After a bump higher following the elections last week, the FTSE 100 paused on Tuesday as the index traded around breakeven with a clear interest in defensive sectors.
Severn Trent, United Utilities, National Grid and gold miner Endeavour were among the top gainers as investors favoured those companies with ‘safer’ attributes.
“The FTSE 100 closed broadly flat yesterday and has opened today in a similar fashion, without too many catalysts to drive a move either way. Housing sector investors welcomed Rachel Reeve’s speech yesterday and new supply pledges helped a slew of listed builders tick higher,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
The housebuilders have provided support for the index in recent sessions, but the buying pressure started to ebb on Tuesday after Vistry released a positive trading update that didn’t wow investors.
Vistry shares slipped in early trade but picked up as the session progressed, although housebuilders Persimmon, Taylor Wimpey, and Barratts remained fairly static.
An update from BP provided the biggest counterweight to buying activity in defensive stocks. The company said production is fairly flat, and lower oil prices were curtailing any potential excitement from refining margins.
“The FTSE 100 ticked higher on Tuesday despite a weak update from index heavyweight BP acting as a drag on the market,” said AJ Bell investment director Russ Mould.
“A teaser ahead of second-quarter results later this month from BP suggests they won’t be a winner.
“The major issue is a big hit to refining margins, reflecting both market dynamics but also operational issues for the company. These factors also underpin guided impairments of $1 billion to $2 billion for the quarter. The broad range left the market with some uncertainty over how the second-quarter numbers will land.”