MARKET REPORT: Reckitt shares rise after major US court victory

The owner of Dettol and Durex saw its shares rise at their fastest pace in 24 years following a major victory in the US courts.

Reckitt, which also owns Vanish washing powder and Nurofen painkillers, rose 6.6 per cent, or 310 pence, to 4,994 pence after a Missouri judge ruled that the company’s US arm, Mead Johnson , was not responsible for causing a child to develop necrotizing enterocolitis (NEC). a life-threatening intestinal disease that almost exclusively affects premature babies.

The lawsuit alleged that Mead Johnson, which makes baby formula, had failed to warn that its products could cause the disease, and the plaintiffs were seeking up to £4.8 billion in damages.

But after a five-week trial, the jury concluded that the company, as well as its rival Abbott Laboratories, were not liable. This caused a rally in Reckitt’s share price on Friday. The ruling is a welcome relief for investors on the formula question. The Missouri case had been part of about 1,000 similar lawsuits across the United States.

They sparked fears that the company’s specialized formulas, used to help feed newborns in intensive care units, could be withdrawn from sale.

Plaintiffs in the cases allege that Mead Johnson concealed the fact that its formulas were riskier than alternatives, such as natural donor milk. The company denies the accusations. Earlier this year, the company suffered a blow when a court ruled in March that it would have to pay £46 million ($60 million) in damages to the mother of a premature baby who died of NEC after being fed with their Enfamil baby formula.

“There are still many cases pending, so this issue won’t go away for Reckitt overnight, but it certainly represents a crumb of comfort to long-suffering shareholders,” said AJ Bell chief investment officer, Russ Mould.

It comes amid speculation that Reckitt could be looking to sell the Mead Johnson business, which it originally bought for £12.8bn in 2017.

The FTSE 100 rose 0.8 per cent, or 67.05 points, to 8,177.15 and the FTSE 250 gained 0.5 per cent, or 90.78 points, to 20,479.74.

After a volatile week in the run-up to Labour’s first budget, which took place on Wednesday, traders appeared to have settled down during the final session of the week. The blue-chip index was supported by oil companies, with Shell shares rising 0.02 per cent, or 0.5 pence, to 2,579 pence and BP advancing 0.4 per cent, or 1.55 pence, at 378.2p.

Brent crude jumped nearly 2.5 percent to around $74.60 a barrel following reports that Iran could be preparing to carry out military attacks on Israel within days, further escalating tensions in the Middle East rich in oil.

In the United States, shares of technology giant Apple fell almost 2 percent in early trading in New York after its results, released late Thursday, indicated lower sales growth for the Christmas quarter than expected. by analysts.

Online retail giant Amazon’s results enjoyed a better reception, with shares rising more than 6 percent after it reported better-than-expected quarterly profits.