Share prices don’t just move up or down because of good or bad financial results, and thankfully so. If they did, we’d have little to get excited about between quarterly, half-yearly and/or full year updates. Prices also move on changes in sentiment towards economic and sector growth. But that’s not all.

Clients are often very hot on knowing what’s on the corporate calendar of the companies in which they are invested. They are usually well-prepared for scheduled results, trading statements, dividends, AGMs and the like. What they are less good at is doing the same for key sector peers, making themselves aware of the important events that could impact their positions indirectly.

This is a big part of what we do here at Accendo, helping ensure that our clients are aware of everything that could move the shares of the companies in which they are invested or trading. Potential read-across.

Whether it be economic data like GDP, interest rate changes by central banks, political votes/speeches or Presidential tweets, we’ve got our eyes wide open for you. And this includes other companies in the same space as that to which your money is exposed. In some cases the sector may be small, for others the peer group might be much larger.

A prime example this week came from UK Index advertising giant WPP. It’s shares slumped 3% on Thursday, having already fallen by 3% on Monday and again on Tuesday. Why? Because peers on both sides of Atlantic reported poor results that dented the outlook for the sector, and thus, shares.

On Tuesday Omnicom missed second quarter (Q2) revenue growth forecasts (especially domestically but also UK), sending the stateside advertiser’s shares down 10%. Owch! On Thursday, shares in France’s Publicis plunged 11% after a surprise decline in revenues blamed on a sharp drop in US healthcare communications, currency swings and the costs of new data protection regulations (GDPR). Owch again!

Both companies reiterated full year growth guidance; both times investors raised an eyebrow. Investors are understandably questioning the longer-term impact of structural changes to the industry, traditional advertising avenues (billboards, paper, magazine) facing stiff competition from the cheaper and wider-reaching on-line medium.

WPP’s own results on 4 Sept may seem a way off, but with its shares down 7.2% for the week, trading their lowest since 27 April just before they jumped 8.6% on positive Q1 results, investors are clearly pricing in the potential that, WPP too, could offer disappointing first half results that upset traders, investors and the markets.

With hundreds of UK, European and US companies updating the stock market on recent business performance next week, make sure you don’t fall foul of another Publicis or Omnicom. Get access to our award-winning research and allow us to help you and your portfolio. We can’t guarantee you any profits next week if sector news is good, but we might be able to help you avoid an unnecessary, read-across-inspired loss should the news prove unfavourable.

Have a great weekend.

Mike van Dulken, Head of Research, 20 July 2018