Tobacco Stocks Go Up In Smoke

Monday, 12th November: The FTSE 100 was gaining on Monday morning as a consequence of increasing oil prices, and a vulnerable pound, the latter due to further uncertainty surround the Brexit deal and members of Theresa May’s party voicing further concerns over her ability to negotiate an orderly Brexit plan with Brussels with less than five months to go until they are due to leave. Adding to this pressure on Monday was Joerg Kukies, German Deputy Finance Minister who warned everybody to still prepare for a hard Brexit occurring.

Tobacco was at the bottom of the FTSE 350 sectors on Monday. The sector was down more than 7.0% at around 10:00 GMT, largely due to losses suffered by British American Tobacco which was down almost 9.0%, whilst the other contributor to the sector, Imperial Brands, was only down around 3.0%. The impact came from the attempt by US regulators to ban menthol cigarettes, which contribute 25% and 15% to BAT and Imperial profits respectively.

Hawkish updates from two Apple Inc suppliers shook the technology specialists’ share price. Lumentum Holdings Inc and Japan Display Inc both made changed to previous forecasts due to cuts in orders and overall weaker demand from smartphone makers. The result of this was particularly damaging on Lumentum’s share price, which dropped by circa 30%, whilst the share price of other iPhone suppliers fell by between 3% and 10%.

By mid-day, all of the gains the blue-chip index had opened with slipped through its fingers as they had fallen in the opposite direction with the majority of the constituents covered in red. The index suffered at the end of the day and closed 0.74% lower at 7053.

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