Sector movers: Cyclicals lead amid varying degrees of caution among analysts

Cyclicals are clearly pacing gains in mid-afternoon trading, as stocks stabilise on the back of the more constructive news-flow on the international trade front. However, some strategists were a tad cautious.

In a nut shell, and as Michael Hewson at CMC Markets UK said: "This would be the third successive week in succession that we've managed to finish higher in Europe and suggest that, despite concerns about an escalation in trade tensions, as well as a possible break-out of hostilities in the Middle East, that stock markets may well be starting to carve out some form of short term base."

And indeed, Cyclicals were clearly in the lead at the end of the week amid the more positive note on global trade struck by the White House overnight ... but also despite the reservations of some equity strategists.

Thus, strategists at Unicredit Bank were cautioning clients that: "Corporate earnings growth has peaked and upcoming quarters will probably experience a slowdown in earnings growth. This supports our recommendation for a predominantly-defensive allocation."

Similarly, strategists at Bank of America-Merrill Lynch were reiterating to clients their recently-adopted mantra to "sell-the-rip not buy-the-dip", explaining that the most recent reading on their weekly Bull&Bear Indicator was pointing to a story of rotation between sector rather than volatility over the second quarter.

That, they said, was all consistent with "peak positioning, peak profits, peak policy stimulus imply peak asset returns."

As on the other side of the Channel, it was Auto&Parts, one of the sectors most exposed to the potential fallout from any trade frictions, that was putting in the best performance.

Another sector that was wanted was Mining, with markets apparently shrugging off the weak reading for Chinese foreign trade in March that was released overnight.

Instead, the spotlight was on remarks by US president Donald Trump regarding what he believed were the improved prospects for the ongoing trade talks with China and America's NAFTA partners too.

In the Electronic and Electrical Equipment space, analysts at German broker Berenberg initiated their coverage of Halma with a 'buy', setting a target price of 1,410p.

Hill&Smith was also initiated at a 'buy' but Renewi was put at 'hold'.

Separately, and in the UK mid-cap space, they identified Victoria, Diploma, Vitec and Halma as 'top picks' and named Foxtons, Dialight and Travis Perkins their 'least preferred'.

Top performing sectors so far today

Automobiles & Parts +2.82%

Forestry & Paper +2.18%

Mining +1.21%

Electronic & Electrical Equipment +1.12%

Leisure Goods +1.05%

Bottom performing sectors so far today

Software & Computer Services -1.85%

Oil Equipment, Services & Distribution -1.54%

Industrial Transportation -1.00%

Tobacco -0.83%

Real Estate Investment Trusts -0.79%