Sector movers: Electricity, Pharma lead falls on political risk

Defensive issues paced losses in London even as prices for Gilts staged an advance, pushing yields lower.

Political risk was the common denominator.

Typically lower yields reflect a risk-off attitude among investors which often coincides with outperformance by the more defensive segments of the stockmarket.

Having closely followed the recent BEIS Select Committee and Parliament's Economic Committee public hearings on the energy market and CMA investigation, Citi analyst jenny Ping said the risk of political intervention in the UK retail energy market is "high".

"The onerous is shifting from consumer switching to treating customers fairly. With Ofgem also voicing its willingness to support any policy changes including a cap, we conclude that risk of political intervention is high, especially around standard variable tariffs," Ping said.

On the basis of the above, Ping downgraded shares of SSE from 'Neutral' to 'Sell' (target price: 1,344p) and reiterated her 'Sell' on Centrica.

Pharmaceuticals & Biotechnology was the other main loser of the session, after the US president took to his Twitter account late in the afternoon, promising more competitive drug pricing.

"I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!," Trump tweeted.

His remarks saw stock in AstraZeneca drop 0.87% and that of Shire erase 1.64%.

"Trump’s promise to control drugs prices highlights that the optimism felt in response to Hilary Clinton’s election loss was clearly misplaced, proving that the topic remains one rare bipartisan area of agreement," mused Chris Beauchamp and Josh Mahony at IG.

Miners were also moving lower as the price of the yellow metal continued its retreat, giving back 0.64% to 1,217.70 an ounce.

That weighed on the likes of Fresnillo and Randgold Resources.

Going the other way, GKN drove gains, possibly benefiting from speculation around the start of the 2017 Geneva Motor Show on 9 March.

Top performing sectors so far today
Automobiles & Parts 8,730.34 +0.78%
General Industrials 6,014.27 +0.73%
Personal Goods 34,484.80 +0.68%
Software & Computer Services 1,906.84 +0.60%
Tobacco 58,050.38 +0.56%

Bottom performing sectors so far today
Electricity 8,965.97 -1.63%
Pharmaceuticals & Biotechnology 14,331.99 -1.10%
Insurance (non-life) 2,780.97 -0.78%
Mining 15,953.62 -0.60%
Travel & Leisure 8,986.46 -0.59%