Sector movers: Telecoms, tobacco and miners weigh
Telecoms, tobacco, miners and banks were the sectors on the slide on Tuesday, while industrial engineers and food producers were providing buoyancy.
Telecoms stocks were led lower by BT, where even further speculation about takeover interest was not enough to lift the shares for more than a few seconds.
The sector was one of several defensive investment themes to take a further hit in recent months.
Likewise, while some disappointment with Imperial Brands' annual results may have led to some shareholders stubbing out, the company was among many "bond proxy" stocks taking a dive.
“The role of the Gilt yield cannot be underestimated," said Russ Mould, investment director at AJ Bell.
He said Imperial’s, and the same is true of other similar stocks in other sectors, dividend yield "looks less attractive relative to cash and Government bonds, the higher cash and Gilt yields go – especially as the risks with shares are so much higher".
"If investors can get better returns from lower-risk cash and bonds, they may decide that they don’t need own income-stocks such as Imperial, or that they should at least pay a lower price to access the dividend stream. This is why tobacco firms are often seen as so-called ‘bond proxies,’ stocks which do well when Government bond yields and interest rates are falling and less well when they are rising.
“This is all part of the natural market cycle. Investors must then decide at what stage do they think Imperial’s shares are over-sold, given that the firm has increased its annual shareholder dividend at a double-digit rate in every year but two since 1997. The shares offer a historic yield of 7% and analysts are predicting further dividend growth for the year to September 2019. Against that, sceptics will argue that the past may not be a good guide to the future as regulatory and health concerns weigh on demand for tobacco and stick volumes continue to gently decline."
The mining sector was down amid lower copper prices and research from S&P Global Market Intelligence that found cost of building a copper or gold mine is now cheaper than buying an existing one, pouring cold water on prospects of major M&A activity in the sector.
Data shared with Reuters support comments from major miners, including BHP and Rio Tinto , which say their strategy is to build or to "smart buy", if they can possibly find a suitable mine for sale at the right price or acquire part of a promising prospect.
Banks were down after Financial Conduct Authority told the sector to rescue thousands of borrowers "trapped" in poor value home loans, threatening to intervene if no action is taken.
Chris Woolard, executive director of strategy and competition at FCA, said some mortgage customers who took out mortgages before lending practices and regulation changed after the financial crisis are unable to switch, even though they would benefit from doing so.
Jackie Bennett, director of mortgages at trade body UK Finance, warned that it could increase operational risks if banks are asked to deal with many new rule changes.
Top performing sectors so far today
Industrial Engineering 11,431.49 +1.70%
Food Producers & Processors 7,254.34 +1.32%
Real Estate Investment & Services 2,601.65 +0.81%
Electricity 7,140.07 +0.49%
General Industrials 5,774.30 +0.47%
Bottom performing sectors so far today
Fixed Line Telecommunications 2,926.20 -3.41%
Tobacco 37,527.45 -3.20%
Construction & Materials 5,400.41 -2.35%
Mobile Telecommunications 3,290.50 -2.23%
Food & Drug Retailers 3,671.17 -2.04%
FTSE 100 - Risers
Associated British Foods (ABF) 2,451.00p 2.64%
ITV (ITV) 156.65p 1.20%
Rolls-Royce Holdings (RR.) 831.40p 1.02%
Smith (DS) (SMDS) 384.10p 0.97%
Experian (EXPN) 1,787.50p 0.87%
Rentokil Initial (RTO) 309.70p 0.85%
Burberry Group (BRBY) 1,814.50p 0.81%
Marks & Spencer Group (MKS) 299.70p 0.71%
St James's Place (STJ) 1,020.50p 0.54%
Direct Line Insurance Group (DLG) 319.40p 0.44%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 241.15p -5.26%
CRH (CRH) 2,240.00p -3.53%
British American Tobacco (BATS) 3,293.00p -3.35%
BT Group (BT.A) 254.15p -3.29%
WPP (WPP) 867.20p -2.98%
Rightmove (RMV) 450.60p -2.66%
Imperial Brands (IMB) 2,580.50p -2.38%
Intertek Group (ITRK) 4,562.00p -2.29%
Vodafone Group (VOD) 147.10p -2.19%
Kingfisher (KGF) 249.20p -2.08%
FTSE 250 - Risers
Weir Group (WEIR) 1,606.00p 6.22%
IWG (IWG) 251.10p 5.99%
Synthomer (SYNT) 460.00p 4.17%
Sanne Group (SNN) 610.20p 3.95%
Indivior (INDV) 209.90p 3.91%
EI Group (EIG) 177.60p 3.86%
Spire Healthcare Group (SPI) 132.00p 3.61%
Wizz Air Holdings (WIZZ) 2,702.00p 3.25%
Quilter (QLT) 124.70p 3.16%
Wetherspoon (J.D.) (JDW) 1,330.00p 3.10%
FTSE 250 - Fallers
Just Group (JUST) 86.70p -5.66%
William Hill (WMH) 202.00p -5.43%
Amigo Holdings (AMGO) 232.35p -5.16%
CYBG (CYBG) 253.80p -4.23%
Vivo Energy (VVO) 109.90p -4.18%
Mediclinic International (MDC) 377.20p -3.41%
Travis Perkins (TPK) 1,092.00p -3.36%
Card Factory (CARD) 184.30p -3.15%
Go-Ahead Group (GOG) 1,548.00p -3.01%
IP Group (IPO) 112.00p -2.78%