Weir bucks falling FTSE but AstraZeneca drops on drug disappointment

Worries about a Greek default as conflicting tales about the state of talks with its creditors did the rounds, along with a stronger dollar on hints of a US rate rise this year, combined to send leading shares lower.

But there were some bright spots. Engineering group Weir, which supplies equipment to the oil industry, has suffered as the crude price slumped and companies cut back investment. But despite another drop in Brent, signs of improvement in the US industry helped push Weir 65p higher to £20.02. Analysts at Jefferies said:

We note a further sequential moderation in the pace of decline in last week’s rig count data (the total US rig count fell by only one last week, which is the slowest weekly decline since December 2014). Weir continues to be a stock that is gathering interest with investors, and with last week’s rig count data/ slowing pace of decline, we suspect this will increase further (we again highlight the strong correlation between Weir’s share price and the rig count and the oil price). Weir is potentially at an interesting inflection point if this data point continues its recent momentum.

Meanwhile Royal Mail added18p to 521.5p as Cantor Fitzgerald moved from sell to hold, while positive noises from Deutsche Bank lifted housebuilders Taylor Wimpey, up 0.4p to 184.8p, and Barratt Developments, 3p better at 598.5p.

Overall though the FTSE 100 fell 82.73 points to 6948.99 as the weekend’s news that Spain’s anti-austerity parties had gained ground in regional elections added to Greece’s woes to raise new concerns about the eurozone.

Better than expected US housing and confidence figures hinted at a US rate rise this year, especially given comments by Federal Reserve chair Janet Yellen on Friday that borrowing costs would rise if the economy continued to improve as expected.

That helped lift the dollar, which in turn knocked back gold and silver prices, pushing Mexican precious metals miner Fresnillo down 27p to 736p and Randgold Resources 168p lower to £46.11.

AstraZeneca dropped 100p to 4373.5p after a problem with an experimental psoriasis drug which it hoped would be one of its blockbusters, and would lift its revenues towards the target set when it saw off an unwanted bid from US group Pfizer. AstraZeneca’s partner Ambgen said late on Friday that it would end the collaboration to develop brodalumab after some patients using the medicine developed suicidal thoughts. AstraZeneca said it would confirm its decision on the future development of brodalumab “as soon as possible, based on further review of the data.”

UBS said the Amgen move was unexpected:

We had viewed bro-mab as a critical asset to contribute significantly to AstraZeneca’s bottom line from 2017, especially as bro-mab could have been a simple profit stream, as AstraZeneca had no plan for co-marketing a dermatology asset and was supposed to receive a profit share from its 50/50 joint venture with Amgen. Amgen’s decision may not spell the end of the bro-mab. However, in view of increased uncertainty, we have removed bro-mab profits from our earnings model, and hence cut our core earnings per share estimate by 3-9% from 2017-2020, reducing our AstraZeneca valuation from £60 to £56 per share.

Royal Bank of Scotland lost 9.9p to 345.2p as Credit Suisse issued an underperform rating on the bank’s shares.

Vodafone fell 3p to 250.75p after rising sharply last week to a 14 year high on talk of a possible deal with US group Liberty Global.

Among the risers easyJet climbed 25p to £16.16 after positive results from rival Ryanair.

Finally Aim-listed heating specialist Inditherm, jumped 59% to 4.375p after unveiling a reverse takeover by medical device distributor Inspiration Healthcare.