Sector movers: Banks and miners lead losses on interest rate doubts

Shares in banks and miners paced losses on the London market, the same as on the Continent, with shares in lenders finally joined in the broader market retreat in the face of rising expectations for rate hikes in the States.

Acting as a backdrop, investors were waiting on what some observers believed would be a key speech from US Federal Reserve governor Lael Brainard, after the close of trading in London.

Brainard was well-known to be on 'dovish' side of the spectrum in terms of the need to tighten monetary policy. Hence, any shift on her part towards a more hawkish bent might presage a broader change at the Fed, or so the thinking went.

The Stoxx 600's gauge of lenders' shares lost 2.05% or 3.03 points to 144.69 while the benchmark's sub-index for Basic Resource companies erased 1.77% or 5.51 points to 305.95.

Linked to the above, some market commentary was referencing a research report from Morgan Stanley, according to whose analysts the signals from its economic cycle indicators for developed markets had gone from pointing towards an 'expansion' to flagging a 'downturn'.

The broker's own economists on the other hand were just now flagging upside risks to the macroeconomic outlook.

"The Morgan Stanley Cycle Indicators across the US,eurozone and Japan have stalled,highlighting the increasing risk that we have moved from 'expansion' to 'downturn' in DM markets,even as our economics team flags upside risks to its macro outlook.

"But while some aspects of the current environment signal a true cycle peak, others seem to be giving out false signals, muddying the cycle call," they said in a research report published on 11 September.

Overnight, rebar futures on the Shanghai Futures Exchange hit a seven-week low, contributing to the selling pressure on the sector.

AB Foods was heavily marked down, dragging its sector gauge to the bottom of the pile, after the company informed shareholders that a previous small pension surplus had in recent weeks morphed into a £200m pension deficit.

Top performing sectors so far today

Mobile Telecommunications 5,001.62 +0.38%
Pharmaceuticals & Biotechnology 14,044.54 +0.28%

Bottom performing sectors so far today
Food Producers & Processors 8,271.21 -6.94%
Industrial Metals & Mining 1,301.02 -5.30%
Banks 3,568.37 -2.61%
Mining 11,178.71 -2.21%
Life Insurance 6,921.88 -2.19%