Investors rotated into FTSE 100 stocks with defensive attributes on Tuesday as London’s leading index gained for a second consecutive day.
Tensions in the Middle East drove a risk-off tone in equities, and buyers jumped into utilities, pharmaceuticals and energy firms.
The defensive characteristics of the FTSE 100 as an index were highlighted with a 0.4% gain, while other European indices fell.
Severn Trent, United Utilities and AstraZeneca were the top risers with gains between 2%-3.5%. AstraZeneca is the FTSE 100’s second-largest company and added a significant number of points to the index.
The risk-off tone was further demonstrated by declines in cyclical sectors, including miners and consumer discretionary stocks.
There was interest in UK-facing stocks after news UK wage growth exceeded inflation for the first time in two years helped interest rate-sensitive sectors. Housebuilders were among the top risers.
“The headline grabber will undoubtedly be the news that average pay growth has outstripped inflation for the first time in almost two years. It means hard working Brits should begin to feel the benefit of those extra pennies in their pay packets when doing the household budgets,” said Danni Hewson, AJ Bell head of financial analysis.
“But it’s important to note this is an average number. Not every worker will have had a pay rise and there are clear differences between the public and the private sector.
“What the Bank of England’s MPC members will be considering is that though pay growth is high it isn’t rising as quickly as it had been.”