Drugmakers, banks lift FTSE 100; IAG down on weak forecast

Pedestrians leave and enter the London Stock Exchange in London, Britain

London’s FTSE 100 rose on Friday, led by banks and healthcare major Astrazeneca, while British Airways parent IAG fell after flagging a bigger-than-expected annual loss.

The blue-chip FTSE 100 (.FTSE) gained 0.4% in morning trade, with drugmakers Astrazeneca (AZN.L) and GlaxoSmithKline (GSK.L) among the top performers.

The banking sector (.FTNMX301010) rose 0.9% despite UK’s 10-year government bond yields at a one-month low after a surprise decision by the Bank of England on Thursday to hold off on raising interest rates.

The pound extended its decline, down 0.4%, having recorded its worst day in over a year on Thursday, further boosting the export-heavy FTSE 100 index and dollar earner companies like British American Tobacco (BATS.L), Unilever (ULVR.L) and Diageo (DGE.L).

“Consumer stocks have taken the cue from the MPC’s assessment the economy is on a positive trajectory,” said Kunal Sawhney, CEO of Kalkine Media.

“Despite the GDP forecast being revised downward by a percentage point, the demand is likely to sustain, which will help the consumer stocks to continue the momentum gained recently,” he added.

The FTSE 100 rose 1% this week, underperforming the 2% increase in UK’s mid-cap index (.FTMC) and a 1.8% weekly gain in the wider European stock aggregate (.STOXX), bogged down by volatile commodity prices and heavy losses in the banking sector on Thursday following BoE’s rate decision.

The domestically focussed FTSE 250 index (.FTMC) advanced 0.3%, reaching its highest level since September 28 in intraday trading, with financial stocks among the best performers.

IAG (ICAG.L) fell 2.3% after it warned of a bigger-than-expected loss of 3 billion euros ($3.5 billion) for 2021, as pandemic restrictions and the partial closure of the transatlantic market continued to hold back travel recovery.

IAG’s gloomy forecast is also weighing on other British travel stocks like Wizz Air (WIZZ.L) and Easyjet (EZJ.L), down nearly 1.2% each.

Britain’s THG (THG.L) gained 6.0% after investment management company Blackrock disclosed its 5.37% stake in the online consumer brands company on Thursday.

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