Between signs of a surer economic footing, a run up in the oil price and expectations of a business-friendly parliamentary handover, it’s been a solid quarter for large-cap UK equities. In simple price terms, the FTSE 100 has pushed 5.6 per cent higher since 20 March.
But perhaps the biggest boost to the stock market’s steady rise – albeit one that is most often held up as a sign of London’s enduring cheapness and therefore frailty relative to other bourses – has been the takeover factor. Though acquirers’ ability to finance big deals hasn’t much improved, the prospect for all-share M&A activity has been turbocharged by several strategic tilts and opportunistic bids, most notably BHP’s (BHP) failed attempt to swallow its preferred cuts of Anglo-American (AAL).
The impact on our quarterly Momentum Classics screen – which takes long positions in the 10 FTSE 100 stocks whose share prices climbed the most in the preceding three months, and ‘shorts’ the 10 weakest performers – has been most keenly felt in the latter grouping. While neither telecoms group BT (BT.) nor wealth manager St James’s Place (STJ) has received a formal approach, in both cases takeover chatter has helped recast their shares from laggards into fliers in the space of a few weeks.