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22 Feb, 2021 19:36

Sector movers: Interest rate-sensitive issues drag on the stock market

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British Airways

Cyclicals were clearly in the lead at the start of the week, but failed to fully offset the drag from rising government bond yields on the other side of the Atlantic.

By the end of the trading day the yield on the benchmark 10-year US Treasury note was nearly two basis points higher to 1.35%, weighing on interest rate-sensitive areas of the market in particular.

Other so-called 'defensive' sectors such as health care equipment were also under pressure, alongside shares in grocers amid mounting expectations for the reopening of the UK economy.

According to analysts at UniCredit, 10-year yields in the US were likely to finish 2021 at around 1.50%.

In their opinion, upwards pressure on inflation over the next couple of years would be "modest" and would not trigger tightening by the US central bank.

"But of course, we could be wrong, and end up seeing this big fiscal plan push inflation to 3%-4%, as argued by e.g. Larry Summers, triggering a rate hike before the end of 2022," conceded UniCredit chief economist Erik F.Nielsen.

"But I'll put the odds of that at less than 25%."

Strength in the oil patch provided a large boost to the upside, partly on expectations for prolonged disruptions to the US oil sector, which sent Brent crude oil futures 4.2% higher to $61.71.

Top performing sectors so far today

Travel & Leisure 8,807.96 +3.92%

Oil Equipment, Services & Distribution 5,354.76 +3.56%

Aerospace and Defence 3,424.23 +2.96%

Oil & Gas Producers 4,977.90 +2.83%

Automobiles & Parts 5,000.79 +1.17%

Bottom performing sectors so far today

Health Care Equipment & Services 6,190.41 -3.60%

Food & Drug Retailers 4,327.99 -2.78%

Equity Investment Instruments 13,000.11 -2.20%

Software & Computer Services 1,948.41 -2.12%

Gas, Water & Multiutilities 4,607.06 -2.03%


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.