Advantage Data: Junk sectors show gains for 10th straight week; metals, energy areas show strength

By Paul Deckelman

New York, April 25 – The junk bond market remained solidly on the upside last week – its 10th consecutive week there, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

In the 16 weeks since the start of the year, gainers have dominated in 11 of those weeks, versus five weeks in which more negatives were seen.

Besides last week’s upturn and the ones seen in the nine 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.

For a second straight week, 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, exactly matching the breakdown seen during the previous week, ended April 15.

The past two weeks have represented a continuation and a strengthening of the strongly positive trend seen the week before that, 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.

Among specific large-sized sectors last week, metals mining remained the top performer – its second successive week in the top spot – followed by several energy-related sectors that more normally might be showing sizable losses.

As had also been the case the week before, coal mining was not one of those energy gainers, again showing the only weekly loss among the key sectors.

Metals mining still remained the best performer so far on a year-to-date basis for an eighth straight week, while building construction fell to the bottom of the year-to-date rankings.

Metals, energy move mightily

Among specific large-sized sectors, metals mining turned in the best showing among the significantly sized sectors for a second week in a row, gaining 5.24% on the week, on top of the previous week’s even more robust 5.43% return.

Also showing unexpected strength in the latest week – their second straight week in that position – were a trio of oil and natural gas-related sectors, given a boost by market hopes that major global energy producers might rein in production and thus support crude oil prices, currently in the $40 per barrel range.

These included oil and gas extraction (up 4.18%), energy exploration and production (up 3.79%) and oilfield services (up 2.51%).

In the April 15 week, those sectors, like metals mining, had each been among the Top Five best-performing large-sized sectors, with returns of 4.62%, 4.41% and 2.51%, respectively.

Last week’s Top Five list was rounded out by primary metals processing, which gained 2.56% on the week, after not having been among the elite finishers the week before.

Coal again sole loser

On the downside, coal mining turned in the worst weekly performance of any large-sized sector and posted the only actual loss seen among those sizable sectors, falling by 8.98%.

Though last week’s loss was considerably larger than that seen in the April 15 week, when coal only declined by 0.32%, its circumstances were the same – the only actual losing sector among all of those large-sized sectors.

It was coal’s third week in the last four among the Bottom Five weakest-performing large-sized sectors; during the week ended April 8, the volatile sector had made a rare visit to the Top Five on the strength of a 1.07% gain.

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

These included industrial and commercial machinery and computer manufacturers (up 0.16%), printing and publishing (up 0.30%), automotive services (up 0.34%) and insurance carriers (up 0.36%).

It was a second straight week among the Bottom Five for auto services, which was also there the previous week with a 0.19% gain.

The machinery and computer makers, printers and publishers and insurers had been among neither the major-sector gainers nor losers over the previous few weeks.

Metals mining tops on year

On a year-to-date basis, with 16 trading weeks in the books so far for 2016, metals mining (up 24.83%) remained as the best-performing large-sized sector on a cumulative basis for an eighth straight week, aided by its stellar performance on the week, as noted.

Primary metals processing (up 15.83%), another strong gainer on the week, was in the runner-up spot, also for an eighth straight week.

Midstream energy services (10.14%) moved up one notch to third-best on the year so far from just fourth-best the week before, the position where it had spent two of those previous three weeks.

That bumped lodging (up 10.01%) down by one notch, to only fourth-best, from third place, where it had spent the previous two consecutive weeks.

Lodging has consistently been among the best year-to-date performers so far this year but has not shown the same kind of overwhelming dominance it exhibited last year. In 2015, the innkeepers 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 year’s last 44 weeks.

Miscellaneous retailing (up 9.59%) was in fifth place last week for a second straight week.

Other than metals mining and metals processing, as noted, none of the week’s other top-finishing large-sized sectors were among the year-to-date leaders.

Builders at the bottom

On the downside, building construction (up 1.39% on the year) had the weakest showing of any large-sized sector on a year-to-date basis, although it had not been among the worst laggards the week before.

It replaced coal, which had been at the bottom over the previous nine weeks but which was lifted from among the worst underachievers last week due to statistical considerations.

Depository financial institutions (up1.96%) fell two notches in the rankings, to second-worst on the year from just fourth-worst previously.

Holding companies and other investment offices (up an even 2.00%) also fell by two slots, to third-worst on the year from just fifth-worst the week before.

That benefited printing and publishing (2.05%), pushing it up by one notch, relatively speaking, to just fourth-worst on the year from third-worst the previous week.

Automotive services (up 2.14%) tumbled to fifth-worst on the year, after not having been among the worst cumulative performers the week before.

The auto services and printing and publishing sectors, as noted, were also among the individual week’s smallest gainers.

© 2015 Prospect News.
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