It’s that time of year when half of the City seem to be away from their desks.
The star fund managers retreat to their multi-million pound chateaux in the south of France, while even we journalists are able to sneak in a few days at an all-inclusive in Benidorm.
With the traders and managers – the guys who keep the markets ticking over – all too preoccupied with champagne and caviar, trading volumes go through the floor.
‘Buyers beware in thin markets’
That leaves companies, particularly those with bad news, susceptible to the ‘thin markets’, which is generally when equities are a little more volatile.
Provident Financial PLC (LON:PFG) was the first to suffer at the hands of a dull market this week when its share price collapsed by almost three-quarters on Tuesday following a shock profit warning.
Advertising giant WPP PLC (LON:WPP) was next up on Wednesday as stumbling revenues and a weak outlook knocked more than 12% from its value.
Then today we had PC World owner Dixons Carphone Plc (LON:DC) which plunged as it warned on profits amid a challenging retail environment.
‘Thin market exaggerates price moves’
As ETX Capital analyst Neil Wilson explains: “A lot of traders are away and not everyone is at their desk so some of these moves may be more exaggerated than we might otherwise have seen.”
“Maybe once some of the big players come back into the market then we might start to see things pick up.”
Both Provident and WPP have pre-empted traders’ returns it seems, particularly the former, with both making moves higher today.
As for Dixons Carphone: “There’s clearly an issue here…but I’d also add that it’s not necessarily as bad as today’s share price fall would suggest.”