Market conditions for shareholders of BT Group (LSE:BT.A), Glencore (LSE:GLEN) and United Utilities (LSE:UU.) were far from ideal today as the elevated interest rates outlook continued to depress sentiment.
A poor start to Tuesday’s Wall Street session as US bond yields stayed near their post-2007 highs meant no respite for the FTSE 100 index following its 1.3% decline on Monday.
The rate jitters came on the back of a better-than-expected monthly report on activity in the US manufacturing sector and comments from various Federal Reserve officials that suggested monetary policy will remain tight for some time.
Even the lack of a US government shutdown over the weekend was seen in a more bearish light as it removed a tangible risk for the world’s biggest economy. Deutsche Bank noted this morning that the likelihood of a hike at the Federal Reserve’s next meeting in November had gone from 19% on Friday to 28% yesterday.
Higher yields on both sides of the Atlantic have diminished the investment appeal of income bearing stocks, with utilities among those sharply lower in today’s London session.
Sellers also focused on the telecoms sector as BT Group retreated 2.7p to leave the widely-held stock back near its low point for the year at around 112.9p.
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Others under strain included Glencore and Anglo American (LSE:AAL) as today’s rise in the dollar index to its highest level since November raised commodity costs for buyers in other currencies.
Burberry Group (LSE:BRBY) joined them on the fallers board after City bank UBS hit the luxury goods group with a “sell” recommendation, noting that the feedback to the recent launch of a new collection by creative director Daniel Lee appeared to be muted.
The bank also warned the company’s turnaround may end up having to cost more in order to succeed. It said: “Years of cost control in an increasingly competitive and polarised luxury sector means that the company may need to step up its spending and gross margin reinvestments in order to drive a long-term sustainable profitability improvement.”
UBS downgraded its share price target from 2,285p to 1614p, a move that contributed to today’s slump of 71.5p to 1,822p.
On a brighter note, BAE Systems (LSE:BA.) rose as the same bank took its target price into record territory at 1,220p, reflecting the impact of yesterday’s £4 billion of funding for development work on the next generation of nuclear-powered attack submarines.
There were also gains for Asia-focused HSBC Holdings (LSE:HSBA) and Standard Chartered (LSE:STAN) in the FTSE 100 index, but the stock with real momentum continues to be AIM-listed Oxford BioDynamics (LSE:OBD) following the launch of its EpiSwitch prostate screening test in the US and UK.
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In a further boost for shareholders today, the company said the test had been issued with a code that from the start of 2024 should make it easier for Americans to claim for reimbursement under their insurance.
Shares today topped 50p, which compares with 10p prior to last week’s earlier-than-expected disclosure that the EpiSwitch test (PSE) had received validation. The success has been shared by plenty of ii customers after Oxford BioDynamics featured among our most traded stocks last week.
The PSE test is designed to run alongside a standard PSA blood test, predicting with 94% accuracy the presence or absence of prostate cancer. Those with a PSE result of low likelihood of cancer can be placed on active surveillance and retested later without being referred for an invasive and often destructive biopsy.
The test is the culmination of nearly a decade’s collaboration with Imperial College London, University of East Anglia, Imperial College NHS Trust and the UK's leading prostate cancer experts.
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