• Dec. 7, 2016, 2:40 am

FTSE jumps 1% after Fed rate rise while AstraZeneca buoyed by biotech deal

Powered by Guardian.co.ukThis article titled “FTSE jumps 1% after Fed rate rise while AstraZeneca buoyed by biotech deal” was written by Nick Fletcher, for theguardian.com on Thursday 17th December 2015 09.56 UTC

Leading shares have celebrated the first US interest rate rise in nearly a decade, with the rise itself temperer by comments from the Federal Reserve suggesting any further increases will only be gradual.

Among the risers, AstraZeneca has added 41p to 4457.5p after it splashed out $4bn for 55% of privately owned biotech group Acerta Pharma. Earlier in the week, AstraZeneca had said it was looking at strategic options with Acerta, which is based in California and the Netherlands.

The move gives AstraZeneca access to a new treatment for blood cancers, and chief executive Pascal Soriot said:

[The deal gives AstraZeneca] a potential best-in-class medicine that could transform treatment for patients across a range of blood cancers.

AstraZeneca will pay $2.5bn initially, with a further $1.5bn due depending on first regulatory approval for the new drug, acalabrutnib. Acerta shareholders have the option to sell the remaining 45% of the company for around $3bn, once approval is reached in both the US and Europe.

The deal comes a day after AstraZeneca announced it was buying global rights to a portfolio of respiratory drugs from Japan’s Takeda.

Overall the FTSE 100 is currently 71.25 points higher at 6132.44, helped by better than expected UK retail sales. The news boosted the pound, on the basis that it adds to the idea that the UK could be the next to raise rates after the Fed’s move on Wednesday. Tony Cross, market analyst at Trustnet Direct, said:

London’s FTSE-100 has bounded higher at the open, supported not only by the fact that Janet Yellen drew a line under the financial crisis – at least on the other side of the Atlantic – by hiking interest rates for the first time in almost a decade, but also accompanying this with a dovish call. Yes, more rate hikes will follow, but they will be gradual – and there’s no real expectation of the US hitting inflation targets before 2018.

Benefiting from the buoyant mood was South African investment groups Old Mutual, up 12.2p at 177.2p and Investec, up 34.7p at 487.7p, after gains in the local market following the Fed news.

Supermarkets are also in demand, with Sainsbury up 12.7p at 260.9p and Morrisons 5.8p better at 153p.

Among the fallers, housebuilder Berkeley is down 154p at £36.03 after its shares went ex-dividend while United Utilities was down 1.5p at 936p for the same reason.

A strong dollar hit commodities again, leaving Glencore 0.32p lower at 84.03p.

Among the mid-caps, chemicals company Elementis has dropped 15.4p to 221.3p after it said full year earnings per share were likely to be at the lower end of market expectations, due to “challenging” markets.

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