Sector movers: Global rate hike talk bolsters defensives, boosts US dollar

Investors sought out the defensive areas of the market again on Thursday amid hawkish comments from top officials at the Federal Reserve and European Central Bank.

Overnight, Fed chairman, Jerome Powell, told the Wall Street Journal in an interview that: "Restoring price stability is an unconditional need. It is something we have to do.

"We will go until we feel like we are at a place where we can say, ‘Yes, financial conditions are at an appropriate place. We see inflation coming down.

"We will go to that point, and there will not be any hesitation about that."

As recently as Tuesday, some market operators had been musing out loud about whether the Fed would indeed be able to raise official short-term interest rates beyond the so-called neutral level of 2.0-2.5% without triggering a recession.

The jury was still out regarding the latter but the Fed seemed committed to doing the former if needed.

Against that backdrop, longer-term government bond yields were trading a tad lower on either side of the Atlantic, boosting shares in the Electricity, Gas, Water & Multiutilities, and REIT sectors.

Oil & Gas and Aerospace and Defence were also higher on the back of the still very elevated geopolitical risks emanating from the war in Ukraine.

That was especially so following reports in recent days that talks aimed at trying to reach a ceasefire or peace deal were at a standstill.

The US dollar was also trading higher, dragging on the Precious Metals and Mining space once more.

On this side of the Pond, European Central Bank governing council members Olli Rehn and Pablo Fernandez de Cos also sounded a more hawkish note on the outlook for rates, feeding expectations for a first rate hike possibly as early as July.

Top performing sectors so far today

Electricity 11,994.02 +2.26%

Oil, Gas and Coal 8,029.32 +1.10%

Aerospace and Defence 4,650.87 +0.76%

Gas, Water & Multiutilities 6,748.07 +0.57%

Real Estate Investment Trusts 3,007.53 +0.50%

Bottom performing sectors so far today

Precious Metals and Mining 10,242.51 -3.38%

Industrial Support Services 9,999.80 -2.39%

Personal Goods 26,575.21 -2.33%

Chemicals 12,536.52 -2.31%

Industrial Engineering 13,371.47 -2.10%