“If the shares stay down at those levels the owner of British Gas will become the ninth current FTSE 100 member firm to have suffered a drop of 10% or more in a single trading day this year,” says Russ Mould, AJ Bell Investment Director. “There were two more instances this year in June and August, although Provident Financial has since dropped out of the index.”
Daily share price drops at current FTSE 100 firms | ||
Date | Drop | Stock |
04-Jan-17 | -14.4% | Next |
18-Jan-17 | -29.1% | Pearson |
24-Jan-17 | -20.8% | BT |
27-Jul-17 | -15.4% | AstraZeneca |
23-Aug-17 | -10.9% | WPP |
16-Oct-17 | -26.6% | Convatec |
17-Oct-17 | -15.9% | Merlin Entertainment |
09-Nov-17 | -10.0% | Burberry |
23-Nov-17 | -16.6% | Centrica* |
Source: Thomson Reuters Datastream. *As of 08:30.
“Looking at just the current crop of FTSE 100 firms, last year saw 51 one-day drops of 10% or more (largely due to the two days after the referendum vote) and 2015 saw 12, so this year’s hammerings need to be kept in context
Number of one-day share price drops of 10% or more at current FTSE 100 firms:
Source: Thomson Reuters Datastream
“We have also seen nothing like the 30%, 40%, 50% of more falls inflicted upon former FTSE 100 members, including tech stocks like Marconi or Baltimore as they crashed to earth when the bubble burst, the 50%-plus single-day collapses suffered by Coloroll, Polly Peck or Ferranti when their financial woes became apparent in the early 1990s or even the beatings given to financial stocks during the 2007-09 crisis.
“However, price action has been getting a lot more violent at the individual stock level, despite all of the talk of the lack of volatility overall, and investors seemingly becoming a lot less tolerant of any earnings or dividend disappointment.
Worst single-day falls for current FTSE 100 members | ||
Date | Share price fall | Stock |
19-Jan-09 | -66.6% | Royal Bank of Scotland |
02-Oct-84 | -59.2% | Johnson Matthey |
23-Sep-92 | -43.2% | BAE Systems |
07-Oct-08 | -39.2% | Royal Bank of Scotland |
25-Nov-08 | -36.7% | Rio Tinto |
19-Jan-09 | -33.9% | Lloyds |
05-Mar-09 | -33.4% | Aviva |
13-Feb-09 | -32.4% | Lloyds |
28-Feb-02 | -31.6% | Shire |
20-Jan-09 | -31.1% | Lloyds |
26-Jan-09 | -29.7% | Ferguson |
28-Sep-15 | -29.4% | Glencore |
24-Jun-16 | -29.3% | Taylor Wimpey |
18-Jan-17 | -29.1% | Pearson |
05-Mar-09 | -28.9% | Legal & General |
24-Jun-16 | -27.6% | Persimmon |
16-Oct-17 | -26.6% | Convatec |
09-Nov-11 | -25.6% | Admiral |
10-Oct-08 | -25.3% | Royal Bank of Scotland |
09-Sep-04 | -25.2% | Compass |
Source: Thomson Reuters Datastream
“Investors therefore need to be on their guard against two things. First, any further increase in stock-specific volatility. Second, any narrowing of market leadership – whereby the market keeps going up but fewer and fewer stocks do, as investors herd toward what are perceived as safer names. And third, any broader increase in volatility at the overall market index level.
“Even a combination of all three would not necessarily call a top in the market but it could herald the long-awaited near-term correction, if history is any guide.”