Newspaper article The Journal (Newcastle, England)

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Newspaper article The Journal (Newcastle, England)

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Article excerpt

Byline: By Chris Glasper

For obvious reasons, the best performing sectors for much of the bear market were defensive sectors (eg non-cyclical consumer goods and utilities).

However this group, which represents about a quarter of the value of the market, is losing momentum.

Four defensive sectors appear in the top ten in terms of absolute performance over the last 12 months (tobacco, personal care, food producers and electricity) but this will be down to two shortly because of the rate at which the latter two sectors have been underperforming.

A mix of growth (telecoms, media and technology), financials and cyclicals (basic industries, general industrials, cyclical consumer goods and cyclical services) has taken up the running in recent weeks and helped to drive the market forward. The important point is that sector rotation away from the defensives has been under way for several months and that this change is accelerating.

The improving momentum for the lion's share of the market that is not defensive accounts for the firmer tone that has been observed for the FTSE 100 and reflects a growing confidence that an earnings recovery is under way in the US and is spreading over here.

By the end of last week the vast majority of US companies had reported their first quarter earnings.

Positive surprises outnumbered negative surprises by four to one and the year-on-year growth rate of earnings is in excess of 13pc.

Following a comforting set of results in December, a number of analysts took the opportunity to have another look at Sage and endorse the strength of its market position.

First half pre-tax profits were in line with market estimates while revenues were 7pc ahead of last year.

The strong performance was mainly driven by a recovery in UK operating margins, thanks to a strong performance from Sage's small and medium sized enterprise (SME) and customer relationship management (CRM) businesses. …

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