Sector movers: Oil equipment stocks pace losses as markets reset

Oil equipment stocks were unwanted, as a spate of reports in China's state-controlled press said the country's government might restrict the supply of rare earths to foreign users.

While in fact not so rare, aside from promethium, holding roughly 40% of global supplies, China had a lot to say regarding short-term dynamics in the market for rare earths elements, a key input on many high-tech, low carbon and defence products.

More to the point, the flurry of reports was a possible indication of the worsening tensions in the ongoing trade war between the US and China.

As markets moved to price-in the potential hit to the global economy, leading to a further inversion of the US Treasury yield curve, cyclical issues including oil equipment and industrial engineering stocks were continuing to come under pressure.

US financial weekly Barron's also cited speculation that Beijing might curtail its energy imports in a bid to knock oil prices lower.

Talking about the outlook for stock markets, on Tuesday UBS's Francois Trahan had pointed out to clients how the more cyclical areas of the market such as Energy and Financials had underperformed over the back half of 2018, and again throughout most of the year to date, during the recent rally, labelling the pattern "a bad omen for the road ahead".

But it was grocers' shares that led to the downside, literally (at least for the so-called 'Big Four'), with Tesco acting as the main drag on the sector, after Kantar reported that Germany's Aldi and Lidl were continuing to chip away at their market shares.

Consumer spend on groceries held up well over the 12 weeks to 20 May, Kantar said, increasing by 1.3% despite difficult comparisons with the year earlier period, which saw record growth on the back of scorching weather and multiple major events, including the royal wedding.

Tesco continued to tower over rivals with a market share of 27.3%, but that was less than the 27.7% that it held in 2018, although total till roll in fact edged higher, rising from £7,500m to £7,503m.

Total consumer spend at Aldi on the other hand shot up by 11.1% to £2,191m, while at Lidl it rose by 8.5% to £1.589m, boosting the pairs' market shares from 7.3% and 5.4% to 8.0% and 5.8%.

Top performing sectors so far today

Mobile Telecommunications 2,947.51 +1.60%

Automobiles & Parts 5,729.44 +0.93%

Gas, Water & Multiutilities 4,635.24 +0.48%

Real Estate Investment & Services 2,490.21 +0.31%

Bottom performing sectors so far today

Food & Drug Retailers 3,766.99 -3.93%

Oil Equipment, Services & Distribution 8,859.53 -3.19%

Software & Computer Services 2,222.00 -2.73%

Tobacco 31,179.72 -2.53%

Industrial Engineering 12,305.51 -2.36%