It’s the most wonderful time of the year. Christmas tinsel glitters, eggnog is overflowing, and financial managers are checking their annual portfolio returns. Which UK Index stocks got shiny presents from Santa this year? Who ended up with coal in their stocking?

2018 has been a turbulent year for London’s blue-chips. The UK 100 set many traders’ heads spinning with multiple 10-20% rallies and sell-offs. Some investors think that markets are very bleak when they read the recent headlines. The UK 100 itself is negative for the year (-12.8% year-to-date). That said there are plenty of household names which have had a fantastic 2018.

Despite all the doom-and-gloom, a full quarter of the UK 100 is positive year-to-date and has much to celebrate. Many of the 25 names come from the same sector.

Food Retailers have had a fantastic year (+24.3%). Only Tesco is negative year-to-date (-8.2%), while peer Morrison is break-even for the year. Sainsbury (+11.4%) and online challenger Ocado (+93.2%) have outperformed. Mixed individual performance, but biased positive, especially given the latest UK Retail Sales data, which smashed expectations in November (+3.6% growth vs. +1.9% expected). This comes in stark contrast to warnings from some big retail names ahead of key Christmas period.

Pharma companies, on the other hand, had a much more uniform performance. All 3 UK 100 drug-makers (AstraZeneca, Shire, GlaxoSmithKline) are positive for the year and up around 15%. While the UK Index is set to lose Shire next week (acquired by Japan’s Takeda), investors won’t lose out. Why? Because smaller generic drug-maker Hikma is being promoted to take Shire’s place.

Miners have been more uneven, with plenty of mixed signals pulling the share prices up and down (China-US trade war, Fed interest rate hikes, global demand concerns, USD moves). Precious metals miners (Randgold and Fresnillo) are deep in the red for 2018, but there were plenty of success stories. For example, steelmaker Evraz (+41%) and diamonds-to-copper conglomerate Anglo American (+11.4%).

Banks and Financials were the big underperformers, -17.2% on average. Banks alone are doing even worse (-23.4%), but the recent share price slides for big UK Banks may present an opportunity of its own. Domestic banks (Barclays, Lloyds) currently trade at or around 2018 lows, while RBS has already bounced +3.8%. Are they oversold on the back of Brexit uncertainty? Could we see a rebound in January, when the MPs vote on Theresa May’s Brexit bill? Last time we had important Brexit news, we saw big moves in UK bank shares.

The year may be ending, but trading opportunities appear every day. Stocks that underperform one week, can bounce back the next. Why? Because the drivers of  financial markets are always shifting: geopolitical events, corporate news and technical market indicators, etc etc.

Keeping track of all the incoming data can be tough. This is why a professional trading support service is invaluable. To take full advantage of our flexible research and trade ideas, click here to subscribe to our Gold Pass.

Chris Peters, Trader, 20 December 2018