Rumours and reports add to the volatility: The Markets in February

Recovery slows as talk of trade, interest rates and inflation fades.

Article updated: 27 February 2019 3:00pm Author: Graham Spooner

The year to date recovery in markets continued over the early part of the month but showed signs of petering out towards its end as initial euphoria over trade talks, direction of interest rates and inflation data faded. Of course, there was also the normal uncertainty over Brexit affecting markets. The FTSE 100 index having started the month below 7,000 looks likely to finish above but it could be a close run thing.

More takeover rumours

The rumour mill has been slower than in past months, but an old story resurrected itself with talk that Whitbread may be a takeover target. Other companies mentioned include a possible offer for Kcom and the potential for the company that approached Inmarsat last year, EchoStar, to return with a higher offer. There was a story in the press that private equity groups may be looking at WPP’s research unit Kantar.

Activist investors have been prominent over the month, with one taking a stake in CRH and others exerting pressure on Barclays, Just Eat and Hammerson.

Company reports shake the market

Another reporting season kicked in towards the end of the month, adding to volatility in some areas. There was talk of future dividend cuts at under pressure Centrica, following on from another profit warning. Other companies that experienced sharp falls in their share price were travel group TUI, on the back of a profit warning and one time investor favourite Purplebricks, as a result of concerns over expansion plans. We would certainly encourage investors to cast an eye over the latest updates from companies and management, which in some cases might lead to an early spring clean of the portfolio.

Sainsbury’s shares fell back to below pre-merger levels as the UK regulator virtually put the kibosh on its proposed tie-up with Asda, stating that the deal could lead to a “substantial lessening of competition”.

With temperatures hitting record levels let us hope that politicians can keep a cool head. Their recent form guide does not inspire much confidence and this in turn could lead to increasing market volatility, potentially presenting opportunities close to the ISA season. Mention of a form guide is a reminder that Cheltenham is fast approaching, with equine flu still creating some concerns, let us hope that punters do not catch a cold as well.

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Graham Spooner portrait photo
Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FCA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.