Advantage Data: Junk sectors up for fourth week; energy accounts for most of best performers

By Paul Deckelman

New York, June 6 – The junk bond market moved higher for a fourth consecutive week last week, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

Those four straight weeks of gains follow the most recent downturn, during the week ended May 6, which, in turn, had broken a winning streak of 11 consecutive weekly gains.

In the last 10 weeks, gains have been seen in nine of them, with the retreat during the May 6 week the only setback during that time.

On a somewhat longer-term basis, in the 22 weeks since the start of the year, gainers have dominated in 16 of those weeks, versus six weeks in which more negatives were seen.

As noted, 11 of those better weeks came during the winning streak which began during the week ended Feb. 19 and had extended through the week ended April 29. Besides that long string of gains, and the improvements seen over the last three weeks, 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 then 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 62 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 29 of those bigger sectors finishing in the black last week, versus just four sectors ending in the red.

That represented a slight easing from the week ended May 27, when fully 32 of those sectors had posted gains for the week and only one had suffered a loss. But during the week before that, ended May 20, just 19 of those larger sectors had seen gains for the week while 14 had endured losses.

Among specific large-sized sectors last week, several energy-related sectors – which had shown remarkable strength over the previous few weeks before tumbling to the very bottom during the May 6 week and posting the worst losses that week – remained back on top as a group for a fourth straight week last week, led by coal mining and oilfield services.

On the downside, wholesale durable goods distributors posted the worst loss on the week, followed by lodging.

Metals mining remained the best performer so far on a year-to-date basis for a 14th straight week, while automotive services was in a familiar parking space as the worst year-to-date performer for a second straight week.

Energy outperforms

Among specific large-sized sectors, coal mining turned in the best performance of any large-sized sector last week, gaining 3.66% – its second consecutive week as the top finisher.

Coal had also been there during the week ended May 27, with a 2.78% gain on the week, and has now been among the Top Five best-performing sectors in five weeks out of the last eight.

Also showing strength during the latest week were oilfield services (up 1.56%), industrial and commercial machinery and computer equipment manufacturers (up 1.12%) – the sole non-energy sector among the top finishers – energy exploration and production (up 1.08%) and oil and natural gas extraction (up 0.78%).

Oilfield services has now been among the Top Five in two weeks out of the last four, while energy E&P and oil and gas extraction – both of which had been among the elite finishers during the May 27 week, with gains of 1.83% and 1.70%, respectively – have now both been among the big winners in seven weeks out of the last eight.

The machinery and computer makers have not been among either the best or the worst performers in recent weeks.

Durables distributors weak

On the downside, wholesale durable goods distributors had the worst loss among the large-sized sectors, losing 1.24% on the week.

Other losers on the week included lodging (down 0.50%) food stores (down 0.19%), securities and commodities brokers, dealers and exchanges (down 0.13%).

The week’s Bottom Five list of the worst-performing large-sized sectors was rounded out by precision instrument manufacturing (up 0.01%).

It was the fourth straight week among the laggards for food stores; the grocers had also been there during the May 27 week with a 0.07% loss.

None of last week’s other Bottom Five finishers had been on the list over the past several weeks.

Metals mining tops on year

On a year-to-date basis, with 22 trading weeks in the books so far for 2016, metals mining (up 37.10%) remained as the best-performing large-sized sector on a cumulative basis for a 14th straight week.

Energy exploration and production (up 23.03%) moved up one notch in the rankings, into the runner-up spot, after having been third-best in the May 27 week and having been fourth-strongest over the three weeks before that.

Energy E&P traded places with primary metals processing (up 21.63%), which fell by one position on the week, to just third-best from second-best the week before, where it had been for 12 weeks out of the previous 13. It has now been in the Number-Three slot in two weeks out of the last three.

Oil and gas extraction (up 19.93%) was fourth-best for a second straight week.

Midstream energy services (up 15.42%) was fifth-strongest on the year for a second consecutive week and for a fourth week out of the last six.

Energy exploration and production and oil and gas extraction were also among the weekly leaders, as noted.

Automotive services weakest

On the downside, automotive services providers had the smallest gain of any large-sized sector last week, up 2.28%.

It has now been the worst-performing large-sized sector for a second consecutive week and in four weeks out of the last six.

Other sectors showing only relatively modest year-to-date returns included food stores (up 3.48%), depository financial institutions (up 3.62%), and building construction (up 3.78%).

The food stores improved, relatively speaking, to just third-worst from second-worst the previous week.

The depository financials weakened to fourth-worst on the year after having been just fifth-worst in four weeks out of the last five.

It traded places with building construction, which edged up into fifth-worst from fourth-worst a week earlier.

Only the food stores were also among the latest week’s underachievers, as noted.

© 2015 Prospect News.
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