Search Share Prices
Sector movers: Utilities pace gains as Gilt yields move lower
Defensives were clearly in demand at quarter-end, amid a steady drip lower in technology shares on both sides of the Atlantic.
Pacing gains in the space was stock in United Utilities - followed closely by shares in Pennon and Severn Trent - helped by a favourable tailwind in the form of a six basis point drop in the yield on the benchmark 10-year Gilt.
Perhaps the most important thing to take note of was how just the day before yields on similarly-dated US government debt had broken out of their trading range of the past five weeks - to the downside.
Reflecting the more cautious stance of some investors, earlier on Wednesday analysts at UniCredit reiterated their preference for more 'defensive' issues.
Against the backdrop of the recent downdraft in the technology space, especially in the States, they explained to clients how in reality the underlying cause was "extremely stretched valuation metrics that have generated a sizeable misalignment with fundamentals, mostly for the big technology stocks."
They added: "With sector price to earnings and price to book ratios trading significantly above their long-term averages, it should not come as a surprise that some negative news would precipitate a sell-off. We see this continuing, either with US tech stocks underperforming a rising equity market or weakening materially if risk aversion remains high. In the last few weeks we have recommended a rotation towards defensive sectors, which are more attractive at this stage in the cycle and are more insulated in the event that trade conflicts escalate."
Pharma shares were close behind, with Shire rallying from its sharp losses of the last few months after Takeda Pharmaceuticals announced it was "considering" making an approach for the US-based outfit.
Nevertheless, in their respective announcements both companies were non-comittal, especially Shire, who said it had received no offer.
To take note of, for one City-based analyst, "[it] seems that consolidation in the sector/market is back".
ABF accounted for strength among Food prooducers, thanks to an upgrade to 'overweight' out of Morgan Stanley.
On the other side of the ledger were miners, as copper futures continued to face a headwind from rising inventories at the LME.
Three-month copper futures in fact ended higher at $6,665 per metric tonne, versus a Tuesday close of $6,649, but were off their best levels, having recently lost a key level of technical support.
"Copper stocks continue to rise on the LME and unless we get some serious strike news, it's hard to get too bullish and we need a good break above 6750 to regain any bullish momentum and at least back above the 200 day MA at 6690 to get out of this short term down trend," said analysts at Sucden Financial.
Top performing sectors so far today
Gas, Water & Multiutilities +5.45%
Pharmaceuticals & Biotechnology +4.32%
Personal Goods +4.23%
Tobacco +3.37%
Food Producers & Processors +2.71%
Bottom performing sectors so far today
Industrial Metals & Mining -4.88%
Mining -2.51%
Oil Equipment, Services & Distribution -1.45%
Automobiles & Parts -1.19%
General Industrials -1.08%