FTSE 100 watch: Weaker pound lends support to Footsie

Tobacco manufacturers weigh on index after RBC downgrades

FTSE 100 watch: Weaker pound lends support to Footsie

The UK benchmark index has started September on the front foot, recouping some of the previous session’s losses, benefitting from a drop in the pound in today’s trading. British American Tobacco (LON:BATS) and Imperial Brands (LON:IMB), however, are weighing on the FTSE 100 following downbeat comments at RBC.

FTSE 100 gains ground

As of 12:29 BST, the Footsie had added 67.59 points to stand 0.91 percent higher at 7,500.01. The index has recovered, finding support in a weaker pound and a strong mining sector, with resource stocks tracking copper prices higher. Reuters, however, noted today that worries over Brexit were keeping investors cautious on UK equities.

“The UK is a defensive, high-dividend yielding market which might have a problem if bond yields move sustainably higher, and if global equities advance, as we expect,” equity strategists at JP Morgan said in a note, as quoted by the newswire, adding that they were looking for a stronger pound “which will weigh on the performance of the FTSE 100”.

Individual stock news

Imperial Brands’ share price is 1.13 percent down at 2,713.00, while BAT’s shares are changing hands 1.10 percent lower at 3,680.50p after RBC downgraded both stocks from ‘sector perform’ to ‘underperform’. Proactive Investors quoted the analysts as saying that they “expected relatively lower margin [next-generation products] to continue to outgrow the core cigarette business”, which would lead to a “negative mix effect on profitability”.

Royal Mail (LON:RMG) is marginally outperforming the market, as its General Logistics Systems division acquired a Canadian parcel delivery company. The postal operator’s shares are 1.14 percent up at 453.10p.

The FTSE 100 index was 0.94 percent up at 7,502.02 points as of 12:35 BST on Monday, 03 September 2018.

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