Markets pause for breath, British American Tobacco faces more headwinds and Chemring boosted by defence sector prospects

“After a brief rally since the end of last week, markets have taken a moment to catch their breath, with the main indices across Europe treading water on Tuesday,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 slipped 0.1% to 7,589 as strength among mining stocks was offset by weakness in financials.

“With limited corporate news on the agenda this week to drive trading volumes, it’s likely that we could see markets struggle to find direction until we get updates on inflation, jobs and monetary policy.”

British American Tobacco

“British American Tobacco confirmed there would be no change to its strategy under new chief executive Tadeu Marroco. However, the new boss did flag issues with its US combustibles business which need fixing and a poor start to the year for its Glo tobacco heating product.

“Tobacco companies are pinning their hopes on mass take-up of next generation products such as vaping, yet they face considerable pushback from regulators, health campaigners and more. Each week there seems to be someone else calling for tougher rules on vaping, in particular, with children’s doctors the latest to say the rules have to change. They imply youth vaping is a serious problem and needs to be stamped out immediately.

“British American Tobacco will be no stranger to dealing with these headwinds, but in this modern world it has a responsibility as a good corporate citizen to ensure its products are not harming society.”

Chemring

“Chemring’s shares jumped more than 6% after saying its order book was at its highest level for more than a decade.

“While profits fell in its latest half-year results due to contract delays, investors seem to like the fact that Chemring is one of many companies experiencing stronger prospects thanks to the Russia-Ukraine war encouraging governments around the world to spend more on defence.

“It is also worth noting that Chemring’s cybersecurity arm Roke continues to see fast revenue growth as companies and governments boost their digital defences.”

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