British American Tobacco shares fell on Tuesday after releasing trading figures that were reasonably positive.

BATS reaffirmed its full-year 2025 targets, expecting approximately 2% growth in both revenue and adjusted profit from operations. The company also announced a new £1.3 billion share buyback programme.

Shares were down 3.1% at the time of writing, perhaps more down to profit-taking than major disappointment with the update.

“The recent surge in BAT’s shares has come unstuck, as this morning’s update acts as drag on the share price,” said Chris Beauchamp, Chief Market Analyst at IG.

“Still, the strength in the US is encouraging, though it might provoke worries that BAT will be yet another firm tempted to swim the Atlantic in favour of a US listing. The doldrums of 2019 – 2023 seem to be firmly behind it now that it rediscovered its sales momentum in key markets.”

The FTSE 100 tobacco giant reported strong momentum in its US business, driven by resilient combustibles performance and excellent results from its Velo Plus nicotine pouch brand, which is on track for full-year profitability. Early signs of federal and state enforcement action against illicit vaping products have also supported recent improvements in its Vuse brand volumes and revenue.

Group value share across top markets remained flat, whilst volume share declined 10 basis points. This may be disappointing for investors.

However, the US showed particular strength, with value share gaining 20 basis points and volume share holding steady.

The company’s Velo brand continues to perform well, with volume share in Modern Oral products surging 590 basis points to 31.8% in top markets. In the US specifically, Velo Plus drove Modern Oral volume share up 920 basis points to 15.6%, delivering triple-digit revenue growth.

BAT reaffirmed its mid-term growth guidance from 2026, expecting 3-5% revenue growth, 4-6% adjusted profit from operations growth, and 5-8% adjusted diluted earnings per share growth, with 2026 performance expected at the lower end of these ranges.

“The company is confident of returning to its medium-term growth ambition next year, albeit at the lower end of 3-5% revenue growth and 4-6% growth in underlying operating profit,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“The strong recovery in the share price this year suggests markets may have been hoping for more, but a new share buyback programme should keep markets happy for now. That does however put some pressure to bring net debt back into the company’s target range next year. “

The FTSE 100 was broadly flat on Monday as investors readied for the Federal Reserve interest rate decision later this week, when it is expected that US interest rates will be cut by 0.25%.

London’s leading index was 2 points higher at 9,668 at the time of writing, with investors holding off making major changes to their portfolio.

“Europe got off to a quiet start, with minimal movement among the main equity indices,” said Dan Coatsworth, head of markets at AJ Bell.

“The FTSE 100 held firm as strength among industrials, basic materials and healthcare was offset by weakness in consumer stocks and real estate.

Coatsworth continued to explain that the US interest rate decision this week may be a non-event, with a rate cut already nailed on, leaving little reason to reposition before or after Wednesday’s decision.

“On the economics front, the big event of the week is the US interest rate decision on Wednesday where the market is pricing in an 87% chance of a quarter percentage point cut. Markets may not rally if we get a 25 basis-point cut, given how investors are already expecting it to happen. Instead, markets are only likely to move in a large way up or down if we don’t get a cut or if the cut is much bigger than expected.”

Far less certain is what the Bank of England will do when it announces its decision on 18th December. Markets are pricing in a 0.25% interest rate cut to 3.75% but there are questions about whether traders are being overly optimistic, given persistently high UK inflation.

This may be part of the reason behind lower housebuilding shares on Monday, which appear to be running out of steam after a post-budget bounce.

Persimmon, Barratt Redrow, and Berkeley Group were down between 1.75% and 2% at the time of writing.

Unilever was the top faller after completing the spin-out of The Magnum Ice Cream Company, which started trading in London, Amsterdam, and New York today.

Prudential was the top riser, jumping 2%, after an update on the sale of shares in ICICI Prudential Asset Management on Indian stock markets.