London midday: Stocks drop, tobacco and travel stocks pace losses

Stocks had lurched clearly lower come midday, dragged down by heavy losses in tobacco makers' shares following a Wall Street Journal report that the US administration was mulling capping the level of nicotine in cigarettes.

Also dampening investor sentiment ahead of those was data showing an unexpected 56,000 drop in UK payrolls for March - the first decline in four months - and reports of higher Covid-19 cases, with the later dragging on travel and leisure names.

As of 1230 GMT, the FTSE 100 was down by 1.13% or 78.81 points at 6,921.27, while cable was about flat at 1.3984, having earlier briefly hit 1.4237.

In the background, investors were waiting on the release of key corporate results in the States which were due out after the market close in New York, including from media giant and stock market darling Netflix.

"These are not strong directional moves but there is not a lot of dry powder on the side lines in investors pretty well all-in on stocks. The macro story seems well understood for now vis-à-vis vaccines, the pandemic, the Fed, stimulus – really the question mark is over whether earnings can keep up with expectations to support current valuations," Said Neil Wilson, chief market analyst at Markets.com.

"In the current setup it’s hard to see room for multiple expansion – compression is way more likely as rates rise (although this trade has taken a breather for now) - so we need the ‘E’ bit of the PE bit to hold up or we will see losses. Given the reopening this year, a large global savings glut and all the fiscal and monetary largesse, earnings should be strong."

Shares finished modestly lower overnight on Wall Street, driven by weakness in technology stocks including Tesla and chip-maker Nvidia.

The latter fell after the UK government said it would look into the national security implications of its acquisition of ARM Holdings.

Across the Channel meanwhile, the European Union's General Affairs Council was also due to meet, via video conference, to analyse the state of relations with the UK, among other matters.

No major economic releases were scheduled in the US.

Journal report hits Tobacco stocks

Stock in British American Tobacco and Imperial Brands was pummeled after the Wall Street Journal reported that the Biden administration is mulling whether to set a legal limit on the nicotine content of cigarettes. A deadline for declaring a ban on menthol cigarettes was also reportedly looming close on the horizon.

Associated British Foods saw its bottom line more than halve over the half-year ended on 27 February. However, citing its "success" in a number of new markets, ranging from Poland to Florida, the board announced that the food ingredients maker would repay the monies received from the government's job retention scheme during the present financial year and declared an interim dividend of 6.2p.

Rio Tinto reported a 7% improvement in Pilbara iron ore shipments year-on-year to 77.8 million tonnes for the first quarter on Tuesday, with production down 2% to 76.4 million tonnes. The FTSE 100 mining giant said bauxite production slipped 2% to 13.6 million tonnes, while aluminium production grew 3% to 0.8 million tonnes. Mined copper production of 120,500 tonnes was 9% lower than in 2020, while titanium dioxide slag production was 5% lower year-on-year at 279,000 tonnes and production of pellets and concentrate at the Iron Ore Company of Canada (IOC) was 8% lower than in 2020.

Cybersecurity software company Avast said first quarter revenue rose 10.4% to $237.1m on an organic basis, with its Consumer Direct business continuing to deliver good growth, while the SMB business also sustained positive momentum. The FTSE 100 company said adjusted EBITDA was 10.3% for the period at $133.7m, resulting in an adjusted EBITDA margin of 56.4%.

Shopping centre owner Hammerson on Tuesday appointed a new finance director and reported an encouraging rebound in footfall at its English malls after a partial easing of Covid-19 curbs this month. “Initial footfall recovery in England is encouraging, and around 90% of operators are currently able to trade,” Hammerson said in a trading update.

First quarter revenue at price comparison platform Moneysupermarket fell by a fifth as consumers reined in their spending during the latest Covid lockdown. Revenue for the three months to March 31 fell to £85.5m, down from £107.3m a year ago. Nevertheless, the online service-switching service said it expected its full-year results to be in line with market expectations.

Jupiter Fund Management posted a 0.1% increase in its assets under management for the three months ending on 31 March to reach £58.79bn. However, positive market returns of £837m accounted for all of the increase versus the year earlier period, offset by £776m of net outflows due to continued lower client demand for UK and European equity strategies.

Market Movers

FTSE 100 (UKX) 6,914.16 -1.23%
FTSE 250 (MCX) 22,325.27 -0.74%
techMARK (TASX) 4,323.64 -1.02%

FTSE 100 - Risers

Avast (AVST) 489.50p 3.80%
Ashtead Group (AHT) 4,650.00p 1.09%
Fresnillo (FRES) 928.60p 0.98%
SEGRO (SGRO) 996.40p 0.79%
Kingfisher (KGF) 363.40p 0.75%
Polymetal International (POLY) 1,566.50p 0.74%
Hikma Pharmaceuticals (HIK) 2,398.00p 0.71%
B&M European Value Retail S.A. (DI) (BME) 572.60p 0.70%
Croda International (CRDA) 6,742.00p 0.57%
Weir Group (WEIR) 1,955.00p 0.51%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,473.50p -6.80%
British American Tobacco (BATS) 2,721.50p -6.61%
International Consolidated Airlines Group SA (CDI) (IAG) 200.35p -4.66%
Rolls-Royce Holdings (RR.) 100.66p -4.30%
Associated British Foods (ABF) 2,364.00p -3.90%
Next (NXT) 7,834.00p -3.43%
Melrose Industries (MRO) 165.15p -3.19%
InterContinental Hotels Group (IHG) 5,000.00p -3.03%
Standard Chartered (STAN) 481.70p -2.73%
Whitbread (WTB) 3,431.00p -2.50%

FTSE 250 - Risers

Elementis (ELM) 155.60p 14.66%
IntegraFin Holding (IHP) 580.00p 6.32%
Ferrexpo (FXPO) 408.60p 4.50%
AJ Bell (AJB) 469.40p 1.87%
Petropavlovsk (POG) 27.24p 1.64%
Drax Group (DRX) 420.80p 1.50%
Quilter (QLT) 166.25p 1.43%
LondonMetric Property (LMP) 225.60p 1.35%
Domino's Pizza Group (DOM) 369.00p 1.10%
IMI (IMI) 1,401.00p 1.08%

FTSE 250 - Fallers

FirstGroup (FGP) 83.55p -6.18%
Hammerson (HMSO) 36.16p -4.84%
Cineworld Group (CINE) 93.72p -4.56%
Wood Group (John) (WG.) 262.90p -3.70%
Carnival (CCL) 1,574.80p -3.69%
Airtel Africa (AAF) 72.50p -3.33%
Indivior (INDV) 134.90p -3.30%
Aston Martin Lagonda Global Holdings (AML) 1,924.50p -3.22%
Meggitt (MGGT) 462.20p -3.12%
Mitchells & Butlers (MAB) 299.40p -2.98%