Bond-like stocks in the utilities, healthcare and consumer staples sectors are being pummeled as long-dated bond yields and sterling tick higher, offsetting gains among oil producers and service companies.
London's leading 100 stocks trade 0.1% lower at 6,778 as investors step up selling of stocks perceived to be 'bond proxies', those with defensive but low growth cash flow profiles.
Cruise liner Carnival (CCL) is among the bigger blue chip fallers, down 2.4% at £39.48, alongside other defensives including Severn Trent (SVT), Unilever (ULVR) and Imperial Brands (IMB).
Sterling strength may also be playing a role as the UK currency continues to rally at the start of December following its best monthly run against the dollar since January 2009. Carnival, Unilever and Imperial all generate a substantial share of their profits abroad. Sterling buys $1.2535, up around half a cent overnight.
OIL PRODUCERS
Oil production asset owners along with engineers geared towards the industry are moving the other way on the back of industry cartel OPEC's decision to curb output, which caused an 8% spike in the price of crude.
West Texas Intermediate, a key industry benchmark, trades another 0.3% higher this morning at $49.61 (£39.48).
Oil service outfits Hunting (HTG), Amec Foster Wheeler (AMFW) and Weir Group (WEIR) are among the top FTSE 350 gainers, though counter-intuitively they trail airline Wizz Air (WIZZ), whose costs are heavily impacted by price moves on the commodity.
GOLDMAN UPGRADE AT WIZZ
Wizz, up 5.6% at £17.70, is gaining because of a bullish call by analysts at investment bank Goldman Sachs, who have slapped a 'buy' rating on the stock and increased its price target to £21 a share from £17.53.
Moving the other way, Talk Talk (TALK) trades 5% lower at 152p after a broker downgrade from JP Morgan Cazenove.
Elsewhere, Rio Tinto (RIO) says it is a cooperating with the Securities & Exchange Commission (SEC) over an investigation around the timing of losses recognised on a coal project in Mozambique. Media reports of the probe emerged earlier this week.
Outsourcer Serco (SRP) says trading profit in 2016 is likely to be in line with expectations at around £80m though profit may dip slightly in 2017. Turnaround initiatives should return the business to top-line growth in 2018 four years of declines, Soames adds, citing a growing order backlog. Progress is underlined with a £600m cleaning and domestic services contract win with Barts Health NHS Trust, England’s largest NHS trust. Shares trade 2.3% higher at 136p.
OTHER MOVERS
Convenience retailer McColl’s (MCLS) posts a 1.9% dip in like-for-like sales, a measure of revenue derived from stores open more than one year, just as it reaches a corporate milestone of operating 1,000 stores. Shares trade 3.2% higher 181p.
Fulcrum Utility Services (FCRM:AIM) seals a £4m contract to build a 12km gas pipeline for a food manufacturer in the south-west of England helping shares gain 2.0% to 52p. Work will commence in spring 2017 though payments for the project will not be concluded until 2022.
Premier Asset Management (PAM:AIM) reports its first set of results since joining the junior market in October, delivering a 22% increase in assets under management (AuM) to £5.1bn. Net inflows have been positive for 14 consecutive months says chief executive Mike O’Shea. No shares have changed hands in early trade.
