Sector movers: Banks sideswiped by Trump comments on interest rates

Shares in the Main High Street banking groups were sideswiped at the end of the week after US President Donald Trump told the Wall Street Journal he liked a low interest rate policy, although shares in the so-called challenger banks fared better .

That sent yields on the benchmark 10-year US Treasury note spiralling lower overnight to an intra-session low of 2.22%, although by the closing bell in London they had bounced back partially to stand at 2.25%.

Linked to the above, yields on similarly-dated Gilts also fell.

Asia-exposed HSBC and StanChart did worst in the group, possibly on the back of the heightened geopolitical tensions in the region.

Construction stocks were also down, with stock in US-focused CRH weighing like a ton of bricks.

Speaking of bricks, Ibstock was again another big gainer as the stock made another move back towards its 52-week highs.

On Thursday, analysts at Barclays reiterated an 'Overweight' recommendation on the pair, together with its 3700p and 215p targets, respectively.

Also weighing on the market were oil stocks, despite positive endorsements for BP out of Barclays and from Morgan Stanley on BP and Shell, as crude oil futures took a breather following their recent strong run.

Unsurprisingly, the focus of analysts at both brokers were the pairs' dividend policy.

"For Big Oil, we expect aggregate earnings in 1Q17 to reach their highest level since 2Q15. Shell and BP, which yield disproportionately at ~7%, will likely report the biggest q/q and y/y improvement. As these come through, we believe the market will begin to de-risk their yields significantly," Morgan Stanley told clients.

On a more positive note, an upgrade out of analysts at Jefferies boosted shares in AB Foods, lifting the entire Food producers space.

The broker upgraded its recommendation on the shares to a 'Buy', on the back of continued strength in its sugar business and an expected upturn in margins from its Primark retail arm.

Its target price was hiked from 2,450p to 3,100p.

A report in the Dagens Nyheter newspaper sent shares in Svenska Cellulosa up by 7.76% after the daily said a consortium of private equity firms were seeking to buy the Swedish consumer good company’s hygiene business for about 200bn Swedish crowns ($22bn).

Positive read across for the rest of the sector in Europe was likely behind gains in Mondi.

Top performing sectors so far today
Food Producers & Processors 8,193.00 +1.95%
Software & Computer Services 2,054.77 +1.68%
Forestry & Paper 21,294.98 +0.92%
Insurance (non-life) 2,886.83 +0.86%
Industrial Transportation 3,097.50 +0.77%

Bottom performing sectors so far today
Banks 4,092.74 -1.32%
Construction & Materials 6,674.67 -1.21%
Oil & Gas Producers 7,899.82 -1.11%
Oil Equipment, Services & Distribution 16,740.91 -1.07%
Fixed Line Telecommunications 3,614.55 -0.81%