Sector movers: Defensives drag amid profit-taking in government bonds

Mondi

1,164.50p

15:45 15/11/24

0.00%

0.00p

Cyclicals took over from defensives on Wednesday as traders in government bond yields continued to book profits ahead of the year-end.

FTSE All-Share

4,411.85

15:45 15/11/24

n/a

As on the other side of the Pond, utilities and tobacco shares were weakest, alongside other interest rate-sensitive areas of the market, including personal goods and fixed line telecommunications.

Health Care equipment names were also moving lower, albeit amid profit-taking following the prior day's gains.

In the background, the yield on the benchmark 10-year UK Treasury note was climbing by five basis points to 1.25%, alongside a two point gain on similarly-dated US Treasuries to 2.48%, with the latter threatening to break above their late-October highs at 2.46%.

Acting as a backdrop, overnight both chambers of the US Congress approved Republicans' tax cut proposals, which ironically saw markets react in typical buy-the-rumour-sell-the-fact fashion, pushing both stock and bond prices lower (and hence bond yields higher).

Shares of Mondi (Forestry) were again moving higher, helped by an upgrade out of analysts at Goldman Sachs who said the recent sell-off in the stock had thrown open an "attractive" entry point, leading them to upgrade their recommendation to a 'buy'.

"Mondi remains the highest-return company in our coverage; recent containerboard price increases are a tailwind for 2018 earnings, as are annual contracts resetting at higher levels. In addition, we expect ongoing capex projects to underpin growth from 2019. Our base dividend forecast implies a 3% yield for 2017, which we believe could be more than doubled through a potential special dividend announcement at the FY results," Goldman told clients.

Top performing sectors so far today

Industrial Metals & Mining 3,793.75 +3.11%
Forestry & Paper 20,250.15 +2.90%
Automobiles & Parts 7,087.14 +1.34%
Mining 17,685.20 +1.19%
Oil Equipment, Services & Distribution 12,604.68 +0.95%

Bottom performing sectors so far today
Electricity 7,610.80 -1.21%
Fixed Line Telecommunications 3,114.33 -1.21%
Tobacco 53,612.59 -1.11%
Personal Goods 36,203.10 -1.08%
Health Care Equipment & Services 7,406.29 -0.84%