Sector movers: Defence sails higher, tobacco up in smoke
London stocks finished higher on Friday, with aerospace & defence a driving force and early tobacco gains going up in smoke.
Aerospace and defence was the strongest sector on Friday as BAE Systems was awarded a £20bn contract by the Australian government to build its fleet of nine new navy frigates.
Rolls-Royce, which supplies propellers and other parts to the Type 26 frigates, and other defence related contractors such as Cobham and Melrose, were also being lifted by reports that the Ministry of Defence is confident it will be able to squeeze a bit more budget from the Treasury.
Analyst Joshua Mahony at IG also added the wider rises for the sector were a reflection of markets "seeing this as a blueprint for the kind of deals that can be put together in a post-Brexit world, with a greater ability to appeal for specific deals".
Tobacco stocks were among the losers after a panel of judges at the World Trade Organisation rejected arguments from tobacco companies and countries such as Cuba, Indonesia, Honduras and the Dominican Republic that plain packaging laws violated international trade. Analysts at RBC Capital Markets recently warned that changes in regulation of tobacco such as plain packaging requirements will be a "significant determinant" of share price performance.
A British American Tobacco spokesperson said: "An initial reading of the report leads us to conclude that the panel’s interpretation leaves trademark owners with an empty shell – which is contrary to the protection of intellectual property rights under the TRIPS Agreement, and will reverberate across numerous industries, not just tobacco."
Top performing sectors so far today
Aerospace and Defence +2.34%
Software & Computer Services +2.18%
Leisure Goods +1.35%
Support Services +1.31%
General Industrials +1.30%
Bottom performing sectors so far today
Automobiles & Parts -2.36%
Oil Equipment, Services & Distribution -1.74%
Tobacco -0.84%
Oil & Gas Producers -0.65%
Beverages -0.34%