MARKET REPORT: Reckitt shares spike on main US courtroom victory

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

Reckitt, which also owns Vanish washing powder and Nurofen painkillers, surged 6.6 per cent, or 310p, to 4994p after a judge in Missouri ruled that the company’s US arm Mead Johnson was not responsible for causing a boy to develop necrotizing enterocolitis (NEC) – a potentially fatal intestinal disease that almost exclusively affects premature infants.

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

But following a five-week trial, the jury found the company, as well as rival Abbott Laboratories, was not liable. It sparked a rally in Reckitt’s share price on Friday. The ruling is a welcome relief for investors on the formula issue. The Missouri case had formed part of around 1,000 similar lawsuits across the US.

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

Boost: Reckitt surged 6.6 per cent, or 310p, to 4994p after the judge’s ruling

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

‘There are still plenty of outstanding cases so this issue will not go away for Reckitt overnight, but it certainly represents a crumb of comfort for long-suffering shareholders,’ said AJ Bell investment director Russ Mould.

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

The FTSE 100 rose 0.8 per cent, or 67.05 points, to 8177.15 and the FTSE 250 gained 0.5 per cent, or 90.78 points, to 20479.74.

Following a volatile week in the run-up to Labour’s first Budget, which took place on Wednesday, traders appeared to have settled during the final session of the week. The blue-chip index was supported by oil firms, with Shell shares inching up 0.02 per cent, or 0.5p, to 2579p and BP edging ahead by 0.4 per cent, or 1.55p, to 378.2p.

Brent crude jumped nearly 2.5 per cent to around $74.60 a barrel following reports that Iran could be preparing to conduct military strikes on Israel within days, further escalating tensions in the oil-rich Middle East.

Over in the US, shares in tech giant Apple fell nearly 2 per cent in early trading in New York after its results, posted on Thursday night, saw it pencil in lower sales growth for the Christmas quarter than expected by analysts.

Results from online retail giant Amazon enjoyed a better reception, with shares surging more than 6 per cent after it reported better than expected quarterly profits.