Sector movers: Investors call time on Trump rally

The sectors which most benefitted from Donald Trump´s surprise election victory fell back on Thursday fell back as some investors expressed caution.

"Fiscal spending may boost growth near term but earnings expectations are already double-digit, margins extended, and costs could also rise.

"Valuations are vulnerable to tighter monetary policy and high economic policy uncertainty. Longer term risks are skewed to the downside if a more ‘populist’ Trump presidency weighs on global trade and pushes the US towards stagflation," equity strategists at HSBC said in a research report sent to clients.

As a result, HSBC said it was "neutralising" duration (a measure of a security´s sensitivity to changes in interest rates), upping its allocation to Banks and Industrials while cutting that for Pharmaceuticals.

Indeed, Pharma was to be found near the bottom of the leader-board, led by a drop in Hikma, alongside falls for Aerospace&Defence.

On a related note, on Wednesday evening billionaire investor Carl Icahn - a long-time Trump supporter - said the stock-market rally might have gone too far.

“When it runs up like this, I scale off a little bit,” Icahn said, Reuters reported.

“But that doesn’t mean that I am that negative or positive,” he added.

Nonetheless, it was Industrial Transportation stocks which were putting in the worst performance, weighed down by shares in Royal Mail.

Stock in the company slid after it said half-year revenue edged up thanks to its European business, but the EU referendum resulted in a reduction in UK marketing activity.

Accendo Markets head of research Mike Van Dulken said investors were uninspired by the results, which showed a 5% drop in underlying operating profits.

Construction sector shares and miners were going the other way, with the latter group bouncing back from the weakness seen over the prior session despite falling prices for bulk metals.

Building materials group CRH was helping was the chief driver behind gains for Construction after it reported a 6% rise in cumulative sales in the first nine months of the year and said it continues to expect earnings for the year to be in excess of €3bn.

In a trading update for the period from 1 January to the end of September, the company said cumulative sales rose to €20.4bn, up 22% compared with the corresponding period last year, or 6% higher on a proforma basis.

Meanwhile, earnings before interest, taxes, depreciation and amortisation came in at €2.4bn, up 14% on proforma 2015.

Top performing sectors so far today
Forestry & Paper 16,652.52 +2.32%
Software & Computer Services 1,851.70 +1.28%
Mining 14,281.17 +1.17%
Construction & Materials 6,642.78 +1.11%
Real Estate Investment Trusts 2,755.33 +1.11%

Bottom performing sectors so far today
Industrial Transportation 2,921.38 -5.17%
Aerospace and Defence 4,702.28 -1.71%
Chemicals 11,993.52 -1.02%
Pharmaceuticals & Biotechnology 13,262.77 -0.90%
General Industrials 5,173.00 -0.59%