Market Report: Trading fears knock M&S

MARKS & SPENCER had a day to forget, as rumours of poor trading and whispers of a dividend cut encouraged a wave of selling.

As most other FTSE 100 stocks kept their cool in the face of the expected no change in rates, Britain's premium retailer struggled, ending 14.75p lower at 380.25p. A deluge of bad news did the damage.

First on the block was the announcement that William Baird, M&S's biggest supplier, had suffered a dip in profits in 1998 and was forecasting a tough first half.

Baird itself shed 4p to 105p, sparking concern about M&S clothes sales. Panicky dealers talked of "negative double-digit" like-for-like sales at the start of the all-important spring season.

One or two brokers added to Marks & Sparks' misery by reawakening the spectre of a dividend cut with the final results, due out in June. On current forecasts of a 14.4p divi, the payout will only be covered one time and the Square Mile is starting to fret. Balance sheet worries were compounded when Moody's, the ratings agency, downgraded the retailer's debt.

HSBC put the seal on a truly awful session by repeating its "reduce" advice. The stock, which topped 600p in April, has lost over 9 per cent in the last three days as the market view got gloomier and gloomier.

If the trend continues, the title of a recent analysts' note on the new management's restructuring efforts, "It's going to be painful", could be inscribed on M&S' Baker Street headquarters.

The FTSE 100 had a relatively painless day, finishing 13 lower at 6,048.3. The blue chip index shrugged off the Bank of England's decision to keep rates on hold and remained in positive territory for most of the day, thanks to a robust opening on Wall Street.

However, when the Dow turned negative, the FTSE 100 followed suit ending with a small deficit. The FTSE 250 outdid its bigger brother once again, posting a 9.6 rise to 5,286.9. The Small Cap was also resilient, finishing 6.2 ahead at 2,282.5.

The undercard's bid speculation centred on British Borneo. The oil exploration group, which last year bought rival Hardy, drilled an 8.3 per cent increase to 105p in heavy volume.

The rumour is that a US predator is mulling a hostile bid of up to 180p a share to exploit Borneo's depressed price. The stock reached 522p a couple of years ago and has since been hammered by the falling oil price.

Talks of a merger with rival Lasmo also did the rounds as dealers reported aggressive buying from three big brokers. Merril Lynch, who reiterated its "buy" advice, was said to be among them.

Borneo pipped GKN as the best riser in the top 350 companies. The aerospace engineer took off with a 62.5p jump to 910p. Analysts were impressed by the better-than-expected results and confident outlook for this year.

GEC, up 29 to 565p, remained in demand as the market awaits the next acquisition, following this week's purchase of the US telecom group Reltec.

The insurers were having a love-in with the analysts. Royal & Sun, results today, soared 17.75p to 551p as ABN Amro suggested a switch out of Norwich Union, down 0.25p to 451.5p. CGU, up 27.5p to 955.5p, was also on ABN's wish list. Legal & General, up 25p to 774.5p, got the nod from Cazenove. Britannic spoiled the insurers' party with a 97p plunge to 1065p after a set of mediocre results.

Powergen, figures today, rose an electrifying 24p to 787p amid vague talk that it might buy a second regional electricity company.

Fellow utility Energis, a FTSE 100 candidate, powered 120p ahead to 1,580p after announcing a Northern Ireland telecom joint venture with the local electricity group Viridian, up 24.5p to 733p.

Hays, the services group, benefited from some switching out of rival Rentokil, which on Tuesday failed to meet its earnings target. Predictably, Hays rose 21.75p to 626.5p and Rentokil lost 2.75p to 396.25p. Railtrack was derailed by profit-taking, losing 75p to 1,.455p.

Food retailers went sour as the threat of a price war looms large. Tesco was first in the check-out queue with a 5.5p fall to 163p. Sainsbury offloaded 11p to 353p while Safeway dropped 7.75p to 256p as CSFB advised to sell. Morrison, the Northern chain, shed 7.5p to 296.5p.

The stores' black day was completed by Arcadia, down 18p to 213p. The broker Kleinwort Benson put a "sale" sign on the Burton off-shoot and reduced its forecasts. Merrill Lynch also hovered with talk of a 1m line of shares on offer.

Wates City, the property group, climbed 6.5p to 72.5p. Its major building City Point in the Square Mile is near completion and should add a further 30p to the share price.

Torotrak, the maker of a revolutionary gearbox, roared 26.5p ahead to 130p after pledging to win 80 per cent of General Motors' automatic transmission orders.

Bula Resources, the oil group, was boosted by the appointment of the former Irish prime minister Albert Reynolds as chairman rising 0.25p to 1.25p.

SEAQ VOLUME: 991.2M

SEAQ TRADES: 76,228

GILTS INDEX: 112.25 -0.72

NIGEL WRAY, the property and sports tycoon, is about to embark on an unusual venture. Yesterday, he disclosed an 11.4 per cent in Frank Usher, a long-suffering maker of evening dresses. Usher, which closed up 7p to 11.5p, is considering appointing the entrepreneur to the board. Mr Wray who owns the rugby team Saracens and made its fortune in the property world with Trocadero, is not a clothes expert. However, he has an eye for undervalued companies.

PPL THERAPEUTICS, the company that cloned Dolly the Sheep, is near to clinching a key deal for one of its major drugs. The shares soared 9p to 107.5p yesterday amid talk that PPL has found a US partner for its cystic fibrosis drug. The partner, believed to be a large pharmaceutical company, will shoulder a large chunk of the drug's clinical trials, reducing PPL's development costs. The company recently published encouraging results for the drug.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore