This summer has seen unprecedented share price movements among large cap stocks on the London market with 10%, 15% and even 66% changes for a single stock in a day.

As a rule of thumb, a 5% move in either direction is significant for a FTSE 100 stock which will typically be less volatile than its smaller counterparts.

You also have to think that a 5% rise in a large cap company actually equates to a chunky increase in the value of the business.

For example, a 5% rise in a £4bn company means something has happened to push up its value by £200m. In contrast, a significant bit of news can easily push up the value of a small cap by 25% or more.

Why have share prices behaved differently this summer?

Due to the size of large caps, any setback or breakthrough has to be very material to move the dial by more than 5%, in our opinion.

And yet this summer we have seen pharmaceutical giant AstraZeneca (AZN) endure its worst ever one-day share price performance (down 15%) on the failure of a key drugs trial (27 Jul).

Advertising giant WPP (WPP) sank 10% on 23 August after warning it may deliver no growth in 2017.

Doorstep lender Provident Financial (PFG) lost two thirds of its market value on 22 August after a massive profit warning.

So why have we seen such pronounced share price moves? Stocks on high price-to-earnings ratios are typically more prone to big share price falls if they disappoint as the market has typically already reflected future growth in their share price.

With the FTSE 100 not far from record high levels, perhaps there is a case for saying the valuation of the market as a whole is a bit stretched.

Another possible cause is the thinner volumes typically seen in the summer months when some of the more experienced traders and fund managers were sunning themselves on the beach.

Is there any logic behind the share price moves?

Although not a FTSE 100 stock, Dixons Carphone (DC.) fell 23% on 24 August as it warned of a negative impact as consumers delay replacing their old phones, put off by the impact of sterling weakness on the cost of new models.

The share price decline might look hefty but it’s actually not far short of the scale of the downgrade to 2017 pre-tax profit guidance which, based on the top of the previous forecast of £485m to £490m and the bottom of the revised numbers of £360m to £440m, is more than 26%.

The market perhaps prudently is holding fire a little ahead of two key factors which will impact the future performance of the business, namely the launch of the new iPhone 8 this autumn and trading during the key Christmas period.

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