Advantage Data: Junk sectors show gains for ninth straight week; energy areas improve

By Paul Deckelman

New York, April 18 – The junk bond market remained solidly on the upside last week – its ninth consecutive week there, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the ninth week out of the last 10 in which more sectors were posting gains than losses.

In the 15 weeks since the start of the year, gainers have dominated in 10 of those weeks, versus five weeks in which more negatives were seen.

Besides last week’s upturn and the ones seen in the eight straight weeks before that, going back to the week ended Feb. 19, 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 racking up losses in five out of the first six weeks of the year.

A subset consisting of the 33 largest 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 32 of those bigger sectors finishing in the black in the latest week, versus only one sector ending in the red.

That represented a continuation and a strengthening of the strongly positive trend seen the previous week, ended April 8, during which 29 of those sectors had shown gains while three had posted losses and one sector was unchanged, showing neither a gain nor a loss for the week.

At least 20 of the large-sized sectors have been on the upside in all nine weeks of the current winning streak, and at least 30 of the sectors have shown gains in all but one of those nine weeks.

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

Among specific large-sized sectors last week, metals mining was the top performer – followed by many energy-related sectors that more normally might be showing sizable losses.

However, coal mining was not one of these – it had the only weekly loss among the key sectors.

Metals mining still remained the best performer so far on a year-to-date basis for a seventh straight week, while coal mining stayed at the bottom of the year-to-date rankings for a ninth week in a row.

Metals miners move the most

Among specific large-sized sectors, metals mining turned in the best showing among the significantly sized sectors, gaining 5.43% on the week.

That was a switch from the previous week, ended April 8, when that sector had been unchanged for the week, showing neither a gain nor a loss – a weak enough performance to land it in the Bottom Five worst-performing large-sized sectors for the second time in three weeks.

Also showing strength in the latest week were a quartet of oil and natural gas-related sectors, given a boost by speculation that major global energy producers might be able to agree on reining in production in order to support prices – a hope which, over this past weekend, ultimately proved to be unfounded.

These included oil and gas extraction (up 4.62%), energy exploration and production (up 4.41%), midstream energy (up 2.54%) and oilfield services (up 2.51%).

The oil and gas extraction and exploration and production sectors had each been among the Bottom Five over the previous two weeks, including the April 8 week, when they were down by 0.38% and 0.37%, respectively.

In contrast, oilfield services – after having not been among the big gainers or losers during the April 8 week – has now been among the Top Five best large-sized performers in two weeks put of the last three, including a 0.76% gain in the week ended April 1, and on a slightly longer-term basis, in six weeks out of the last seven.

Midstream energy – covering companies that process, store and transport oil, gas or natural gas liquids – was neither among the big gainers nor the big losers in recent weeks.

Coal the sole loser

On the downside, coal mining – after a rare burst of strength in the April 8 week – was in a more familiar position last week, having the worst showing of any large-sized sector, and the only actual loss on the week, ending down by 0.32%.

It had finished among the best gainers in the April 8 week, when it rose by 1.07%, but has now been among the Bottom Five in two weeks out of the last three, including the April 1 week, when it lost 2.49%. Like last week, coal was the worst performer of all in that earlier week.

With coal the only actual losing sector on the week, as noted, the Bottom Five last week was filled out by sectors merely showing considerably smaller gains than all of the others.

These included automotive services (up 0.19%), miscellaneous retailing (up 0.22%), non-computer electronics manufacturing (up 0.23%) and business services (up 0.33%).

None of those other sectors had been among either the biggest losers or the biggest gainers over the previous several weeks.

Metals mining tops on year

On a year-to-date basis, the best-performing sectors were largely in the same positions relative to one another last week compared with where they had been the week before.

After 14 trading weeks so far in 2016, metals mining (up 24.40%) remained as the best-performing large-sized sector on a cumulative basis for a seventh straight week, aided by its stellar performance on the week, as noted.

Primary metals processing (up 15.30%) was in the runner-up spot, also for a seventh straight week.

Lodging (up 10.60%) was third-best for a second straight week. The sector had clawed its way up by two notches in the rankings during the April 8 week, to third place from just fifth-best the week before. The innkeepers had fallen into fifth in the April 1 week after having been fourth-best for four weeks and Number-Two for five straight weeks before that.

In 2015, lodging had been the single-best finisher among any of the large-sized sectors 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 9.47%) returned to fourth best last week, moving up one notch from, just fifth best the week before, and has now been in fourth place in two weeks out of the past three.

It traded places with miscellaneous retailing (up 8.75%) which fell by one slot last week into fifth place from fourth.

None of the week’s top-finishing large-sized sectors, as noted, were also among the year-to-date leaders.

Coal remains year’s worst

On the downside, coal mining (down 9.61%) remained the absolute worst major sector on a year-to-date basis for a ninth consecutive week. It has now been the cellar-dweller in 11 weeks out of the last 12.

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 pile 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.

Paper manufacturing (up 1.30%) fell to second-worst on the year last week, despite not having been among the worst underachievers the previous week.

Printing and publishing (up 1.61%) fell to third-worst on the year after having only been fourth-worst the week before.

Depository financial institutions (up 1.66%) likewise tumbled one notch in the rankings, to fourth-worst on the year last week from only fifth worst the week before.

Holding companies and other investment offices (up 1.80%) declined to fifth-worst on the year, despite not having been among the worst laggards the week before.

Coal mining, as noted, was also the week’s worst finisher, the only one among the yearly underperformers to also be in the weekly Bottom Five.

© 2015 Prospect News.
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