Advantage Data: Junk sectors strongly positive for fifth straight week; energy sectors firm

By Paul Deckelman

New York, March 21 – The junk bond market stayed in positive territory last week – its fifth consecutive week there after two straight weeks before that in which it had been mired deeply in the red, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the sixth week out of 10 so far this year in which more sectors were posting gains than losses.

Besides last week’s upturn and the ones seen in the four weeks before, ended Feb.19, Feb. 26, March 4 and March 11, the sectors had also done better during the week ended Jan. 29, after having started the new year with three straight weeks on the downside and six weeks out of the prior seven showing losses.

For a third week in a row, a subset of the 33 most significantly sized sectors (out of the total of 60 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding, showed nearly a clean sweep last week, with 32 out of the 33 having finished in the black during the week ended Friday and just a single sector closing in the red.

It was the fifth straight strongly positive week with 30 or more of those larger sectors ending in positive territory; during the Feb. 26 week, the breakdown was 30 gains versus three losses, while in the Feb. 19 week, the positive split was again 32-to-1.

That earlier week marked a nearly complete reversal of the breakdown seen the week before, ended Feb. 12 – the most recent negative week – when all 33 of the large-sized sectors had posted losses, against no gains.

Among the specific large-sized sectors, for a second week in a row, energy exploration and production had the best gain on the week.

It was the third straight week in which several oil and natural gas-related sectors moved up strongly, in line with robust gains in world crude prices amid hopes for output cuts by major producers and a global economic upturn.

Chemical manufacturing was the only sector actually showing a loss on the week. It was the second straight week in which a sector other than coal mining was the worst weekly performer, following a three-week run by coal mining as the worst weekly finisher.

Coal, however, did stay at the very bottom of the year-to-date rankings for a fifth week in a row.

Metals mining was the top year-to-date finisher for a third straight week.

Energy E&P stays strongest

Among specific large-sized sectors, energy exploration and production had the best return of any large-sized sector on the week, jumping by 4.34%. It was the second consecutive week that the E&P names were tops, having also held the crown during the March 11 week with a 4.97% gain.

E&P, along with other energy-oriented names, continued to get a boost from recently strengthened world oil prices, which ended the week around the $40 per barrel mark, their first time there since December.

Also showing strength in the latest week were oil and natural gas extraction (up 4.38%), oilfield services (up 3.59%), lodging (up 2.67%) as midstream energy services (up 2.31%).

None of those four non-E&P sectors had been among the biggest leaders in the March 11 week, although after taking a hiatus that week, midstream energy has now been among the Top Five best-performing large-sized sectors in four weeks out of the last five.

Chemical names clobbered

On the downside, chemical manufacturing, as noted, was the only sizable sector actually finishing in the red last week, plunging by 4.11%.

Although the chemical makers had not been among the big losers during the week ended March 11, they have now been among the Bottom Five worst-performing large-sized sectors in two weeks out of the last three.

For a third straight week, with only one sizable sector actually in negative territory, last week’s Bottom Five list was filled out by sectors showing only modest gains on the week versus their higher-gaining sector peers.

These included paper manufacturing (up 0.23%), food manufacturing (up 0.30%), health care (up 0.38%) and automotive services (up 0.49%).

It was the second straight week among the Bottom Five for the food companies, which had also been there the week before with a sedate 0.24% gain.

None of the other three sectors had been among the big losers the week before.

Metals mining tops on year

On a year-to-date basis, the best-performing sizable sectors stayed in the exact order of ranking, relative to each other, last week that they had held the previous week, and their order was largely unchanged from the week before that.

After 11 trading weeks so far in 2016, metals mining (up 18.98%) remained as the best-performing large-sized sector on a cumulative basis for a third straight week, after having displaced miscellaneous retailing from the top spot after that latter sector had a six-week run up there.

Primary metals processing (up 11.71%) was in the runner-up spot for a third straight week.

Miscellaneous retailing (up 7.93%) and lodging (up 7.84%) were in the third- and fourth-best positions, respectively, for a third straight week. The retailers, as noted, had previously been in the Number-One position for six weeks, and lodging had been Number-Two for five straight weeks previously.

In 2015, lodging had been the single-best finisher on the year, gaining 18.92%, on the strength of having held that exalted position over the last three weeks of the year and on a longer-term basis, in 43 out of the last 44 weeks of 2015.

Midstream energy services (up 6.24%) was fifth-best on the year for a second week in a row.

Lodging and midstream energy, as noted, were also among the week’s best finishers last week.

Coal remains YTD worst

On the downside, coal mining (down 15.15%) was the absolute worst on a year-to-date basis for a fifth consecutive week. It has now been the cellar-dweller in seven weeks out of the last eight.

Coal had actually started out the new year during the week ended Jan. 8 as only second-worst on the year, then improved, relatively speaking, to just third-worst in the Jan. 15 week and to fifth-worst in the Jan. 22 week, before finally heading for the bottom of the mineshaft during the weeks ended Jan. 29 and Feb. 5.

Before all of that, coal had ended 2015 as the absolute worst performer for the year, with a 35.31% loss, having had the biggest cumulative loss for 51 straight weeks last year. Coal had also been the single-worst large-sized performer in 2012, 2013 and 2014 as well.

Oil and gas extraction (down 3.28%) fell by one notch in the rankings to second-worst on the year last week, after having been only third-worst for four consecutive weeks before that, and for a total of 19 out of the prior 23 weeks.

It switched places with energy exploration and production (down 2.82%), which improved by one slot last week, relatively speaking, moving up to only third-worst on the year after having been second-worst over the previous four consecutive weeks and in five weeks out of the prior six.

Food stores (down 2.36%) dropped by one position last week, to fourth-worst on the year, after having only been fifth-worst for two straight weeks before that.

Chemical manufacturing – the week’s single worst large-sized sector, as noted – tumbled to fifth-worst on the year with a 2.12% cumulative loss, despite having not been among the year-to-date big losers lately.

It was the only one of the week’s worst finishers, as noted, to also be among the worst year-to-date performers last week, although for a third week in a row, oil and gas extraction remained among the big losers for the year despite a strong enough performance to be among the week’s biggest gainers, as also noted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.