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19 Mar 2021 | 16:05

Sector movers: Defensives offset drag from Cyclicals, Telecoms down on 'profit taking'

(Sharecast News) - Stocks on the FTSE 3500 were modestly lower at the end of the week, wiping out the week's gains in the process. Defensives were helping to offset some of the selling in cyclical names following the drubbing for stocks on Wall Street the day before.

Government bond yields were similarly little changed following the previous session's renewed climb higher, which had again triggered selling in stock markets.

Meanwhile, in the background, some market commentary was drawing similarities between the recent rise in yields and the 2013 'Fed taper tantrum', when bond markets were impacted by their lack of depth after the Great Financial Crisis, contributing to a so-called 'overshoot' in yields.

It was against that backdrop that the night before the Federal Reserve said it would allow the capital break for the biggest lenders on 31 March, as previously planned.

The break had allowed banks to purchase government debt and load up on deposits without having to set aside proportionate capital buffers.

In any case, Friday was 'quadruple witching' day in the States, with futures and options for stocks and indices all set for their quarterly expiry.

To take note of, those derivatives expiry dates were sometimes preceded by bouts of volatility.

On the flip side, it remained to be seen whether traders would push stocks lower still given that there were now under two weeks left until the end of the quarter and the Good Friday bank holiday, which one might expect to see some 'window dressing' by fund managers, even if only in the session's right before quarter's end.

In the case of Fixed Line Telecommunications, selling in BT Group was at least in part due to 'profit taking' after a solid run throughout the week.

That followed a positive surprise at a spectrum auction on Wednesday and Ofcom's wholesale fixed telecoms market review, on Thursday.

And there were more potential positive catalyst on the way, said analysts at Berenberg, including the triennial pension review and the Premier League auction.

There was also slight concern among some analysts about the risk of a fourth Covid-19 'wavelet' in the US, should the virus strain first detected in the UK continue spreading.

According to Pantheon Macroeconomics, it was unknown whether it would or not, but they remained "firm" in their conviction that vaccinations and improved weather would end up turning the tables on the virus.

Even so, such concerns were likely also a factor behind recent selling in stocks and cyclical names in particular.

Top performing sectors so far today

Food & Drug Retailers 4,217.70 +1.53%

Tobacco 29,244.79 +1.19%

Gas, Water & Multiutilities 4,712.10 +1.04%

Oil Equipment, Services & Distribution 4,967.10 +0.63%

Electricity 8,463.66 +0.41%

Bottom performing sectors so far today

Aerospace and Defence 3,690.25 -2.19%

Fixed Line Telecommunications 1,762.13 -2.16%

Automobiles & Parts 4,693.63 -2.12%

Industrial Engineering 14,939.73 -1.90%

Mining 23,399.80 -1.87%

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