it was announced it would be exiting the FTSE 100, while Morrisons – also now a confirmed casualty – fell 0.2 per cent to 151p per share.
In the FTSE 250, Pace’s share price rallied 9.25 per cent to 441.8p after the US Department of Justice closed its investigation into Arris’ acquisition of the company. Brewer Greene King’s share price rose 13.09 per cent to 963p, after posting strong financial results.
However, Saga’s share price slumped 4.71 per cent to 202.20p after its largest shareholder sold a 13 per cent stake and Moneysupermarket’s stock slid 4.36 per cent to 314p per share after it was announced founder Simon Nixon is stepping down from the company, having sold off 32m shares in the business.
Tomorrow, markets are looking towards the European Central Bank for the announcement of its interest rate decision and confirmation of the amount of quantitative easing it will bring, in shortly after midday.