Tobacco shares prove a drag as US regulators mull nicotine cap
TOBACCO shares went up in smoke yesterday after US regulators reignited fears of a crackdown on nicotine levels in cigarettes to help smokers to stub out the habit.
London’s cigarette sellers were rattled last year when the US Food and Drugs Administration outlined a radical plan to reduce nicotine to non-addictive levels in tobacco products.
On Thursday the FDA hosted a presentation highlighting research that discovered that cutting nicotine by as much as 96pc would improve public health. The FDA’S presentation, which included a disclaimer insisting that the findings did not represent the regulator’s stance, indicated that the FDA is “committed to building a body of evidence to support its nicotine reduction agenda”, Morgan Stanley warned.
Analyst Pamela Kaufman told clients that the FDA is considering a 0.2 to 0.7mg per cigarette nicotine cap, compared to the 10 to 14mg in the average US cigarettes. She added that the studies supported an immediate cut in nicotine rather than a gradual decline.
The FDA boosted tobacco shares last month by outlining plans to tackle the “epidemic” use of e-cigarettes among young people. But signs that US regulators are switching focus back to cigarettes sent the traditional tobacco players sliding.
The FTSE 100’s tobacco giants weighed heavily on the index. British American
Tobacco slumped 133p to £32.72, its lowest level in more than four years, while
Imperial Brands was the biggest faller, sliding 161.5p to £25.17. Elsewhere,
housebuilder Barratt
Developments led a faltering rebound on the FTSE 100 after Credit Suisse told clients that the firm will be able to pay out dividends to shareholders even in the event of a no-deal Brexit.
With housebuilders’ fortunes tied to the UK economy, share prices in the sector have been hit by heightened Brexit uncertainty.
But the bank argued in a gushing “outperform” note that Britain’s largest housebuilder will have “ample head-room” to hand out bumper returns to shareholders “even when applying 2008-09 market downturn conditions” to its forecasts.
Asos shares rallied away from their lowest level since 2016 after Credit Suisse handed the e-tailer an upgrade to “neutral” ahead of its full-year results next week. It argued that online clothing platforms, such as Asos, will remain “significantly more attractive to brands than Amazon”. Asos climbed 196p to £50.06. Man Group gave up early gains despite investors pouring $400m (£304m) of new money into the world’s largest listed hedge fund in the third quarter. Its assets under management rose to a record $114bn but it tumbled 5.1p to 140.4p.
Scottish Mortgage Investment Trust surged 26.6p to 481p as US tech stocks started to stage a recovery after bearing the brunt of the global stocks sell-off. Top holding Amazon rallied as much as 5.2pc in intraday trade.
Silicon Valley firms were leading a stuttering rebound in global stocks as investors attempted to recover from a two-day rout on markets.
The FTSE 100 gave up a 1pc gain to close 11.02 points lower at 6,995.91, its lowest level since March, despite easing trade tensions between the US and China. The index suffered its worst week since February.