Sector movers: Big tobacco lights up, life insurers dragged down

The tobacco sector made the difference on Wednesday, while life insurers lagged.

Cigarette makers British American Tobacco and Imperial Brands drove gains on Wednesday after the resignation of the top US drug and tobacco regulator overnight.

Scott Gottlieb, who as Commissioner of the US Food & Drug Administration had been spearheading a ban on menthol cigarettes and curbs on e-cigarettes, is expected to leave in April, less than two years since he started in the role.

Barclays analysts said Dr Gottlieb’s resignation "takes the risk of a menthol cig ban off the table", but only until a new FDA commissioner is appointed. While broker Liberum said the tobacco products arm of the FDA is still "moving down a path towards greater restrictions over combustible cigarettes and more recently, flavoured e-cigarettes".

Life insurers were led lower as Legal & General's full year results received a mixed reception.

The 10% growth in operating profit was slightly ahead of the average analyst forecast, boosted by a reserve release of £433m as life expectancy levels plateau faster than previously expected.

Although the L&G Retirement arm absorbed a record £10bn of annuity sales, Citi analysts were disappointed with lower new business surplus, driven by lower margins on some of the larger bulk annuity plans in the second half of the year and greater volumes of higher-strain US business. "The bulk annuity pipeline remains robust at £20bn but the margin outlook will be key going forward."

Sector peers Aviva and Prudential were both in the red, along with closed life assurance fund consolidator Phoenix Group.

Broker Panmure Gordon said that L&G shares, trading at 9.1 times 2019 expected operating EPS and with a 6.1% dividend yield, were undervalued: "We see the dividend as being supported by a combination of strong balance sheet, cash generation and potential further mortality releases."

Top performing sectors so far today

Tobacco +3.18%

Oil Equipment, Services & Distribution +2.55%

Automobiles & Parts +1.84%

Industrial Metals & Mining +1.06%

General Industrials +0.87%

Bottom performing sectors so far today

Leisure Goods -3.22%

Technology Hardware & Equipment -2.68%

Life Insurance -1.85%

Personal Goods -0.87%

Electronic & Electrical Equipment -0.84%

Market Movers

FTSE 100 (UKX) 7,206.44 0.32%
FTSE 250 (MCX) 19,401.29 -0.22%

FTSE 100 - Risers

Smith (DS) (SMDS) 366.60p 5.01%
Wood Group (John) (WG.) 573.20p 4.37%
British American Tobacco (BATS) 3,024.00p 4.26%
GVC Holdings (GVC) 724.00p 3.87%
NMC Health (NMC) 2,994.00p 1.91%
TUI AG Reg Shs (DI) (TUI) 808.60p 1.58%
Glencore (GLEN) 310.45p 1.47%
Imperial Brands (IMB) 2,613.50p 1.44%
easyJet (EZJ) 1,244.00p 1.43%
Evraz (EVR) 600.20p 1.42%

FTSE 100 - Fallers

Legal & General Group (LGEN) 274.50p -4.09%
Burberry Group (BRBY) 1,882.50p -3.63%
Intertek Group (ITRK) 4,899.00p -1.94%
Fresnillo (FRES) 801.40p -1.86%
Hargreaves Lansdown (HL.) 1,750.00p -1.82%
Rolls-Royce Holdings (RR.) 899.59p -1.47%
Rentokil Initial (RTO) 354.80p -1.09%
Prudential (PRU) 1,608.77p -1.06%
Carnival (CCL) 4,204.00p -0.99%
British Land Company (BLND) 603.60p -0.89%

FTSE 250 - Risers

Ultra Electronics Holdings (ULE) 1,433.00p 11.60%
Aston Martin Lagonda Global Holdings (AML) 1,110.80p 3.81%
IWG (IWG) 240.00p 3.63%
Funding Circle Holdings (FCH) 363.00p 3.54%
Indivior (INDV) 112.20p 3.51%
Centamin (DI) (CEY) 93.82p 3.42%
Entertainment One Limited (ETO) 442.60p 3.41%
Genus (GNS) 2,308.00p 2.85%
Tullow Oil (TLW) 230.60p 2.40%
Kaz Minerals (KAZ) 662.59p 2.32%

FTSE 250 - Fallers

Contour Global (GLO) 174.40p -4.80%
Amigo Holdings (AMGO) 216.00p -4.76%
Games Workshop Group (GAW) 3,000.00p -3.38%
John Laing Group (JLG) 375.80p -3.14%
Safestore Holdings (SAFE) 595.00p -2.78%
Dunelm Group (DNLM) 850.90p -2.70%
Capita (CPI) 121.25p -2.65%
Bakkavor Group (BAKK) 139.20p -2.52%
Coats Group (COA) 85.30p -2.51%
Ascential (ASCL) 345.80p -2.48%