Sector movers: Utilities hit by UK election worries
Tobacco and pharmaceuticals, two sectors often seen as safer havens in times of stock market stress, led the way on Thursday, while utilities were being sold off due to political concerns.
Cigarette makers Imperial Brands and British American Tobacco were mainly lifted due to an upgrade from Citi, which sees the regulatory environment easing.
"We are upgrading both Imperial Brands and BAT to 'buy' from 'neutral' because they are still pricing in a discontinuity in earnings and cash flows, and we think that in 2019 the environment is likely to become less threatening, not more," analysts said in a note on the sector.
“In 2019 there are not likely to be any significant new policies on cigarettes, so we think investors will gradually get more comfortable with the current proposals. We do expect even greater focus on e-vapor, but that may be positive for BAT and Imperial.”
Pharmaceuticals were rebounding from the pressure in recent days as the White House renews its efforts to dismantle Obamacare in the courts. Commentary on Bloomberg suggested the move would be very difficult for the Trump administration to pass.
Utilities stocks, from water to electricity, were in the red as investors fretted about the potential for a UK general election and the Labour party's plans for renationalisation.
In a note to clients, Citi's utilities analysts said: "Our economics team’s view is that a new leader, long extension to Brexit and new Parliament essentially point to a need for a general election, which effectively brings back on the table nationalisation risks, given the Labour party’s views."
They stressed that while the likelihood of a general election in the UK cannot be dismissed, support for the Labour party has weakened in recent months and that they see "many difficulties with such plan to renationalise" National Grid, including that it is comprised of circa 50% US assets.
They argued that UK water utilities, 100% UK based, "are more exposed to any nationalisation plans".
Top performing sectors so far today
Leisure Goods 7,781.82 +5.05%
Tobacco 36,488.19 +2.08%
Pharmaceuticals & Biotechnology 15,586.31 +1.85%
Chemicals 13,855.91 +1.63%
Forestry & Paper 18,912.60 +1.33%
Bottom performing sectors so far today
Gas, Water & Multiutilities 4,925.92 -2.58%
Automobiles & Parts 6,118.05 -1.62%
Mobile Telecommunications 3,149.40 -1.35%
Life Insurance 7,445.02 -1.30%
Electricity 7,256.29 -1.29%
Market Movers
FTSE 100 (UKX) 7,234.33 0.56%
FTSE 250 (MCX) 18,908.59 0.08%
techMARK (TASX) 3,499.59 0.25%
FTSE 100 - Risers
Ocado Group (OCDO) 1,359.50p 5.31%
NMC Health (NMC) 2,270.00p 3.56%
DCC (DCC) 6,710.00p 2.76%
Bunzl (BNZL) 2,521.00p 2.48%
Sage Group (SGE) 698.80p 2.43%
Johnson Matthey (JMAT) 3,185.00p 2.35%
Hargreaves Lansdown (HL.) 1,821.50p 2.33%
Imperial Brands (IMB) 2,619.00p 2.30%
AstraZeneca (AZN) 6,495.00p 2.19%
British American Tobacco (BATS) 3,152.00p 2.01%
FTSE 100 - Fallers
easyJet (EZJ) 1,118.00p -3.37%
National Grid (NG.) 855.10p -3.29%
Schroders (SDR) 2,635.00p -2.88%
Barratt Developments (BDEV) 593.60p -2.82%
Paddy Power Betfair (PPB) 5,905.00p -2.32%
Sainsbury (J) (SBRY) 232.60p -2.31%
Prudential (PRU) 1,525.00p -2.27%
United Utilities Group (UU.) 824.20p -2.00%
British Land Company (BLND) 583.80p -1.92%
Barclays (BARC) 153.08p -1.58%
FTSE 250 - Risers
Syncona Limited NPV (SYNC) 258.50p 6.60%
Games Workshop Group (GAW) 3,120.00p 5.05%
NewRiver REIT (NRR) 235.50p 4.90%
Woodford Patient Capital Trust (WPCT) 80.80p 4.66%
Clarkson (CKN) 2,405.00p 4.34%
JD Sports Fashion (JD.) 497.90p 3.73%
Equiniti Group (EQN) 207.50p 3.49%
Hochschild Mining (HOC) 205.00p 2.94%
Hill & Smith Holdings (HILS) 1,200.00p 2.92%
Indivior (INDV) 96.54p 2.70%
FTSE 250 - Fallers
Metro Bank (MTRO) 766.50p -6.12%
Kier Group (KIE) 362.40p -4.93%
Vivo Energy (VVO) 118.08p -4.77%
888 Holdings (888) 156.50p -4.75%
Just Group (JUST) 62.10p -3.12%
Bovis Homes Group (BVS) 1,072.00p -3.07%
CLS Holdings (CLI) 240.50p -3.02%
Sabre Insurance Group (SBRE) 286.00p -2.72%
Go-Ahead Group (GOG) 1,970.00p -2.57%
Aston Martin Lagonda Global Holdings (AML) 1,008.40p -2.34%