Sector movers: Utilities pummeled, Aerospace and Defence seen impervious to politics

The Utilities sector was pummelled after the Chancellor announced general elections for 4 July, instead of in autumn as many analysts had anticipated.

Water companies were likely to suffer most from the increased political risk, analysts at Citi said.

Among other things, the purdah period before the election meant that the UK water sector's Draft Determination would likely be postponed.

News of a capital raise at National Grid and the recent ebbing in expectations for rate cuts on either side of the Atlantic were also acting as a drag.

UK Defence spending on the other hand was expected to be insulated from the political wrangling, Citi added in a separate research note sent to clients.

"It is also worth noting that defense manufacturing tends to be more in industrial areas, which are likely to be Labour constituencies, making widespread parliamentary support more likely," they said.

"Finally, with both parties in electioneering mode, much is likely to be said in the run-up to the election, but fundamentally there appears to be bipartisan support for increasing defense, if the public finances allow."

Leaving politics to one side, foreign investors were apparently still finding value in bottom fishing in UK stocks, as evidenced by a surprise bid overnight for Hargreaves Lansdown.

Yet for analysts at Canaccord Genuity: "Any successful bid would have to carry a significant strategic premium over and above our [target price of 1,148.0p], in our view. As the UK’s largest D2C wealth platform, with £150bn of AUA, c.1.9m customers and a ROE of 55% (FY23), HL is a prized asset In the UK wealth market.

Top performing sectors so far today

Aerospace and Defence 11,283.68 +2.17%

Household Goods & Home Construction 14,073.23 +1.42%

Food Producers 8,451.46 +0.92%

Investment Banking and Brokerage Services 14,787.65 +0.74%

Software & Computer Services 2,496.77 +0.58%

Bottom performing sectors so far today

Gas, Water & Multiutilities 5,866.33 -8.58%

Medical Equipment and Services 12,093.97 -4.32%

Electricity 10,595.09 -3.12%

Precious Metals and Mining 10,531.72 -1.93%

Real Estate Investment Trusts 2,328.10 -1.59%