FTSE 100 marks time in third quarter despite bidding frenzy

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The FTSE 100 barely changed in value in the third quarter but that did not mean there were not some big winners and losers.


The FTSE 100 started the period at 7,080 and rose just six points (0.1%) in the ensuing three months, despite it being a quarter characterised by some high-profile bid activity.


Wm Morrison Supermarkets PLC, up 66%, was the top performer after two US private equity groups battled it out to take control.


The supermarket chain has only just made it back into the FTSE 100 but looks set to disappear in the next reshuffle, as does the second-best performer, Meggitt PLC, which like Morrisons has only just returned to the top tier of the Footsie indices.


Like Morrisons, the company was also the subject of a bid battle, with US-based aerospace group Transdigm ultimately dropping out after doing its due diligence, leaving the field clear for another US-based outfit, Parker-Hannifin, to win Meggitt’s hand.


Meggitt shares rose 45% during the period.


Sector peer Rolls-Royce Group PLC, up 29%, was the third-best performer as things started looking a lot brighter for the propulsion systems giant.


The engines maker and maintainer was hit hard by the fall-out from the COVID-19 pandemic that led to air traffic collapsing.


The loosening of restrictions on air travel, some asset disposals and some contract wins put the smile back on the face of most shareholders but not Causeway Capital Management, which called on the company’s incoming chair, Anita Frew, to refresh its board, according to a report in the Financial Times.


Jonathan Eng, portfolio manager of the US investment group that holds just under 9% of Rolls-Royce, told the FT that Rolls-Royce needs to make sure it has the right expertise to tackle the decarbonisation challenge. Frew should also consider the board’s engineering expertise given the company’s durability problems on the Trent 1000 engines and any relevant experience on health issues given the pandemic, he added.


Entain PLC, the owner of the Coral and Ladbrokes betting chains, was the fourth-best performer with a gain of 27% and once again bid interest was the reason for the rise, with US firm Draftkings Inc tabling a bid while existing US partner MGM Resorts Internationals considers it options.


The top five was rounded out by Royal Dutch Shell PLC, which rose 26% as gas and oil prices continued to go through the roof during the third quarter.


Meanwhile, down in the Footsie cellar


“Into each life some rain must fall,” according to the poet Longfellow, and it was a wet and miserable quarter for many mining companies and housebuilders.


Polymetal International PLC, Rio Tinto PLC, Anglo American, Antofagasta PLC, Fresnillo PLC and BHP Group suffered falls ranging from 26% to 14% while housebuilders Persimmon PLC and Barratt Developments PLC fell 18% and 15% respectively as the roaring UK housing market quelled a bit.


The worst performer, however, was Royal Mail PLC, which reported in July that parcel deliveries slowed sharply in its latest quarter as the online boom sparked by the Coronavirus (COVID-19) pandemic eased, though letter volumes continued to rise.


Royal Mail shares fell 29% between June and September.


A trading update was the cause of the 21% fall for Associated British Foods PLC, as well.


The Primark owner said that at the beginning of the fourth quarter of its fiscal year, sales at Primark were running 24% below pre-pandemic levels. This subsequently improved to a 10% decline in the following weeks but for the fourth quarter, like-for-like sales are expected to be 17% lower than the same period two years ago.


FTSE 100 leaders
Ticker Company % change
MRW Morrison (Wm) Supermarkets PLC 65.7
MGGT Meggitt PLC 45
RR. Rolls-Royce Group PLC 28.6
ENT Entain PLC 27.4
RDSB Royal Dutch Shell PLC 26.2
RTO Rentokil Initial PLC 21.8
AVST Avast PLC 21.8
CRDA Croda International PLC 21.8
SMT Scottish Mortgage Investment Trust PLC 18.5
SPX Spirax-Sarco Engineering PLC 17.6
REL RELX PLC 16.2
EXPN Experian PLC 15
SGRO Segro PLC 13.8
RMV Rightmove PLC 12.8
AZN AstraZeneca PLC 12.6
TSCO Tesco PLC 12.6
FLTR Flutter Entertainment PLC 11.8
JD. JD Sports Fashion PLC 10.5
SGE Sage Group (The) PLC 8.47


FTSE 100 laggards
Ticker Company % change
RMG Royal Mail Group PLC -29.1
POLY Polymetal International PLC -26.3
RIO Rio Tinto PLC -22.1
ABF Associated British Foods PLC -20.6
AAL Anglo American PLC -19.6
ITV ITV PLC -18.9
MNG M&G PLC -18.1
PSN Persimmon PLC -17.6
SN. Smith & Nephew PLC -16
PSON Pearson PLC -15.6
ANTO Antofagasta PLC -15.2
BDEV Barratt Developments PLC -14.7
FRES Fresnillo PLC -14.6
HL. Hargreaves Lansdown PLC -14.3
JMAT Johnson Matthey PLC -14.2
BHP BHP Group PLC -14.1
BRBY Burberry Group PLC -13.9
IAG International Consolidated Airlines Group SA -13.8
STAN Standard Chartered PLC -13.2

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