LONDON, April 21 ― London's FTSE 100 ended lower yesterday, dragged down by stocks of heavyweight oil companies and cigarette makers, while Associated British Foods slipped after a downbeat first-half earnings update.
The blue-chip index dropped 2 per cent, the highest single day fall since February 26, with tobacco firms British American Tobacco and Imperial Brands declining 7.6 per cent and 7.3 per cent, respectively, after a report said the United States was considering a rule to cut nicotine in all cigarettes sold in the country to levels at which they are no longer addictive.
Shares of AB Foods fell 5.9 per cent after it posted a 50 per cent drop in first-half profit, hurt by Covid-19 lockdowns that shuttered its Primark fashion stores.
“This seems somewhat of an overreaction given that this isn't a surprise and while the stores have been closed for a good part of the last 12 months, its other businesses have performed better than expected,” said Michael Hewson, an analyst at CMC Markets.
Sterling hit its highest in more than six weeks against the dollar, further weighing on the FTSE 100, many of whose constituents earn most of their revenues overseas and see their repatriated profits eroded by a stronger pound.
“While today's losses are quite large, they don't appear to be being driven by concerns over the economic outlook,” said Hewson.
The domestically focussed mid-cap FTSE 250 index fell 1.72 per cent, with Elementis reversing early gains to end 1 per cent lower after it rejected a 160-pence per share takeover approach from the US chemicals firm Innospec Inc.
Meanwhile, official figures showed Britain's unemployment rate unexpectedly fell to 4.9 per cent in the December-February period, although tax data showed the number of employees on company payrolls fell by 56,000 between February and March, the first decline in four months.
The FTSE 100 index has gained 6.2 per cent so far this year, but has underperformed its European peers during the period as a recent rise in Treasury yields and a jump in coronavirus infections across the globe weighed on sentiment.
Among other stocks, cyber security company Avast jumped 1.3 per cent after upbeat first-quarter trading update. ― Reuters
