FTSE’s first quarter performance worst since 2009 and Compass dragged down by rival’s warning

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“The market is trying its best to end the week on a positive note, with the FTSE 100 rising 0.09% to 7,050 in early trading on Thursday,” says AJ Bell Investment Director Russ Mould.

Stock Market Movements

“Data suggests the FTSE 100 is the worst performing major stock market index in the first quarter of 2018, assuming no major changes to its performance today.

“The FTSE 100 looks on track to have fallen by 8.3% in the first quarter of 2018. That represents the worst first three months of a calendar year since 2009 which saw an 11% decline.

“Over the same period this year, Japan’s Nikkei 225 index is down just over 7% and Hong Kong’s Hang Seng index is showing a small gain just below 1%. The biggest risers look set to be Russia’s Trading System index (up 7.3%) and Brazil’s Bovespa index which at the time of writing was up 11.4% so far this quarter.”

Compass

“Shares in catering giant Compass have taken a knock after French rival Sodexo cut its full year sales and profit margin outlook following a weak second quarter performance. Investors clearly worry that Sodexo’s pain is representative of the catering market as a whole, therefore Compass is at risk.

“Many people view these companies as immortal, believing their services to always be in demand regardless of economic conditions. Therefore seeing earnings weakness may come as a big shock to a lot of people.

“In reality, Sodexo is no stranger to earnings setbacks, having issued a revenue warning as recently as last summer. Another competitor, Elior, has also been struggling.

“Admittedly Compass has a better track record of being resilient. However, if you go back to 2005, you’ll find that Compass issued three profit warnings in a year. No company is immune from trading setbacks, even the most defensive types of business.”

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