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UK Index – you got the moves

It’s a 50/50 split for UK 100 risers and fallers this week, the index itself flat. But this masks the fact that ten of the hundred are up/down by more than 5%, some by around 20%!

For blue-chips it’s been a truly exciting week with plentiful news flow and the index holding within touching distance of fresh record highs while the US Dow and German DAX push even further north.

Gold silver and Bronze medals go to a publisher, airline and pest control company this week.  Pearson (PSON) looks set to close the week 9% higher. This after a positive nine-month trading statement, allowing management to reiterate full year guidance, but really comes courtesy of a £300m share buyback announcement that has helped the shares out of a protracted 2.5yr downtrend with what investors hope is a bullish reversal.

BA owner Int. Cons. Airlines (IAG) is +6.5% after Credit Suisse suggested it may post stronger than expected results following positive comments from US peer Delta. This has helped the shares deliver a bullish breakout to 19yr highs.  Lastly, Rentokil (RTO) has put on 5% after its trading update showed decent organic growth on top of acquisitions, healthy gains from emerging markets, especially its Indian JV, and things back to normal in the Americas after weather disruption (ex-Puerto Rico).

As for wooden spoon contenders, shares in colostomy bag maker ConvaTec (CTEC) are 24% lower after Monday’s trading statement conceded that third quarter performance was severely impacted by supply issues that forced it to warn on full-year profits, brokers cutting forecasts and ratings in response.

It was a similar story from theme park operator Merlin Entertainments (MERL), whose shares are 17% offside after bad weather and terror events impacted London revenues obliging it to cut profits guidance for the year. Lastly, consumer staples giants Unilever (ULVR) and Reckett Benckiser (RB) both fell by around 7% after the former highlighted slower sales growth, the latter cut guidance and, to make matters worse, peers Nestle and Procter & Gamble suggested these problems were sector wide.

Otherwise, engineer GKN (GKN; -5%) extended last week’s profits warning inspired sell-off, MediClinic (MDC -5%) was penalised for flat sales growth and Gold/silver miner Fresnillo (FRES) suffered from a reversal of demand for safe-havens as equities rallied and the USD rose tax reform hopes.

 

A busy week by any account. And despite some big fallers the index is holding its ground while US and German peers push further north. Might the UK Index re-join them? Some of the gainers are at their highs of the week. Several of the major fallers are already well off their lows after bargain hunters swooped in. Might they continue to rise and recover, respectively? What about the fallers – have they corrected enough or might they fall further, representing a short sell opportunity?

To be kept up to speed on next week’s movers and shakers, get access to our research now to ensure you are in position to profit. There will be a next time, but got to be prepared.

Enjoy your weekend,

Mike van Dulken, Head of Research, 20 October

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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

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