This week the UK 100 looks set to close a shade lower. However this masks an impressive sell-off and rebound that could yet turn into a bullish breakout that takes the index back towards June highs, perhaps even May’s record peak.

Having kicked off the week on the back foot, amid fresh fears of a US trade fight with China that could have global implications (trade war fears on), the index has staged a strong recovery (trade war fears off; well, not as potent), regaining nearly all of its lost ground. At one point the index was 200pts offside. As we write, it’s barely 10pts in the red. Watch that rising channel into next week.

So who fared best and worst on the UK 100 index of blue-chip shares this week? Let’s look at why the index’s top five outperformers did so well.

Top of the pops is specialty pharmaceutical giant Shire (SHP; +5.1%) with traders welcoming news that a small group of Takeda shareholders failed to encourage a vote against the company’s £46bn takeover of Shire. With the takeover deal structured 44% cash/55% shares, it’s no surprise that Shire shares have followed Takeda shares higher, the latter up 4.7% for the week. Next up is Rolls Royce (RR/; +5.0%) whose shares got a fillip from a broker upgrade. While yet more engine issues isn’t great news, the company has reassured shareholders that the additional repair costs should be limited.

Tobacco giant Imperial Brands (IMB; +3.6%) got a boost from the company buying a minority stake in a UK start-up focused on research into medical uses of cannabis, continuing to explore opportunities away cigarettes. Defence contractor BAE Systems (BA/; +3.7%) rallied on news of a big contact win to build Australian frigates as well as prospects of a big cash payment in the second half of the year from Qatar for Eurofighter Typhoon jets. Lastly, satellite TV operator and media behemoth Sky (SKY; +2.8%) rose on the possibility that Disney, having increased its bid for 21st Century Fox (bidding war with Comcast), may be forced to increase an indirect but still mandatory offer for Sky (39% owned by Fox).

As for the names which have had a tougher week here’s the top five underperformers, and why;

Bottom of the pile is Cruise operator Carnival (CCL; -8.2%) shares plunged 11% on Monday after its latest set of results contained disappointing guidance, lowering its expectations for profits, dented by currency moves and higher oil prices. Already hurt by a general risk-off mood on Monday (trade war fears) and higher oil prices, British Airways’ owner  Int. Cons. Airlines (IAG; -8.0%) was hurt Tuesday by approval for a third runway at Heathrow which could increase costs in the near term (to help fund it) and result in more competition for take-off/landing slots.

Budget airline easyJet (EZJ; -6.6%) was hit by the same risk-off mood and perceived increase in fuel costs. Miner and commodities trader Glencore (GLEN -6.1%) suffered from a stronger USD depressing the value of metals like Copper (although the red metal is now off its lows). Lastly, newly merged investment outfit Standard Life Aberdeen (SLA; -5.0%) extended its recent downtrend, ever since Lloyds Banking sold its remaining 3.3% stake, the shares testing 2yr lows for support.

What you are reading may be news to you. If you are invested in the markets, that should not be the case. Not because you should have read it already, rather your current provider should have alerted you to such markets and share moving news. If they haven’t, are they really earning their crust, or your trust?

All of the above was discussed with our clients where applicable, or included in our publications, as soon as it was made known to us. It’s our job and what we do. To see for yourself what we do, and how well we do it, get access to our award-winning research. We’re confident you won’t be disappointed.

 As always, enjoy your weekend.

Mike van Dulken, Head of Research, 29 Jun 2018