European shares pulled back on Tuesday after hitting record highs a day earlier, as tobacco companies weighed on UK stocks and many regional indexes edged off pre-pandemic highs.
British American Tobacco, Imperial Brands and Swedish Match fell between 2.5 per cent and 6 per cent following a report the Biden administration was considering requiring tobacco companies to lower the nicotine levels in all cigarettes sold in the United States.
BAT shares were on course to record their biggest percentage drop since March 2020.
UK’s blue-chip Ftse 100 fell 0.4 per cent, Germany’s Dax was down 0.1 per cent and France’s Cac 40 declined 0.7 per cent.
The pan-regional Stoxx 600 index dropped 0.5 per cent. The benchmark has hit a series of all-time highs this month after having climbed more than 10 per cent so far in 2021, broadly in line with New York’s S&P 500.
"On absolute terms, it's difficult to make the case that markets are cheap," said Jason Collins, global head of equities at SEI. "But relatively speaking, European equities offer much better value than the United States.
After bumper earnings reports from US banks last week, investors are awaiting results from mega-cap technology firms, that helped a strong US market recovery last year, but have lagged recently.
In Europe, profits for Stoxx 600 companies are expected to jump more than 55 per cent in the first quarter, according to Refinitiv IBES data, with much of the support coming from consumer cyclical and industrial companies.
Automakers were the only gainers in Europe as BMW’s first-quarter earnings bounced back more strongly than expected, helped by higher prices and strong Chinese demand.
Travel & leisure, banks and insurers fell after strong gains this year.
Investors also looked past data that showed Britain’s unemployment rate unexpectedly fell for a second month in a row to 4.9 per cent in the December to February period, during which most of the country was under a strict Covid-19 lockdown.
French food group Danone slipped 2.8 per cent after reporting a 3.3 per cent fall in first-quarter sales as lockdowns continued to dent its bottled water and baby food sales.
Swedish medical gear maker Getinge jumped 5.6 per cent after it posted a rise in quarterly core profit.
Swiss construction chemicals maker Sika rose 2 per cent after it hiked its sales outlook for 2021. – Reuters
