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(Sharecast News) - On Tuesday, resources stocks and banks dragged down the London benchmarks, while retailers reversed their losses from the previous session.
Oil services and producers were the big laggards as stocks were marked down following the falls in crude oil. Brent crude was down 1.9% to $61.56 and WTI down more than 2% to $52.65. Morgan Stanley also downgraded Shell to 'underweight'.
Market analysts said oil and the wider mining complex was being hit by risks to global growth highlighted by China's gross domestic product figures and the IMF forecasts a day earlier. The IMF now anticipates that world GDP will expand by +3.5% this year, down 0.2 percentage points, and then 3.6% next year, down 0.1ppt since the previous update reflecting "softer momentum in the second half of 2018".
TD Securities was more positive about prospects, having earlier said: "That being said, the recently narrower brent spreads highlight that the market for crude is tightening as supply cuts take effect and demand still remains steadfast. We still think this rally has some legs, but considering that systematic trend followers are looking for significantly higher prices before covering their shorts, risk appetite would have to continue to firm in order to support higher prices."
Many UK and continental banks were down after UBS missed analyst expectations for the fourth-quarter and adopted a cautious tone for the current year. The asset management arm saw investors withdraw $4.9bn of assets in the fourth quarter, while the investment banking arm also struggled with "challenging market conditions", which affected revenues from both equities and corporate client solutions.
But overall the bank struck a cautious tone for the current year: "Lack of progress in resolving geopolitical tensions, rising protectionism and trade disputes, along with increased volatility, which affected investor sentiment and confidence in the second half of the year, and particularly in the fourth quarter, would affect client activity in the first quarter of 2019.
"Lower invested assets as a result of market declines in the fourth quarter are expected to affect recurring revenues in global wealth management and asset management."
Retailers were led by Dixons Carphone, which gained after it reiterated confidence in its full-year profit guidance despite reporting mixed trading over the Christmas period, with electricals sales up but mobile sales down.
A recent Sky News report suggested that activist investor Elliott Advisers is thinking of building a stake in Dixons.
Elshewhere in the sector, Pets at Home trumpeted that it was "a strong quarter", with retail like-for-like sales up 4.7%.
Kingfisher was the second biggest riser, rebounding after its fall at the start of the week.
Top performing sectors so far today
General Retailers 2,111.13 +1.51%
Food & Drug Retailers 3,760.71 +1.20%
Industrial Transportation 2,357.79 +0.90%
Food Producers & Processors 7,206.84 +0.83%
Real Estate Investment & Services 2,473.54 +0.45%
Bottom performing sectors so far today
Oil Equipment, Services & Distribution 11,161.98 -3.99%
Oil & Gas Producers 8,581.35 -1.95%
Health Care Equipment & Services 6,851.82 -1.57%
Mining 17,391.65 -1.49%
Banks 3,810.92 -1.38%
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