Sector movers: Commodity stocks bounce despite weak China data
Commodity stocks were broadly higher at the start of the week despite a slightly weaker-than-expected reading on a key survey for the Chinese manufacturing sector, possibly as investors bid their time ahead of the return of US investors from their summer break, on Tuesday, and following selling at the end of the prior week.
The private sector-compiled Caixin factory sector Purchasing Managers' Index slipped from a reading of 50.8 in July to 50.6 for August (consensus: 50.7), amid weak export sales.
Significantly, data from other surveys and indeed for other countries, including one of China's largest trading partners, South Korea, had pointed to weakness centred on the domestic economy, rather than overseas, some economists said.
"This slowdown appears, on balance, to have continued last month, mostly likely on the back of a further deceleration in credit growth and infrastructure investment," said Julian Evans-Pritchard at Capital Economics.
"While the policy easing now underway should eventually put a floor beneath growth, the usual lags involved mean that growth will continue to cool heading into next year," he added.
Despite that, three-month LME copper futures were staging a modest bounce and changing hands near the $6,000 per metric tonne mark.
According to some market commentary, Big Oil meanwhile was benefiting from increased worries around the prospect of reduced crude oil supplies from Iran next winter in the wake of US sanctions.
Telecommunications stocks were also staging a bounce on Monday.
To the downside, it was all about Tobacco, after analysts at RBC Capital Markets downgraded their recommendation on shares of Imperial Brands and British American Tobacco from 'sector perform' to 'underperform'.
They also slashed their target prices for the shares of the two companies.
In both cases, the reason for the downgrades was the expected impact on their margins from "negative mix effects" as so-called 'next generation products' made up an ever-increasing share of their sales.
Auto&Parts were also lower, albeit only modestly, as investors played it safe ahead of the expected re-start of trade talks between Ottawa and Washington, on Wednesday, and the end of the public consultation period on the US administration's proposed second round of tariffs on Chinese goods later in the week.
Top performing sectors so far today
Industrial Metals & Mining 4,555.20 +2.78%
Fixed Line Telecommunications 2,570.26 +1.83%
Oil & Gas Producers 9,405.60 +1.80%
Mobile Telecommunications 3,737.30 +1.16%
Forestry & Paper 24,417.51 +1.12%
Bottom performing sectors so far today
Tobacco 41,534.71 -0.72%
Real Estate Investment Trusts 3,011.87 -0.48%
Automobiles & Parts 11,598.20 -0.42%
Food Producers & Processors 7,025.58 -0.39%
Real Estate Investment & Services 2,667.68 -0.38%