FTSE 100’s winners and losers in August 2018

Source: Thomson Reuters Datastream. *Covers period 31 July 2018 to 31 August 2018

Russ Mould, investment director at AJ Bell comments:

“The FTSE 100 gave back all of July’s gains and more, to end the month at levels last seen in late April. Financial crises in Turkey and Argentina, mixed economic data from China, fresh worries over a ‘no-deal’ Brexit and ongoing concerns over trade tariffs all weighed on the index and those companies whose fortunes are tied to the global economy in particular.

“Some firms were able nevertheless to overcome the summertime blues.

Winners

“The biggest gainer was Whitbread thanks to a huge rally right at the end of the month. The company surprised everybody with the announcement it had agreed to sell its Costa Coffee arm for £3.9 billion for two reasons. 

“First, chief executive Alison Brittain and chairman Adam Crozier had stated in April that they would look to spin off Costa, leaving them with the Premier Inns hotel business, by 2002, so the timing was much quicker than expected.

“Second, analysts had pencilled in a valuation for the Costa unit of around £2.9 billion, so the price was much higher than expected. The analysts’ estimate price-tag came to £15.50 per Whitbread share whereas the company will get the equivalent of £21.25 – and that 575p-per-share difference covers the bulk of the 666p (17.4%) gain recorded by Whitbread in August.

“Other notable gainers included luxury goods leader Burberry, where bid talk continues to bubble under in a sector that continues to see a wave of consolidation and global merger andf acquisition activity.

“Bunzl further polished its reputation as a company capable of generating reliable growth in a great example of the old saying that ‘where there’s muck there’s brass.’ “Supplying surgical swabs, protective clothing and cleaning products and services may not be glamorous but legions of firms would not be able to operate without the day-to-day things that Bunzl distributes. The firm’s first-half results featured a 9% in the interim dividend, to set the company on its way to increasing its full-year dividend in every year since 1994. Such reliability is understandably highly prized by investors.” 

Losers

“Miners were well and truly in the doghouse in August, as fears over global growth and trade, wobbly Chinese industrial output numbers and a stronger dollar all took a toll on precious and industrial metals prices and thus share prices.

“On the industrial metals side, Rio Tinto and Antofagasta were both heavy fallers. Rio was weighed down by a slide in iron ore prices and renewed weakness in copper, which briefly fell to levels last seen in mid-2017. Even a welcome bounce in copper back above $6,000 a ton at the very end of the month did little to lift Chilean mining giant Antofagasta.

“Fresnillo featured in the list of the five worst performers for the third month running as silver prices remained weak and precious metals out of favour, perhaps somewhat surprisingly given the gathering emerging markets crises in Turkey and Argentina.”