Sector movers: Utilities gain as US wage miss hits Treasury yields
London stocks ended up almost flat on Friday, with utiliites on the up, while non-life insurers and food producers dragged.
Gas, water and other utilities were all up amid a general uplift following the slightly weaker than expected US wage growth, Treasury yields in the States fell back. Utilities in the UK are very closely linked to US Treasury yields, as they have a lot of debt priced in dollars.
The food producers sector was dragged down as Associated British Foods fell the day after its third-quarter update as some analysts readjust expectations downwards for this year and next.
Since speaking with management analysts at Shore Capital said they were tweaking down full year expectations and downgrading 2019 earnings per share by circa 7% to 133.4p which would be broadly flat year-on-year. On these revised forecasts, ABF stock is trading on a September 2019 p/e ratio of 19.5 times and an EBITDA multiple of 9.9 times.
Moreover, analysts at Deutsche Bank cut their target price to 3,100p from 3,300p as they also cut earnings forecasts but reiterated a ‘buy’ on the stock.
Motor insurers were down as Barclays downgraded Direct Line and Esure amid softer pricing. Although this fall in pricing is "entirely rational", analysts said, these cycles "tend to overshoot", particularly as all the listed players are looking for growth and the bank's proprietary analysis shows larger players Aviva and Allianz are taking share too.
Top performing sectors so far today
Gas, Water & Multiutilities +1.81%
Mobile Telecommunications +1.34%
Leisure Goods +1.00%
Fixed Line Telecommunications +0.86%
Media +0.75%
Bottom performing sectors so far today
Food Producers & Processors -2.14%
Insurance (non-life) -1.60%
Automobiles & Parts -1.53%
Oil Equipment, Services & Distribution -0.75%
Health Care Equipment & Services -0.64%