This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
It’s the most wonderful time of the year. Christmas tinsel glitters, eggnog is overflowing, and financial managers are checking their annual portfolio returns. Which FTSE stocks got shiny presents from Santa this year? Who ended up with coal in their stocking?
2018 has been a turbulent year for London’s blue-chips. The FTSE 100 set many traders’ heads spinning with multiple 10-20% rallies and sell-offs. Some investors think that markets are very bleak when they read the recent headlines. The FTSE 100 itself is negative for the year (-12.8% year-to-date). That said there are plenty of household names which have had a fantastic 2018.
Despite all the doom-and-gloom, a full quarter of the FTSE 100 is positive year-to-date and has much to celebrate. Many of the 25 names come from the same sector.
Food Retailers have had a fantastic year (+24.3%). Only Tesco is negative year-to-date (-8.2%), while peer Morrison is break-even for the year. Sainsbury (+11.4%) and online challenger Ocado (+93.2%) have outperformed. Mixed individual performance, but biased positive, especially given the latest UK Retail Sales data, which smashed expectations in November (+3.6% growth vs. +1.9% expected). This comes in stark contrast to warnings from some big retail names ahead of key Christmas period.
Pharma companies, on the other hand, had a much more uniform performance. All 3 FTSE 100 drug-makers (AstraZeneca, Shire, GlaxoSmithKline) are positive for the year and up around 15%. While the FTSE is set to lose Shire next week (acquired by Japan’s Takeda), investors won’t lose out. Why? Because smaller generic drug-maker Hikma is being promoted to take Shire’s place.
Miners have been more uneven, with plenty of mixed signals pulling the share prices up and down (China-US trade war, Fed interest rate hikes, global demand concerns, USD moves). Precious metals miners (Randgold and Fresnillo) are deep in the red for 2018, but there were plenty of success stories. For example, steelmaker Evraz (+41%) and diamonds-to-copper conglomerate Anglo American (+11.4%).
Banks and Financials were the big underperformers, -17.2% on average. Banks alone are doing even worse (-23.4%), but the recent share price slides for big UK Banks may present an opportunity of its own. Domestic banks (Barclays, Lloyds) currently trade at or around 2018 lows, while RBS has already bounced +3.8%. Are they oversold on the back of Brexit uncertainty? Could we see a rebound in January, when the MPs vote on Theresa May’s Brexit bill? Last time we had important Brexit news, we saw big moves in UK bank shares.
The year may be ending, but trading opportunities appear every day. Stocks that underperform one week, can bounce back the next. Why? Because the drivers of financial markets are always shifting: geopolitical events, corporate news and technical market indicators, etc etc.
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Chris Peters, Trader, 20 December 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance.Prepared by Michael van Dulken, Head of Research