Sector movers: Real Estate shares extend rally as government bond yields slip further

Real Estate stocks jumped on the back of further downward pressure on Gilt yields.

The yield on 30-year Gilts fell back by eight basis points to 3.668% while that on the 10-year Gilt came down by 11bp to 3.631%.

But on this occasion, the pound snapped violently higher alongside to reach 1.1457, amid continued speculation that the US central bank might shift to a slower pace of interest rate hikes after its 2 November meeting.

"Rising rates will likely bring unwelcome consequences, but markets are at least appearing positive at the thought that central banks will soon see their tightening phase run its course," said IG senior market analyst Josh Mahony.

"Unfortunately, there is a strong chance that we will soon see that stubbornly high inflation could result in rates remaining elevated for longer than desired. Nonetheless, with yields drifting lower and the dollar on the back foot, we are seeing risk assets gain traction once again today."

According to Fed funds futures, a 75bp hike in the target range for the Fed funds rate was still priced in for the following week's Fed meeting, but only a 50bp hike for the 14 December meeting.

A further 50bp hike in overnight rates to 4.75-5.0% was still seen as more likely than not, with the probability being put at 83.5%, but that might soon be cast into doubt, or not.

That level was roughly expected to be maintained at least until about September 2023 for when the odds of a first rate cut stood at 38%.

Beaten down Leisure stocks including Games Workshop - which was back at pre-pandemic levels- and Team 17 both caught a bid, pushing their sector to the top of the leaderboard.

Burberry and THG Group meanwhile accounted for the strength Personal Goods, while HSBC held back the Bank sector.

Top performing sectors so far today

Leisure Goods 16,598.73 +6.23%

Real Estate Investment Trusts 2,229.77 +5.52%

Automobiles & Parts 1,156.57 +4.13%

Personal Goods 29,605.41 +3.74%

Real Estate Investment & Services 2,026.29 +3.67%

Bottom performing sectors so far today

Banks 2,922.68 -3.23%

Oil, Gas and Coal 8,009.98 -1.82%

Retailers 3,191.88 -1.19%

Aerospace and Defence 4,690.80 -0.56%

Telecommunications Service Providers 2,441.63 -0.35%