Sector movers: Miners down most, whiff of poilitical risk in the air
By Alexander Bueso
Date: Friday 24 Feb 2017
(ShareCast News) - Miners and steel firms fell back as the price for many industrial metals retreated, to the benefit of the more defensive segments of the market, amid a wider pull-back in investors' risk appetite.
"A risk-off tone took hold at the end of the week with investors fleeing stocks and seeking the safety of gold. A stunning 10-day run of record closes in the Dow Jones was probably a cue in itself for global markets to give a little back. The last time the Dow had such a winning streak was 1987, the year that saw Black Monday, the biggest one-day market crash in history," said Jasper Lawler, Senior Market Analyst at LCG.
As of 1330 GMT, three-month copper futures were down by 3.0% to $5,859.00 a metric tonne in LME trading, with contracts for nickel and zinc retreating by 2.1% and 2.6%, respectively, alongside them.
That saw higher-Beta stocks in the Mining space such as KAZ Minerals (-7.24%) and Vedanta (-8.64%) come off sharply.
The only bright spot were the gold-diggers, with Acacia Mining (1.71%) and Randgold Resources (1.12%) gaining ground.
"Despite the political risk, taking a bearish view on stocks is risky when the uptrend has been so persistent. A market that has been reacting better to rising political risk has been gold. The demand for gold is not a new phenomenon this year. The yellow metal has finished higher nine out of the past ten weeks. On Friday it cracked $1250 per oz for the first time since it tanked after the US election."
Among the individual stocks benefiting from Friday´s price actions were SSE, TalkTalk and United Utilities.
To take note of nonetheless, according to some market pundits the swoon in risk-apetite and financial markets more generally was the result of remarks on the previous day out of US Treasury Secretary Steve Mnuchin which put in doubt the timing of any tax cuts in the States.
Indeed, Chinese iron ore futures dipped overnight to $86.7 per metric tonne from the prior day´s close of $89.2 a tonne.
In parallel, Chinese stell rebar futures fell from $562.4 a tonne to $558.6 a tonne.
On a related note, traders were already looking out to speeches from at least 10 Fed speakers over the coming week.
For strategists at Bank of America-Merrill Lynch, the 'upside' case for risk-apettite over the next month could be thus summarised as: "Trump & Yellen = breakout time for bonds & FX: holding pattern in bonds & dollar set to end with Trump to Congress 28th, PCE on March 1st, Yellen speech 3rd, payroll 10th, FOMC 15th (note Fed hike probabilities...March 38%, May 61%, June 75%)."
Top performing sectors so far today
Household Goods & Home Construction 17,280.52 +0.91%
Mobile Telecommunications 4,579.58 +0.87%
Gas, Water & Multiutilities 6,197.84 +0.74%
Fixed Line Telecommunications 3,817.68 +0.71%
Electricity 9,129.49 +0.52%
Bottom performing sectors so far today
Industrial Metals & Mining 2,343.72 -5.68%
Mining 16,062.92 -3.02%
Automobiles & Parts 8,010.21 -2.11%
Construction & Materials 6,483.68 -1.59%
Oil Equipment, Services & Distribution 14,518.36 -1.41%
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