Sector movers: Defensives sought out after weak data hits Big Oil and Miners

Defensives paced gains at the start of the week following the release of a spate of weak economic data out of China and the US which hit commodity markets and related sectors.

Figures released overnight for Chinese fixed asset investment, industrial production, retail sales and new home prices in July all fell short of forecasts, particularly retail sales, prompting a surprise interest rate reduction by the country's central bank.

However, the near unanimous view among economists appeared to be that the People's Bank of China could provide only limited support, with Pantheon Macroeconomics stressing that "liquidity is not answer".

The latest Chinese data was followed by a surprise plunge in the Federal Reserve Bank of New York's regional manufacturing gauge for August.

Some economists said they were very skeptical regarding the reliability of the so-called Empire State survey as a leading indicator, pointing out that it was a third-tier indicator, nevertheless the report did not go unnoticed.

Combined, Monday's economic data pushed the price of many commodities such as copper and oil lower, with the US dollar well-supported, which in turn dragged on precious metals' prices.

Worth noting, crude oil prices retreated in part due to rumours of a possible deal to revive the 2015 Iran nuclear accord.

Bloomberg confirmed in the evening that Tehran had sent its response to a proposal from the European Union to revive the agreement.

In any case, yields on longer-term Gilts and in euro area government debt slipped lower, albeit only barely in the case of US Treasuries.

That saw analysts at Rabobank tell clients: "Regular readers will know that I have kept saying that central banks could only start to consider a policy U-turn once yields AND commodities fell back together, rather than the former falling supporting the latter rising. Has the Empire struck back?"

Top performing sectors so far today

Investment Banking and Brokerage Services 13,577.42 +2.63%

Chemicals 12,951.70 +1.11%

Electricity 11,237.54 +1.11%

Tobacco 35,653.45 +0.95%

Gas, Water & Multiutilities 6,328.50 +0.86%

Bottom performing sectors so far today

Automobiles & Parts 1,916.60 -3.18%

Industrial Metals & Mining 6,551.74 -1.93%

Oil, Gas and Coal 7,554.80 -1.40%

Precious Metals and Mining 10,253.73 -1.28%

Banks 3,401.84 -0.44%