“The FTSE has stuttered along, with markets waiting for another spark,” said Josh Mahony, market analyst at online broker IG. “Unfortunately, while Trump did provide such a spark, it was negative, with his promise to control drugs prices sending pharmaceutical stocks lower.
“Trump’s promise to control drugs prices highlights that the optimism felt in response to Hilary Clinton’s election loss was clearly misplaced, proving that the topic remains one rare bipartisan area of agreement.”
In a tweet shortly before 9am New York time, Mr Trump said he is working on a “new system where there will be competition in the drug industry”.
Mylan, the maker of the EpiPen allergy shot that was at the centre of US public outrage over drug prices last year, declined 1.9% at one stage, while Perrigo dropped 2.5% and Allergan fell 1.7%.
Mr Trump sent his tweet after House Republicans unveiled their legislation to repeal and replace the Affordable Care Act on Monday, which he also touted yesterday, adding that competition will come later in the healthcare rollout.
“We are intrigued by the timing of President Trump’s tweet this morning as it followed rapidly behind the House healthcare reform bill, and we believe shows the administration’s continued focus on drug pricing,” said Vamil Divan, an analyst at Credit Suisse.
The 25-member Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index has dropped as much as 1.3% since January 11, when Mr Trump said the pharma industry was “getting away with murder”.
The president has promised to lower drug costs multiple times — and threatened to use the US government’s buying power to force prices down — but so far has not unveiled any specifics about how to do so.
Yesterday’s tweet left analysts struggling to figure out what the president meant, especially because Mr Trump has alluded to bidding in the past. Unlike most countries, the US does not directly regulate medicine prices; drugmakers have strongly resisted it.
Sterling fell to its lowest level since mid-January against the dollar and the euro, to 86.6 pence but there was no sign of a return of a “Brexit panic”, said Capital Economics in London.
“Indeed, it could help to cushion the blow of the vote to leave the EU by giving the external sector additional support,” the economists said.