Market snapshot: FTSE 100 reshuffle - six stocks to watch

The second FTSE 100 reshuffle of 2022 is due and our head of markets Richard Hunter names the stocks likely to be involved this time.

Hot on the heels of the climax to a football season which provided the usual nail-biting relegation and promotion deciders, the premier index now stages its own version of the latest winners and losers.

The second FTSE 100 reshuffle of 2022 is due shortly and, still subject to change, the amendments will be announced after the close of play on Wednesday 1 June, based on the closing prices from this evening. The changes will then take effect on Monday 20 June.

There are two stocks for whom relegation is guaranteed.

ITV (LSE:ITV) is currently languishing at number 136 in the market cap listings, well below the 110th spot required to remain. Having returned to the FTSE 100 in the reshuffle of June 2021, the shares have declined by 47% over the last year. It most recently unsettled investors in March by announcing an investment of £180 million into its new streaming service at a time of intense competition and inflationary pressures crimping the discretionary spend of the consumer.

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Having narrowly avoided relegation in March, Royal Mail (LSE:RMG) will not escape the axe this time around. Standing at number 124, the shares have declined by 35% so far this year after a volatile bout of trading. Any progress on its transformation and parcel volumes has been more than offset by inflationary cost pressures, ongoing pay talks with the unions, tougher comparatives and, of course, steeply declining letter volumes. The company had regained its place in the FTSE 100 in June 2021, having previously been relegated in December 2018.

The two companies currently in line to replace these stocks with promotion are student housing firm UNITE Group (LSE:UTG) and British Gas owner, Centrica (LSE:CNA).

For the latter, rising energy prices have played into the hands of utilities in general, although progress has been hampered of late by the possibility of a windfall tax spreading to the sector. Centrica’s promotion would mark a return to the top table after a two-year absence, having previously been relegated in June 2020.

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There could even be a third change.

Currently teetering on the edge of relegation is Harbour Energy (LSE:HBR), formerly known as Premier Oil. Its relegation would mark one of the shortest stays on record in the FTSE 100, since the company was only admitted to the premier index this month following Ferguson moving its market listing to the US.

Its relegation would then open the door for the stock currently standing at 95th in the overall listings, namely the medical products business originally spun out of Bristol-Myers Squibb, ConvaTec Group (LSE:CTEC). Its share price has risen by 13.5% in the year to date, pushing the group into promotion contention.