London close: Tobacco makers lead stocks lower on US regulatory fears
London stocks were well below the waterline at the close on Tuesday, 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.
The FTSE 100 ended the session down 2% at 6,859.87, and the FTSE 250 was off 1.7% at 22,108.55.
Sterling was in the red as well, last falling 0.24% against the dollar to $1.3952, and sliding 0.28% on the euro to €1.1587.
“Stocks in Europe appear to have run out of steam after the gains of the last seven weeks, with profit taking appearing to be the order of the day, with losses in excess of 1% across the board,” said CMC Markets analyst Michael Hewson.
“While today’s losses are quite large, they don’t appear to be being driven by concerns over the economic outlook.
“If they were, copper prices wouldn’t be firmer and the US dollar wouldn’t be weaker.”
Hewson said that with the European Central Bank due to announce its latest policy decision on Thursday, and a host of companies turning in their latest numbers, it appeared that after the impressive gains of recent weeks, some investors were taking the opportunity to book some profits, which could lead to further weakness in the short term.
“The FTSE 100 has slipped back below the 7,000 level, hitting a low below 6,900, with tobacco stocks, retailers and airlines bearing the brunt of the losses.
“The decline in tobacco stocks has spilled over from last night’s US session which was prompted by reports that the US is considering legislation to cut the amount of nicotine in cigarettes to a level that’s not addictive.”
Dampening investor sentiment earlier was fresh 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.
Samuel Tombs at Pantheon Macroeconomics described the drop in payrolls as "likely just a blip".
Tombs argued that the extension of the government's furlough scheme until September meant firms had no incentive to fire workers at least until July - when they would have to start contributing toward its costs.
The strongest businesses on the other hand were beginning to take on more workers.
In equity markets, shares in British American Tobacco slid 7.6% and Imperial Brands was off 7.31%, after the Wall Street Journal said the Biden administration was mulling a legal limit on the nicotine content of cigarettes.
A deadline for declaring a ban on menthol cigarettes was also reportedly looming on the horizon.
Associated British Foods was 5.93% weaker after it reported a more-than-halving of its bottom line for the half-year ended 27 February.
However, citing its "success" in a number of new markets from Poland to Florida, the board announced that the food ingredients and fast fashion giant would repay money received from the government's job retention scheme during the current financial year, and declared an interim dividend of 6.2p.
Rio Tinto was off 2.2%, even after it 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.
Shopping centre owner Hammerson fell 4.5% after it 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.
Price comparison platform Moneysupermarket was down 3.47% after its first quarter revenue fell by a fifth, as consumers reined in their spending during the latest Covid lockdown.
Revenue for the three months to 31 March fell to £85.5m, down from £107.3m a year ago.
Still, the online service-switching service said it expected its full-year results to be in line with market expectations.
Jupiter Fund Management was 2.52% lower after it 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.
On the upside, cybersecurity software company Avast rose 1.27% after reporting first quarter revenue growth of 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 company said adjusted EBITDA was 10.3% for the period at $133.7m, resulting in an adjusted EBITDA margin of 56.4%.
FTSE 100 - Risers
SEGRO (SGRO) 1,004.50p 1.61%
Polymetal International (POLY) 1,578.00p 1.48%
Avast (AVST) 477.60p 1.27%
AstraZeneca (AZN) 7,494.00p 1.02%
Halma (HLMA) 2,562.00p 0.71%
National Grid (NG.) 911.30p 0.42%
Fresnillo (FRES) 921.80p 0.37%
Croda International (CRDA) 6,720.00p 0.24%
Weir Group (WEIR) 1,948.00p 0.15%
Smith & Nephew (SN.) 1,411.50p 0.11%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 193.10p -8.11%
British American Tobacco (BATS) 2,692.50p -7.60%
Imperial Brands (IMB) 1,465.50p -7.31%
Associated British Foods (ABF) 2,314.00p -5.93%
Rolls-Royce Holdings (RR.) 99.28p -5.61%
Melrose Industries (MRO) 162.40p -4.92%
Whitbread (WTB) 3,350.00p -4.80%
Glencore (GLEN) 290.75p -4.30%
Standard Chartered (STAN) 475.00p -4.08%
InterContinental Hotels Group (IHG) 4,952.00p -3.96%
FTSE 250 - Risers
Ferrexpo (FXPO) 409.40p 4.71%
IntegraFin Holding (IHP) 566.00p 3.76%
AJ Bell (AJB) 469.80p 2.00%
Dixons Carphone (DC.) 146.30p 1.95%
Assura (AGR) 76.10p 1.87%
CMC Markets (CMCX) 510.00p 1.80%
Primary Health Properties (PHP) 153.70p 1.65%
LondonMetric Property (LMP) 226.60p 1.62%
Drax Group (DRX) 420.60p 1.45%
Petropavlovsk (POG) 27.18p 1.42%
FTSE 250 - Fallers
Carnival (CCL) 1,531.20p -6.36%
Wood Group (John) (WG.) 256.00p -6.23%
FirstGroup (FGP) 83.65p -6.06%
Kainos Group (KNOS) 1,545.00p -5.74%
Mitchells & Butlers (MAB) 291.20p -5.64%
easyJet (EZJ) 934.60p -5.35%
Trainline (TRN) 440.00p -5.29%
WH Smith (SMWH) 1,788.00p -4.97%
Marks & Spencer Group (MKS) 154.15p -4.90%
Wizz Air Holdings (WIZZ) 4,640.00p -4.86%