Sector movers: Almost all sectors higher on trade hopes

Industrial stocks were boosted by trade deal hopes on Wednesday, with UK stocks generally shrugging off the political hullabaloo in Westminster.

The general industrial, chemicals, mining, industrial engineering, utilities, housebuilders, banks, support services, property were almost universally in positive territory.

This was despite the surge in sterling, which generally weighs on London's blue chip stocks due to their high exposure overseas.

"Stocks are rallying into the close as trades are a little upbeat about the state of US-China relations. This is another day of optimism in relation to China and the buyers are coming out of the woodwork," said market analyst David Madden at CMC Markets.

While Theresa May was facing a vote of no confidence, Madden said dealers were pricing in a high probability of the Prime Minister staying put.

Stocks globally were also benefiting from seasonal flows. As Chris Beauchamp, chief market analyst at IG, said : "hope springs eternal where a ‘Santa rally’ is concerned, and historically the pre-Christmas bounce tends to get going from today. The bulls think they spy an opening and are determined to press their advantage while it lasts."

On UK markets, he had a word of caution, saying that while the 160-point bounce in sterling over the past few hours "suggests that the market is confident about the outcome, there are perhaps uncomfortable echoes of the Brexit vote and the election of Donald Trump, both of which were assumed to be foregone conclusions".

"Given the secret ballot, it makes sense to take the protestations of loyalty with a pinch of salt, and to make no assumptions about the result. It is far from clear that a May win would do much good, since it leaves the PM stuck with a deal that is still unlikely to get through Parliament, and the prospect of her staying on might embolden the opposition or even some of the firmest Brexiteers to push for a no-confidence vote. Such is the world of UK politics at present."

The oil services sector was the biggest faller, but this was entirely due to a decline for Wood Group, which said 2018 results would be in line with expectations but issued a more cautious outlook for 2019 as the company sees the recent oil and gas price volatility potentially hitting confidence and the pace of contract awards. This follows the tentative outlook from Schlumberger in their recent trading update.

However, sector mates Hunting and Petrofac were moving higher, regardless.

Food retailers were likewise dragged down by Sainsbury's, after the retailer's request for more a little more time to the Competition and Markets Authority was given short shrift by the antitrust body. Shares in Tesco and Morrison were both higher, even though analysts at Deutsche Bank slightly lower their estimates on the trio in order to factor in the slower sales trend in the fourth quarter as suggested by recent data from Kantar Worldpanel.

Top performing sectors so far today

General Industrials 5,149.10 +3.19%
Chemicals 13,152.24 +2.55%
Aerospace and Defence 4,377.65 +2.49%
Gas, Water & Multiutilities 4,929.45 +2.29%
Real Estate Investment Trusts 2,749.19 +2.26%

Bottom performing sectors so far today

Oil Equipment, Services & Distribution 11,701.98 -5.02%
Food & Drug Retailers 3,438.24 -0.42%
Automobiles & Parts 6,793.92 -0.12%
General Retailers -0.16
Pharmaceuticals & Biotechnology -0.01