Sector movers: Oil&Gas paces gains, but defensives find bid on increased geopolitical risk

Oil&Gas related issues topped the leaderboard in London at the start of the holiday-shortened week, as traders got a chance to react to Washington's decision to act on a previous threat of taking Iranian crude oil exports to zero.

But those gains came together with an advance in defensive names in the healthcare and pharma space, mimicking the price action across the Pond and in a possible reflection of investors' cautious take on the new geopolitical scene.

Amid concerns about the ability of other oil producers to offset any shortfall in the near-term and an angry response from Tehran threatening to shut the Strait of Hormuz to all traffic, as of 1623 BST front month Brent crude oil futures were jumping 0.751% to $74.60 a barrel on the ICE.

Commenting on that decision, analysts at Barclays Research said recent developments posed a "material" upside risk to their forecast for Brent crude oil to average $70 a barrel in 2019, but not over the longer term, given the increased responsiveness of non-OPEC and US tight oil output to any shortfall in supplies.

However, they did now see an increased risk of conflict in the Middle East.

Shares of heavyweights BP and Shell rode the rising tide of crude oil prices significantly higher, alongside stock oilfield services outfits Petrofac and Wood Group.

Gains in the oil patch materialised alongside an advance in defensive stocks such as Healthcare equipment and Pharmaceuticals.

Among the former it was the beaten down shares of of NMC Health and Mediclinic that perked up, with GlaxoSmithKline pacing gains among the latter as analysts at Jefferies reiterated their 'buy' recommendation on the shares.

Ahead of the company's first quarter numbers on 1 May, Jefferies said Glaxo's dividend yield - the largest among EU large-cap pharma - provided "sustainable downside support at least until the proposed split of the Consumer Healthcare joint-venture."

The broker also said it saw the rationale for that demerger in three years' time, adding that it was an opportunity to crystallise value and that Consumer standalone could support higher debt levels, deleveraging it and opening the door to "investment for growth".

Top performing sectors so far today

Oil Equipment, Services & Distribution 11,311.56 +4.39%

Leisure Goods 10,051.52 +3.49%

Oil & Gas Producers 9,468.34 +2.46%

Health Care Equipment & Services 6,933.02 +1.83%

Pharmaceuticals & Biotechnology 14,711.14 +1.78%

Bottom performing sectors so far today

Industrial Metals & Mining 6,204.80 -1.76%

Automobiles & Parts 6,360.28 -0.80%

Fixed Line Telecommunications 2,663.26 -0.76%

Real Estate Investment & Services 2,602.67 -0.54%

Mobile Telecommunications 3,209.93 -0.48%