Sector movers: Miners gleam, travel buoyant, utilities mixed
Tobacco, mining and travel stocks were the apple of investors' eyes on Wednesday, while utilities were mixed.
Tobacco stocks were up for the second day in a row amid a call for stricter enforcement to stop the teen vaping epidemic from the American Lung Association on Wednesday. The annual State of Tobacco Control report from the lobby group put pressure on regulators at the US Food & Drug Administration for not taking “decisive action” to stop e-cigarette and tobacco use by younger people.
If the FDA cracked down harder on vaping, many investors see this an benefiting Big Tobacco's traditional business. Other investors may well see cigarette makers as a good defensive sector to own in choppy markets, as analysts said the risks of a no-deal Brexit were rising.
Berenberg economist Kallum Pickering said that, with only 58 days left until the UK is due to leave the EU, the bank had raised risk of a no-deal to 30% from 20%, and lowered the probabilities of 'Norway plus - soft Brexit' and 'no Brexit'.
The House of Commons vote, backed by Theresa May, to seek an alternative to the Irish backstop, indicated a "unity of the Conservative Party", said economists at Citigroup, which "materially reduces the risk of early elections and thus the likelihood of Jeremy Corbyn becoming PM soon".
Sectors seen susceptible to a change in government, such as utilities, have suffered in the past year or so. The utilities sector was mixed on Wednesday however, but had risen the day before. National Grid was boosted by a positive rating from Barclays, while water companies like Severn Trent and Pennon were seen as "fair value".
With a no-deal Brexit scenario "coming back on the table", Bloomberg quoted Financerie de la Cite strategists as saying that "defensive, non-cyclical sectors should benefit from a sector rotation", with its 'Brexit fund' mainly invested in big caps and export companies in health-care and non-cyclical sectors, "which are preferable in this highly uncertain environment".
The mining sector was among the best-performing on the day, led by the likes of Anglo American, Glencore and BHP as copper and iron ore prices rallied.
Iron ore was up after the world's largest iron ore miner, Brazil's Vale, announced a temporary 10% production cut and said it was decommissioning 10 dams following a mining disaster last week.
Goldman Sachs said that adding to an already tight market, the announcement is likely to drive iron ore prices "significantly" higher. As a result, the bank upped its 2019 iron ore price forecasts. It now has 3/6/12 month targets of $80/70/65 a tonne versus previous targets of $70/60/60.
Travel and leisure stocks were mostly higher. Research by Morgan Stanley's showed more Brits expect to travel abroad using a package holiday this year, and book earlier - "surprising given Brexit and 2018's warm UK summer".
Tour operator TUI was lifted as analysts said the stock looks cheap, but felt the first quarter will be poor so it maintained a 'equal weight' rating, with the same for Thomas Cook.
Cruise operator Carnival gained ground following better-than-expected quarterly results from US-listed rival Royal Caribbean. Wizz Air reported lower quarterly profits but reiterated its full year guidance.
Top performing sectors so far today
Tobacco 31,530.33 +4.33%
Industrial Metals & Mining 4,705.17 +2.36%
Mining 18,398.95 +2.15%
General Industrials 5,645.24 +2.04%
Forestry & Paper 21,119.07 +1.96%
Bottom performing sectors so far today
Technology Hardware & Equipment 1,184.66 -0.92%
Leisure Goods 7,482.52 -0.83%
General Retailers 2,145.33 -0.07%
Fixed Line Telecommunications 2,720.23 -0.05%
Insurance (non-life) 3,068.81 -0.02%
Market Movers
FTSE 100 (UKX) 6,932.57 1.44%
FTSE 250 (MCX) 18,777.45 0.40%
techMARK (TASX) 3,353.44 0.55%
FTSE 100 - Risers
British American Tobacco (BATS) 2,625.00p 4.58%
Melrose Industries (MRO) 170.60p 4.22%
Smith (DS) (SMDS) 347.90p 4.04%
Hikma Pharmaceuticals (HIK) 1,585.00p 3.66%
Smurfit Kappa Group (SKG) 2,334.00p 3.37%
Imperial Brands (IMB) 2,491.50p 3.32%
Johnson Matthey (JMAT) 3,094.00p 3.31%
BHP Group (BHP) 1,677.00p 2.90%
Glencore (GLEN) 305.30p 2.78%
GVC Holdings (GVC) 657.50p 2.73%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 1,643.50p -2.43%
Hiscox Limited (DI) (HSX) 1,426.00p -1.04%
Auto Trader Group (AUTO) 452.00p -0.53%
Centrica (CNA) 137.40p -0.47%
Wood Group (John) (WG.) 531.20p -0.30%
Rightmove (RMV) 471.60p -0.20%
Admiral Group (ADM) 2,088.00p -0.19%
Experian (EXPN) 1,928.50p -0.08%
BT Group (BT.A) 234.20p -0.04%
Barclays (BARC) 161.42p 0.07%
FTSE 250 - Risers
Ferrexpo (FXPO) 232.20p 6.17%
TI Fluid Systems (TIFS) 191.40p 6.04%
Domino's Pizza Group (DOM) 264.50p 5.76%
Senior (SNR) 229.00p 4.57%
Premier Oil (PMO) 73.25p 4.34%
Mediclinic International (MDC) 316.20p 4.12%
Ted Baker (TED) 1,889.50p 3.99%
Sophos Group (SOPH) 322.40p 3.80%
IG Group Holdings (IGG) 641.50p 3.47%
Victrex plc (VCT) 2,414.00p 3.34%
FTSE 250 - Fallers
Metro Bank (MTRO) 1,248.00p -7.21%
Just Eat (JE.) 693.60p -3.96%
Vivo Energy (VVO) 132.06p -3.79%
Jupiter European Opportunities Trust (JEO) 730.00p -2.93%
IWG (IWG) 222.40p -2.88%
Rank Group (RNK) 147.71p -2.82%
Barr (A.G.) (BAG) 752.20p -2.18%
TP ICAP (TCAP) 317.60p -1.95%
Dixons Carphone (DC.) 143.05p -1.85%
UDG Healthcare Public Limited Company (UDG) 583.50p -1.85%