BAT is FTSE’S leading light as stronger pound lifts share price
CIGARETTES giant British
American Tobacco drove the FTSE 100 higher after City analysts played down fears of its key US market going up in smoke, while the pound broke back above the $1.27 mark.
A double-digit decline in US cigarette volumes in May has unnerved investors as Big Tobacco also attempts to stave off the threat from tighter US regulation on vaping and menthol products.
JP Morgan soothed fears by arguing that falling sales were being offset by the “resilience of cigarettes pricing”. A 4.8pc tumble in cigarette volumes in 2019 is being countered by a 7pc jump in profit per pack.
Analyst Celine Pannuti also eased nerves over slowing growth in vaping after a regulatory clampdown on flavoured products, pointing to BAT’S increasing market share.
BAT, which generates almost 40pc of its earnings in the US, was also lifted by the pound clawing back against the dollar.
The greenback extended its slide after a shock slowdown in the US labour market fuelled hopes of interest rate cuts at the Federal Reserve. Sterling rose versus the dollar for a sixth straight day, advancing as much as 0.4pc to $1.2764, as BAT jumped 98.5p to £30.14, a six-week high.
Global stocks surged at the end of their best week of 2019 on expectations of central bank support for the cooling US economy.
Rate cut hopes drove the US 10-year Treasury yield down to its lowest level since September 2017, while the S&P 500 jumped as much as 1.5pc in afternoon trade. The FTSE 100 closed 72.09 points higher at 7,331.94, capping off its best week in four months. Ukraine-focused miner
Ferrexpo hit a six-week high after forecasting first half earnings to “increase materially” and soothing concerns over a probe into payments made to a charity.
The company’s share price tumbled in April after Deloitte resigned as its auditor amid an investigation into “discrepancies” found in donations made to charity Blooming Land. Ferrexpo said yesterday that the independent review was “ongoing” but “no conclusive evidence of any wrongdoing” had been found. The miner jumped 9.5p to 248.3p.
The slide in Woodford Patient Capital Trust entered a sixth straight day at the end of a nightmare week for veteran fund manager Neil Woodford. His listed fund plunged 19pc this week after he suspended trading in his Equity Income fund, and St James’s Place ended its relationship with the investment manager. Yesterday his listed fund sank a further 1.7p at 62.8p, a record low.
Miner Lonmin edged up 0.1p to 75.6p on its final day of dealing as Sibanyestillwater’s takeover ends its storied history on London’s stock market. The company was worth almost £7bn in 2007 but has suffered a sharp decline in recent years as prices of its main product, platinum, have tumbled, leaving the miner worth just over £200m. Investment platform AJ
Bell recovered from a 5pc intraday drop as top shareholder Invesco sold a £144m stake in a placing, cutting its holding to 16pc. It rebounded to close 10p higher at 410p.
Finally, construction equipment producer
Somero Enterprises was underwater on Aim after blaming record rainfall in the US for trading falling below its expectations. Its shares tumbled 80p to 275p, a 23pc plunge.