FTSE 100 falls sharply amid fears for journey because of India Covid variant

The FTSE 100 fell sharply on Tuesday, taking it again beneath 7,000, as world markets had been dragged decrease by rising investor concern over the Indian variant of Covid-19 and sliding tobacco shares.

The blue-chip index dropped by 2% or 140 factors to shut the day at 6,860, led by the British Airways proprietor, IAG, amid fears over renewed journey restrictions and as shares in main tobacco corporations fell on the prospect of harder guidelines being launched by the Biden administration.

It was the worst day for the FTSE – which had risen above the 7,000 mark on Friday for the primary time for the reason that pandemic – in two months.

Shares in IAG fell greater than 8%, whereas the jet-engine producer Rolls-Royce fell by nearly 6%. Wizz Air, FirstGroup and the cruise operator Carnival had been among the many largest fallers on the FTSE 250, reflecting renewed investor fears about prospects for journey.

Joshua Mahony, a senior market analyst on the monetary buying and selling platform IG, stated: “European markets have been hit laborious in the present day, with rising world coronavirus instances serving as a well timed reminder that the pandemic is much from over regardless of latest vaccination progress.”

France’s Cac 40 index closed down 2.1% whereas Germany’s Dax fell 1.5%. The Europe-wide Stoxx 600 fell 1.9%, its largest one-day loss since December. Within the US, the Dow Jones industrial common was down by about 0.9% by late morning in New York.

The losses on the inventory market come after the UK put India on the “purple checklist” for flights in response to rising coronavirus instances fuelled by the emergence of a brand new variant of the illness, whereas there’s additionally concern about rising instances throughout Asia, together with in Japan.

On a day of promoting strain on the monetary markets, about £6bn was wiped off the worth of the UK’s two massive tobacco corporations amid stories the White Home may pressure producers to chop the nicotine content material in cigarettes.

The FTSE 100 corporations British American Tobacco and Imperial Manufacturers each fell by greater than 7% as traders sold-off shares fearing the adjustments would undercut long-term gross sales prospects.

In Asia, Japan Tobacco fell by nearly 2% whereas the US conglomerate Altria, which owns manufacturers together with Marlboro and Benson & Hedges, fell greater than 6% on Wall Avenue.

The Biden administration is contemplating forcing tobacco corporations to decrease the nicotine in all cigarettes bought within the US to ranges at which they’re not addictive, based on a report within the Wall Avenue Journal.

Walid Koudmani, a market analyst on the on-line buying and selling platform XTB, stated: “Even though rumours of this regulation have been round for years, and whereas some could downplay the effectiveness of the ban, it’s clear that extra governments are transferring on this path and that it’s turning into an actual risk within the brief time period.”

New Zealand introduced plans final week that would result in a ban on smoking for anybody born after 2004, as a part of a set of proposals transferring the nation nearer to its purpose of being smoke-free by 2025.

Some e-cigarette flavours equivalent to fruit and mint had been banned within the US beneath the Trump administration final January, with American regulators warning “epidemic ranges of youth use of e-cigarettes” risked turning into a gateway to nicotine habit.

“Nonetheless, any regulatory change may take years to completely implement and this might purchase tobacco corporations a lot wanted time to adapt to the change or foyer the US authorities to alter monitor,” Koudmani added.