Sector movers: Electricity stocks buoyed by low interest rate expectations

Electricity shares were near the top of the leaderboard, with investors apparently growing more confident that interest rates worldwide may indeed remain 'lower for longer'.

A drop in a key US manufacturing gauge to six-and-a-half year lows in the previous session was the main culprit.

To take note of perhaps, a simple regression between US non-farm payrolls and the ISM surveys´ employment employment subindices was historically correlated to an underlying pace of job creation of around 30,000 per month, Deutsche Bank´s Jerome Saragoussi had estimated.

Little surprise then perhaps that the ISM manufacturing report published on 6 September triggered sharp gains in long-term sovereign bond yields.

On a related note, on 6 September Morgan Stanley upped its stance on European utilities from 'cautious' to 'in-line'.

"We upgrade our industry view from Cautious to In-Line. Consensus expectations now look reasonable, with little downside vs our numbers. Low interest rates and mild economic growth imply DPS attraction remains strong, while gas oversupply remains the key risk," the broker´s analysts said.

Goldman Sachs also issued an upbeat note on European utilities the next day, telling clients: "We believe European utilities are on the eve of a major inflection that will end eight years of declining profits and trigger a return to growth in earnings and dividends."

However, Goldman downgraded Centrica from 'neutral' to 'sell', while Morgan Stanley removed the shares from its 'Most preferred list'.

For its part, Goldman started coverage of SSE at 'neutral' with a target price of 1,603p.

Industrial engineers were also sporting healthy gains, with shares in Weir Group boosted by an upgrade from Morgan Stanley from 'equalweight' to 'overweight, saying to clients that the mining cycle was stabilising and that miners´ ability to spend was set to improve, with capital expenditures on replacement described as a "sweet spot".

Top performing sectors so far today

Industrial Metals & Mining 1,357.15 +3.61%
Electricity 9,182.14 +1.46%
Oil & Gas Producers 7,131.53 +1.11%
Automobiles & Parts 7,624.43 +0.96%
Industrial Engineering 9,748.38 +0.94%

Bottom performing sectors so far today
Household Goods & Home Construction 16,829.46 -1.16%
Fixed Line Telecommunications 4,446.42 -1.08%
Gas, Water & Multiutilities 6,573.46 -1.04%
Aerospace and Defence 4,643.40 -0.95%
Health Care Equipment & Services 7,719.67 -0.73%