Sector movers: Big Oil and Banks pace losses

(Sharecast News) - Big Oil and banks dragged on the FTSE 350 at the end of the week amid talk of a possible hard landing in the US during the back half of 2023. On a related note, the day before the heads of the Federal Reserve banks of Minneapolis and St.Louis both sounded a hawkish note.

Indeed, the latter, James Bullard, said he was open to a 50bp rate hike at the Fed's 21-22 March meeting and not 25bp as most market participants were anticipating.

Echoing that increased hawkishness, on Friday, analysts at Bank of America and Goldman Sachs, bumped up their forecasts for interest rate hikes in the US in 2023 from two more 25 basis point moves to three more.

That would take the target range for the Fed funds rate to 5.25-5.50% by June.

Related to all of the above, in a research note sent to clients, BofA investment strategist, Michael Hartnett, said that the Fed's job was "very much unaccomplished".

Indeed, once yields on 10-year US Treasuries rose past 4.0% that would lead to a crack in homebuilders, semiconductor stocks and in lenders' shares in the US, European Union and Japan, he said.

US retail sales at all-time highs, US unemployment at 43-year lows, January's greater than 500,000 increase in nonfarm payrolls and reacceleration in consumer and producer prices meant that a hard landing in the economy lay ahead in the back half of 2023, Hartnett added.

He also said that the S&P 500's failure to breach the 4,200 point level meant that it would head down to 3,800 points by 8 March.

It was such speculation about a looming hard landing that was weighing on Brent crude oil futures.

As of 1614 GMT, front-dated Brent was trading down by 2.2% to $82.95 a barrel on the ICE.

"Oil prices are now caught between a rock and a hard place or, to put it another way, the Fed and a hard landing," chipped in Stephen Innes, managing partner at SPI Asset Management.

"And with oil rallies constantly petering out, traders had turned wary, especially as higher-than-expected US and Russian production and the loss of gas-to-oil switching left the oil market with higher-than-expected global inventories. Higher inventories are not typically the calling card for a running of the bulls in oil markets."

Top performing sectors so far today

Gas, Water & Multiutilities 6,047.82 +1.75%

Real Estate Investment Trusts 2,468.93 +1.05%

Retailers 3,374.33 +0.76%

Household Goods & Home Construction 11,599.71 +0.71%

Telecommunications Service Providers 2,575.05 +0.70%

Bottom performing sectors so far today

Industrial Transportation 4,056.56 -1.66%

Oil, Gas and Coal 9,079.60 -1.58%

Banks 3,822.11 -0.86%

Software & Computer Services 1,891.52 -0.80%

Closed End Investments 11,647.67 -0.79%