London’s main market plunged two per cent today, wiping out last week’s gains amid a bad day for big tobacco.
The index joined in a global stock market rout on Tuesday, ending the day at 6,859.87, down 140.21 points.
The drop pushed the FTSE 100 back through the symbolic 7,000 point mark it smashed last week for the first time since February last year.
British American Tobacco (BAT) and Imperial Brands fell more than 7 per cent each following a report the Biden administration was considering requiring tobacco companies to lower the nicotine levels in all cigarettes sold in the United States.
Today marked BAT’s biggest percentage drop since March 2020.
According to Danni Hewson, financial analyst at AJ Bell, worries surrounding new variants added to market downfall today.
“[There’s] growing concern that new variants will set back recovery that seems to be having the greatest impact, particularly amongst airlines like British Airways owner IAG worried those rays of summer hope might be obscured behind another Covid-cloud,” she said.
The drop came as official figures showed Britain’s unemployment rate unexpectedly fell to 4.9 per cent in the December to February period.
By the end of the day sterling had fallen 0.3 per cent against its European and US rivals.
Elsewhere, the mid-cap FTSE 250 also slipped by 1.7 per cent, despite chemical company Elementis surging 18.6 per cent at the open on reports of a fresh takeover bid.
Elsewhere US indexes S&P 500 and Dow Jones were both trading down around 0.9 per cent when European markets closed. In Germany the Dax fell 1.6 per cent, while the Paris-based Cac dropped 2.1 per cent.
“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,” said CMC Markets chief market analyst Michael Hewson.
The morning’s biggest winner was cybersecurity firm Avast, who rose 3.5 per cent, closely followed by pharmaceutical giant AstraZeneca, up by 1.3 per cent.
Mining firm Antofagasta and home improvement company Kingfisher also rose 1.2 per cent and 1.1 per cent respectively.
British American Tobacco was the morning’s biggest faller, dropping by 5.6 per cent, followed by Imperial Brands’ 5.2 per cent hit.
Meanwhile, Melrose Industries and publishing firm Informa both dipped by five per cent and 2.5 per cent respectively.