Utilities Week In Review For The Week Of June 18-22
Hale Stewart | Jun 25, 2018 01:45AM ET
The utilities sector outperformed this week for the second week in a row.
Utilities are also one of the better performing sectors for the last month.
Morgan Stanley upgraded the utilities sector this week.
This week, utilities were once again the best performing sector:
And they are one of the best performing sectors for the last month:
Part of the reason is that yields have steadied as of late:
The 10-year yield rose ~60 basis points until the beginning of June. It has since come in a bit. This chart of the yield curve puts the situation into a more recent historical perspective:
The yield curve has really moved since May 1.
Another reason for utilities' outperformance is the more defensive nature of the recent price action among the sector. Over the last week and month, utilities, consumer staples, and health care are outperforming other sectors.
Several articles this week highlighted the more defensive nature of the recent market action. From Barron's:
All of this leads Wilson to be more positive about defensive sectors. He's yet another voice calling for a potential turn in the consumer-staples sector, and he also upgraded the utility sector to overweight today, citing his expectation on peak 10-year Treasury yields and improving relative earnings breadth. The firm has Overweight ratings on American Electric Power (NYSE:AEP), PG&E (NYSE:PCG), Public Service Enterprise Group (NYSE:PEG), and XCEL Energy (NASDAQ:XEL).
ETF Trends also noted utilities' overall outperformance (emphasis from the article):
Utilities stocks and utilities ETFs rallied over the past week as trade war concerns and a return to safety helped support this defensive play.
Over the past week, iShares Edge MSCI Multifactor Utillities (NYSE:UTLF) gained 3.9%, John Hancock Multifactor Utilities (NYSE:JHMU) rose 3.2%, Reaves Utilities (NYSE:UTES) added 3.2% and Invesco DWA Utilities Momentum Portfolio (NASDAQ:PUI) increased 3.0%. The Utilities Select Sector SPDR (XLU), the largest utilities related ETF, was 2.5% higher over the same period.
Get The News You Want
Turning to the largest members of XLU, we have the following year-long charts:
Three are at/near 52-week highs: Exelon (NYSE:EXC), NextEra Energy (NYSE:NEE), and Public Service Enterprise (NYSE:PEG) (all three are in the middle row). Sempra Energy (NYSE:SRE) (bottom row, left) recently rallied after an activist investor publicly called for a change in the board of directors. All the other issues are trading at/near 52-week lows.
There was a smattering of news from the major issues:
American Electric Power gained approval from a regulator in the US :
A titanic $4.5 billion plan by AEP Corp. to build the largest wind power in the United States has landed another key approval.
The Columbus-based utility's proposed Wind Catcher Energy Connection project has landed required approvals from two of the four states it will ultimately serve. The Louisiana Public Service Commission approved the project on Wednesday, following the May approval by its counterpart in Arkansas.
That leaves Texas and Oklahoma to approve the plan.
The project would create a 2,000-megawatt wind farm in Texas and in Cimarron County on the Oklahoma panhandle. About 800 wind turbines supplied by GE Renewable Energy will power the project that would be developed by Chicago-based Invenergy LLC.
- After a report, approved a 3-6% increase.
- Exelon has signed on to a lobbying effort to impose a carbon tax in the US.
- NextEra (NYSE:NEE) and AT&T (NYSE:T) signed a deal for NEE to deliver 300 MW of wind power.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Original post
/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.