Reckitt Benckiser (RB)

Source: CMC Markets, 30 July 2018

Household goods company Reckitt Benckiser is a prime example of how attractive share price moves can compete with the returns often sought out by those trading Indices, FX and Commodities. Last Friday, 27 July, RB shares jumped almost 8% higher, representing an £800 profit on a £10,000 position. Assuming a 20% margin/£2,000 deposit to open the position, this would equate to a 40% return.

This market reaction can be attributed to the company’s publication of H1 results, where RB announced 23% year-on-year net revenue growth, 22% growth in adjusted operating profits, a 6% increase in interim dividend, as well as an improvement of FY revenue target.

Such across-the-board positive results can be uncharacteristic for a stable, safe-haven stock like RB. Sharp 8-10% share price moves are uncommon for “defensive” shares and would only have been spotted beforehand by investors who had access to broker previews, which can be provided in advance by Accendo Markets.

Investing in shares like Reckitt Benckiser before results are announced is a type of tradable opportunity regularly available to retail investors, as different companies publish results and trading updates daily.

If the shares had doubled, you could have doubled your money. On the flipside, if the shares had fallen by 8%, your position would have moved into a loss, however, the 20% deposit would have allowed you to keep the position open all the way down to 6120p (-10%; half of the value of the margin), where the shares have not traded since June.

Continue reading overleaf for more examples of big market moves that could benefit investors interested in equity CFDs.

AstraZeneca (AZN)

Source: CMC Markets, 30 July 2018

Presenting a different kind of a big mover is an international pharmaceutical company AstraZeneca. Unlike Reckitt Benckiser, shares in AstraZeneca have regularly risen on the backdrop of a multi-year uptrend. AZN shares are currently trading at record highs.

While AstraZeneca stock also reacts to news of corporate results, pharma company shares can also make big moves on the announcement of new drug approval in major international markets (US, Canada, EU, etc.), as well as news of successful drug trials.

News of very specialised medications passing to a new stage of pharmaceutical research may not capture the same headlines as quarterly or annual results, but they can be important business drivers for AstraZeneca and often lead to significant positive or negative share price reactions.

For example, a 4.2% share price rise on 26 July followed the release of company’s H1 results, when AZN confirmed its FY revenue guidance. While another 3.5% jump on 12 July can be attributed to news that AstraZeneca and industry peer Eli Lilly discontinued global Alzheimer’s drug trial. While a seemingly negative bit of news for the company, markets nevertheless reacted positively to the assurances that the end of the drug trial will not affect AstraZeneca’s FY guidance, underscoring the importance of forward outlook.

AstraZeneca shares represent the kind of tradable opportunity that is both valid for long-term investors, who can benefit from the 11.4% year-to-date share price growth, as well as short-term investors trading on the announcements of results. (Source: AlphaTerminal, 31 July 2018)

CFD traders can take advantage of large up and down 2-4% intraday price movements, while having the security of a new 20% deposit to safeguard their portfolio in case the shares go against them.

There are many other examples of UK 100 shares with significant recent price movements, both intraday and over a longer period, giving retail investors plenty of tradable opportunities.

BT Group (BT)

Shares in telecom company BT have seen significant recent share price volatility, particularly on the back of positive Q1 results on 27 July. BT reported 3% higher year-on-year pre-tax profits, EBITDA beating broker expectations and announced a launch of the UK’s first 5G network.

Markets responded with a near 5% share price move on the day of the announcement. For investors who held CFDs tied to BT shares prior to the news of results, this market reaction could have netted £1,000 in profit on a £20,000 position. With the initial deposit of £4,000, this would have represented a 25% return on the initial investment in a single day, excluding commission and overnight financing costs. Had the results been negative, of course, and shares moved 5% lower, investors would have suffered a loss.

Anglo American (AAL)

Shares in copper, iron and diamond mining company Anglo American traded within a 1580-1750p range in July, but several sessions have seen particularly volatile intraday trading.

On 24 July, Anglo American shares jumped 5.6% after announcement of positive results from its subsidiary Anglo American Platinum, as well as from its iron ore mine in South Africa. Considering the entire previous week (23-27 July), AAL shares moved more than 10% higher.

As is the case with many other Mining stocks, AAL shares remain sensitive to Chinese economic data, as well as to the global trade conflict, presenting additional instances of significant market volatility (with shares moving higher or lower) and potential tradable opportunities for equity investors.

Many UK 100 stocks are showing significant levels of market volatility, tied to announcement of results, broker upgrades and downgrades, changes in macroeconomic environment and other factors.

Accendo Markets is constantly helping our clients to navigate the new margin requirements, spot upcoming big market moves and help investors manage their equity portfolio with full confidence.