Tobacco stocks under pressure as Biden considers nicotine cap

The Biden administration appears to be moving forward with plans to cap the amount of nicotine tobacco manufacturing companies would be allowed to include in their products to a non-addictive level, in addition to introducing a potential ban of menthol cigarettes in the US. News of this has shaken markets, particularly tobacco giants such as British American Tobacco and Imperial Brands whose shares dropped by over 6%. Despite the fact that rumors of this regulation have been around for years, and while some may downplay the effectiveness of the ban, it is clear that more governments are moving in this direction and that it is becoming a real possibility in the short term. 

What we have seen so far is investors react to the uncertainty of the potential vape ban in the US, which has been a growing sector. Nevertheless, any regulatory change could take years to fully implement and this could buy tobacco firms much-needed time to adapt to the change or lobby the US government to change track. As such, in the short term, we are seeing mostly asset protection by investors. 

FTSE 100 pulls back despite upbeat employment figures

UK employment figures released this morning showed a better than expected reading for both the employment change (10.1K vs 24.5K) and as the unemployment rate showed slight signs of recovery (4.9% vs 5.0%) in the first part of 2021. Despite the extended lockdown imposed by the government which has severely affected economic activity, employment figures managed to recover slightly as the government continues to execute its reopening plan. Despite these positive figures, the London FTSE100 is down over 1,65% briefly dropping below the 6900 handles and echoing the performance of other European indices which are all pulling back from their recent highs.