Best and worst FTSE 100 and FTSE 250 shares in Q3

It was a typically volatile summer for stock markets, but who were the heroes and villains?

With Vodafone (LSE:VOD) shares up 25% and a quarter of London's top flight stocks at least 10% stronger, this summer wasn't as bad for retail investors as the headlines might have led us to believe.

However, a closer look at stock market performance for the third quarter reveals that the FTSE 100 consolidated gains seen earlier in the year, with London's benchmark index broadly flat overall.

That masks a big two-week fluctuation over July and August, with the top flight peaking at 7,727 before a quick slide back near to the 7,000 barrier after global recession fears were sparked by the inversion of the US yield curve.

Source: TradingView Past performance is not a guide to future performance

Overall, there wasn't that much distance between the Footsie and the big US indices in the quarter, even though the latter benefited from exposure to a resurgent tech sector after strong results from some of the industry's big players.

What's particularly surprising is the strong performance of the FTSE 250 index, which rose 2.4% despite containing more stocks vulnerable to a Brexit-driven UK slowdown.

Takeover deals for Cobham (LSE:COB) and Greene King (LSE:GNK) helped the cause - lifting pub groups Mitchells & Butlers (LSE:MAB) and EI Group (LSE:EIG) in the process - but there was also impressive recovery momentum for the likes of FirstGroup (LSE:FGP), Plus500 (LSE:PLUS) and Capita (LSE:CPI).

There was a similar story in the FTSE 100 as investors picked some old favourites as part of a drive towards quality stocks. These included heavyweights GlaxoSmithKline (LSE:GSK) and AstraZeneca (LSE:AZN) after gains of 11% and 13% respectively.

Vodafone's (LSE:VOD) renaissance in the third quarter will be a particular relief for retail investors after May's 40% dividend cut sent shares to a 10-year low. With the stock at 128.4p, we flagged a month later that the negative news around the mobile phone giant appeared priced in.

They are now trading at 161p after sentiment was lifted by signs of improved trading momentum in Europe and following the company's plans to reduce debt through the possible IPO of its phone masts business. UBS said today that it believed the company was well placed to return to the 185p to 235p range it occupied for most of the previous five years.

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Vodafone was the fifth-best performing stock in the FTSE 100, with London Stock Exchange and Paddy Power Betfair owner Flutter Entertainment (LSE:FLTR) occupying the top spots after takeover speculation sent their shares up 33% and 28% respectively.

The flight to quality was highlighted by further strong demand for JD Sports Fashion (LSE:JD.), which is now worth more than £7 billion after its shares added another 28% in the quarter. It currently trades with a forward price/earnings (PE) multiple of 22 times, but that's no barrier for investors given the company's impressive record and US growth ambitions.

Next (LSE:NXT) is another well-run retail stock continuing to attract the attention of investors, with its shares up another 12% to 5,969p in the quarter after a strong July trading update. Despite the consumer uncertainty, a number of analysts think the stock deserves to be trading closer to 6,300p based on its current forward PE multiple of 13 times.

At the other end of the retail spectrum, Sainsbury's (LSE:SBRY) is finally showing signs of recovery after its shares collapsed to a multi-year low in the wake of its failed Asda deal. And investors have also rallied behind TUI (LSE:TUI) after the demise of big rival Thomas Cook (LSE:TCG).

FTSE 100 risers in Q3    

Source: SharePad

FTSE 100 fallers in Q3    

Source: SharePad

The safe haven appeal of Polymetal International (LSE:POLY), with its portfolio of nine gold and silver mines, meant the Russia and Kazakhstan-based group stood out in the mining sector. Its shares rose 14% in the quarter, whereas other mining stocks dominated the list of fallers due to the impact of a rising US dollar and ongoing global recession fears.

There was no respite for Centrica (LSE:CNA) investors, which remains in the sight of short-sellers after its shares fell 16% in the quarter. Backers of insurer Prudential (LSE:PRU) are also under pressure after a sharp sell off since early August ahead of the company's M&G demerger.

The quarter ended with a hat-trick of blue-chip profits warnings on the same day from Imperial Brands (LSE:IMB), International Consolidated Airlines Group (LSE:IAG) and Pearson (LSE:PSON), with the textbook publisher the worst impacted of the trio after shares fell 10% over the quarter.

The warnings added to investor jitters at the start of the fourth quarter, particularly as October is often a testing month for markets. This was highlighted last week when the FTSE 100 suffered its worst day since January 2016 as weak US manufacturing data reignited growth worries.

FTSE 250 risers in Q3    

Source: SharePad

FTSE 250 fallers in Q3

Source: SharePad