Sector movers: BATS and Hunting weigh on market
By Alexander Bueso
Date: Friday 21 Oct 2016
(ShareCast News) - The more cyclical areas of the market, such as steel and mining were clearly in the lead during the final session of the week, buoyed perhaps by news that Chinese home price growth accelerated in September to a 11.2% year-on-year pace from 9.2% in the prior month.
Investors in auto parts maker GKN on the other hand were cheering results from their French rival Valeo published on the previous day.
Valeo posted third quarter sales growth of €4bn, which was between 3% and 4% ahead of consensus estimates, while like-for-like sales jumped by 12%.
British American Tobacco dragged on the market after tabling a $47bn bid for the 57.8% of Reynolds American which it did not already own.
However, early gains in the stock soon evaporated as analysts began to speculate that Reynolds might ask for more.
For its part, Reynolds said it would evaluate the offer and then respond.
To take note of perhaps, in July BATS finance chief, Ben Stevens, told Bloomberg the company was looking for bolt-on acquisitions, particularly in Asia and North Africa, but that major industry consolidation looked improbable.
Oil equipment services outfit Hunting was hit by weakness following cautious comments from analysts at UBS.
"Oil companies are determined to keep a tight rein on capex and projects that reach sanctioning are likely to be competitively bid, impacting service sector margins and returns," they said.
"We are cautious on the European oil services sector after the oil-price-led rally has driven the sector up ~30% from January lows. Oil companies are determined to keep a tight rein on capex and projects that reach sanctioning are likely to be competitively bid, impacting service sector margins and returns. Earnings quality is poor - we forecast margins to average ~7% from now until 2020E, down from ~13% for the period of 2008-15," the Swiss broker added in a research note sent to clients.
Top performing sectors so far today
Industrial Metals & Mining 2,043.61 +3.44%
Automobiles & Parts 7,654.83 +1.36%
Mining 13,414.12 +1.25%
Fixed Line Telecommunications 4,354.29 +0.89%
Construction & Materials 6,518.10 +0.70%
Bottom performing sectors so far today
Tobacco 54,969.55 -1.23%
General Retailers 2,515.80 -0.84%
Chemicals 12,872.54 -0.80%
Oil Equipment, Services & Distribution 16,691.13 -0.78%
Aerospace and Defence 4,562.98 -0.73%
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