Aerospace and Defence issues were at the bottom of the pile on Wednesday amid still dour investor sentiment towards the sector.
Underlining the medium-term challenges that the civil aviation sector was facing, analyst at Citi estimated that global flights had halved versus a year ago over the week ending on 13 September.
That was even worse than the 48% drop seen over the prior five weeks.
On the defence side of things, BAE Systems shares dipped after analysts at Jefferies trimmed their target price for the engineer from 615.0p to 600.0p.
Jefferies told clients that under its base case, US defence budgets over financial years 2022-25 would be 5% smaller on average than in FT 2021.
Nonetheless, in the same research report it upgraded BAE Systems to ‘buy’ from ‘neutral’ saying the firm was “strongly placed to weather that”.
Earnings before interest and tax between FY 2021-23 was seen flat but there was “good fundamental support” from the companny’s estimated 7% free cash flow yield in FY 23 and from the broker’s discounted cash flow analysis.
“If BAE is roughly handled by adverse sentiment, a powerful backstop would be a spin-off of Electronic Systems,” Jefferies said.
Grocers’ shares were also on the backfoot, particularly Wm Morrison, after analysts at JP Morgan downgraded the stock from ‘neutral’ to ‘underweight’.
The investment bank said that the big four UK supermarkets are unlikely to benefit from spending transferring to in-home from out-of-home as they continue to lose market share.
Shoppers are continuing to shift to online and convenience and Brexit will add to costs, JP Morgan said, adding that Morrisons, Tesco and Sainsbury’s had changed management and Walmart was looking at how to divest Asda.
Big Pharma was also a drag, with AstraZeneca down after CNN cited a doctor at the US National Institutes of Health according to whom top officials at the prestigious research centre were worried about the reason decision to pause the phase three clinical trial into its Covid-19 vaccine candidate.
The same source also told CNN that he was dismayed by the lack of information from the company about why that occured and why the trial was restarted.
Top performing sectors so far today
Industrial Transportation 2,136.87 +2.71%
Forestry & Paper 17,792.48 +2.46%
Insurance (non-life) 3,000.98 +1.37%
Industrial Metals & Mining 3,442.20 +1.16%
Support Services 9,477.04 +0.81%
Bottom performing sectors so far today
Aerospace and Defence 3,234.21 -1.72%
Food & Drug Retailers 4,197.04 -1.06%
Gas, Water & Multiutilities 4,743.92 -0.89%
Beverages 20,803.94 -0.85%
Pharmaceuticals & Biotechnology 17,909.66 -0.85%
— to www.sharecast.com
