Top-Performing UK Sectors After FTSE Record High

The FTSE 100 is off record highs, but several sectors have still made gains over the last week despite the chaos caused by the war in Iran, and they could continue to gain going forward.

FTSE 100 Sectors Gaining Over the Last 7 Days

• Computer Peripherals +9.8%
• Broadcasting +6.2%
• Semiconductors +5.8%
• Chemicals: Agricultural +4.8%
• Oil Refining and Marketing +4.0%

UK Tumbles Amid Global Uncertainty

The premier stock index in the UK is down by over 7% since hitting three consecutive record highs at the end of February, as traders turn to safe havens amid uncertainty over the war in Iran. Although markets are breathing a bit of relief after crude prices fell from their Monday highs, energy prices are still higher than before the war, which could elevate inflation and drag on the very tepid economy. On Friday, the ONS will report UK monthly GDP growth data, with the January figure expected to accelerate to 0.2% from 0.1%. Higher costs could derail that incipient improvement and keep investors on the sidelines. Nevertheless, some sectors are still managing gains. A quick look at some of the top-performing sectors in the FTSE 100 index shows clear influence from the conflict, with oil and fertiliser prices rising. But AI-infrastructure-related sectors continue to outperform as well. There is one notable sector that is the odd one out:

Broadcasting Rising on ITV Earnings

There is nothing like a war to get viewers to turn on the TV, but the private media network ITV has been gaining so much over the last week that it has pulled up the whole sector. The company posted a smaller-than-expected loss last Thursday and said discussions to sell its media and entertainment arm to Sky were ongoing. It faced tough comparables with the Euros but has a positive outlook with the FIFA World Cup expected to bring back lost advertising revenue. Major events later in the year might help support the sector if the UK economy allows an increase in advertising spending.

AI Supports Computer Peripherals and Semiconductors

As markets rebounded on Tuesday amid hopes of a quick end to the war, tech stocks rallied, with investors reluctant to miss out on the gains. Oracle posted solid earnings, with cloud revenue growing 44%, reassuring traders that demand for AI infrastructure remains strong and the feared bubble hasn't popped yet. UK suppliers rose in sympathy, with hyperscalers expected to spend over $650 billion globally in AI buildout this year.

Crude Raises Energy and Fertiliser Costs

Oil producers' stock prices rise when oil prices go up, which is a no-brainer, but not all companies are the same. Higher crude prices benefit companies that pump, but those invested in refining and selling to consumers (downstream) can see their profit margins squeezed by higher input costs. But the first indication that higher crude prices will filter through the economy could be rising fertiliser costs. Many fertilisers are derived from petroleum products, and higher crude oil prices are expected to elevate fertiliser prices just as farmers are set to buy for the spring planting season. Already, BASF has increased its sales prices to preserve its margins, and other competitors can see improved profitability in a higher-priced market.

FTSE 100 Remains Above 10k

The FTSE had come down near the 10k support on Monday but has since recovered a bit. It managed a close within the VWAP area, however, it remains below the middle line at 10570. It could still be pulling back from the peak of 10480, with 10250 as a local support for now. With both VWAP lines pointing outwards, volatility remains high and sentiment to the downside. So if the 10000 handle gives way to increased pressure, the next support lies at 9930. A continuation higher, however, would open the door to 10650 if the middle line breaks.

Source: SpreadEx | UK 100, Daily Chart