Sector movers: Construction stocks, banks lead gains

Cyclicals were clearly in the lead at the start of the week with a win for France's centrist presidential candidate at the weekend, stoking risk apettite across the globe.

Construction and Materials spearheaded the advance, with stock in CRH wanted ahead of an update from the company on Wednesday, with investors also on the look-out for scheduled data releases later in the week on US existing and pending home sales.

In other news over the weekend, on Saturday US Treasury Secretary Steve Mnuchin said the White House will unveil a tax reform plan "very soon", adding that he hoped passing a tax overhaul will not "take till the end of the year".

That, investors well know, is the key to the White House's infrastructure investment plans.

Speaking at the Institute of International Finance´s Washington Policy Summit, Mnuchin said that: "The difference of a little over 1 percent of GDP over a 10-year period of time can generate as much as $2.0trn of revenue in the U.S.. There’s no question: we’re looking at reforms that will pay for themselves with growth."

He also repeated the White House's goal of achieving economic growth of 3% or more, which in turn would make the tax reform plans self-financing by boosting the government´s tax take.

Banks were also wanted in the wake of Frenchmen's decision to back Macron, eliminating perhaps the greatest short-term threat to the European Union and the single currency bloc, given the key role France plays in it.

On a related note, Emmanuel Macron's win at the weekend could spark an up to 10% re-rating in Eurozone equities in comparison to US stocks, strategists at JP Morgan said. And their preferred sector? European Banks, those in the euro area periphery in partciular.

With polls ahead of the second round of voting in the country's presidential elections assigning Macron a 20 point lead over his rival Marine Le Pen, "the hurdle rate for a surprise is too big now", they said.

That should see 'risk-on' trades being put back on, with yields on German government bonds and the spread between them and those from periphery euro area countries narrowing, which is "very positive" for banks.

To take note of, both Lloyds and RBS were set to update investors later in the week.

On the negative side of the ledger, electricity stocks were the only sector trading lower, with investors opting to pull the plug on the likes of Centrica and SSE.

That followed a Tory pledge to include price caps in their manifesto ahead of the June 8 General Election.

Neil Nilson at ETX Capital said with a likely Tory victory at the ballot box energy firms now faced a threat to the enormous profits they had been generating "up until now".

He added that the recent wave of 10% price hikes this spring "looks to have been the last straw for the government as it seeks to do more for the ‘just-about-managing’".

Nonetheless, with just under half an hour to go until the close of Monday's session, both shares are coming off their intra-day lows.

Top performing sectors so far today
Construction & Materials 7,000.50 +4.55%
Automobiles & Parts 8,566.67 +4.30%
General Industrials 5,862.87 +3.63%
Forestry & Paper 21,671.97 +3.50%
Banks 4,173.97 +3.42%

Bottom performing sectors so far today
Electricity 8,265.81 -2.53%