Sector movers: Defensives pace gains

Precious and industrial metals' miners paced gains at the start of the week despite the release of much weaker than expected activity data for the month of April out of the People's Republic of China reflecting the impact of Covid-19 restrictions.

The annual rate of increase in the output of machinery and automobiles in China hit -31.8% in April, prompting Craig Botham at Pantheon Macroeconomics to tell clients that the world's work shop had effectively closed down in April.

However, gains for the likes of three-month copper future and those on gold, in anticipation of further supply disruptions, helped to offset the impact of that data.

Worth noting too, US dollar strength had been a clear drag on metals' prices year-to-date but the greenback traded lower throughout most of the Monday session.

Nevertheless, in a research note sent to clients, analysts at JP Morgan said they believed that the supply disruptions in both Russian and Ukraine, as well as in China would both improve during the back half of 2022.

JP Morgan also took note of the recent decline in two-year US Treasury yields, which the investment bank said reflected that the Federal Reserve had now reached "peak bullishness".

Morgan Stanley echoed that view, arguing that financial markets might have overestimated just how many interest rate hikes would be able to deliver "based on the significant damage to financial asset prices and the approaching slowdown that looks much worse than just a few months ago."

As an aside, Morgan Stanley was also of the opinion that the S&P 500 would fall towards the 3,400 point mark in search of valuation and technical support even if a bear market rally were to now ensue.

Not lost on some traders in the City either were the very cautious remarks out of Bank England Governor, Andrew Bailey, regarding potential risks to the outlook in his testimony before the Treasury Select Committee.

Coincidentally, all of the other top gainers on Monday were defensive sectors, pharmaceuticals, electricity and telecommunication services.

Top performing sectors so far today

Precious Metals and Mining 10,583.88 +2.40%

Industrial Metals & Mining 7,180.42 +1.85%

Pharmaceuticals & Biotechnology 21,287.13 +1.33%

Electricity 11,592.86 +1.31%

Telecommunications Service Providers 3,026.06 +1.14%

Bottom performing sectors so far today

Industrial Transportation 3,077.64 -2.04%

Construction & Materials 6,746.79 -1.78%

Electronic & Electrical Equipment 8,875.43 -1.67%

Industrial Engineering 13,664.10 -1.46%

Travel & Leisure 6,387.28 -1.16%