Sector movers: Miners drag after soft Chinese inflation data

Industrial metals miners was among the weakest segment of the market at the start of the week.

Dragging on investor sentiment were weaker-than-expected readings on headline consumer and producer prices in the People's Republic of China for the month of June.

An unexpected dip in headline CPI to -0.2% year-on-year led to a fair bit of market commentary regarding the need for further economic stimulus in the Asian giant.

Yet analysts seemed generally cautious, instead anticipating more targetted measures on the part of Beijing.

Broker commentary was not very supportive for individual stocks either with Barclays trimming its target prices for some after refreshing the commodity price deck underlying its estimates for the sector.

For their part, in a research note sent to clients, analysts at Citi said: "Seasonality lags before the China financing momentum change impacts underlying metals demand is likely to keep the sector range-bound in the short term.

"In addition, we do not expect a broad-based China stimulus and therefore the market exuberance around stimulus expectations could get tempered."

Interest rate sensitive REITS and Utilities were also soft ahead of UK wage data due out the next day, given the risk that any upside surprise might see Gilt yields continue to move higher.

Oil and Gas on the other hand caught a bid with Oanda analyst Craig Erlam noting a potential breakout the week before in Brent crude oil futures.

Looking past China and recent moves in UK interest rates, Morgan Stanley strategist Graham Secker said that if inflation rolled over, this lifting macro sentiment, then UK mid and small cap stocks looked "cheap" and would garner interest.

Top performing sectors so far today

Industrial Transportation 3,758.68 +2.20%

Travel & Leisure 7,493.97 +1.65%

Non-life Insurance 2,932.98 +1.10%

Medical Equipment and Services 10,050.59 +0.95%

Oil, Gas and Coal 7,902.11 +0.71%

Bottom performing sectors so far today

Industrial Metals & Mining 6,164.75 -0.71%

Real Estate Investment Trusts 1,971.12 -0.48%

Tobacco 28,251.63 -0.48%

Chemicals 9,886.13 -0.45%

Gas, Water & Multiutilities 5,635.21 -0.40%