Market Report: Christmas cheer in short supply at M&S

Marks & Spencer led the blue-chip retailers lower last night amid concern the company might be left behind during the crucial Christmas selling period.

There was fear that, despite holding two recent one-day sales, M&S may be forced to offer further significant discounts as the festive season progresses, owing to stock left over from September when the Lehman Brothers bankruptcy and the troubles around HBOS precipitated a sharp drop in consumer demand.

Analysts at Morgan Stanley said a "big step-up in markdowns" was likely to affect margins, making its assumption of flat gross margins in general merchandise "unachievable". "M&S disappointed the market with its January trading statement. We fear that it is set to do so again this year..." the broker said, sparking concern about trading which sent the stock down 5.03 per cent, or 12.25p, to 231.25p.

DSG International, up 3.25p at 16p, and Kesa Electricals, down 6.75p at 98.25p, were also said to be at risk this Christmas. "Positive surprises could come from HMV as, despite structural problems, its competitive position has been strengthened by the collapse of Woolworths and supply problems at Zaavi, and Sainsbury's, which we believe will benefit from consumers trading down from M&S and Waitrose," Morgan Stanley added, helping HMV climb to 111p, up 4.72 per cent, or 5p. Sainsbury's was up 2.45 per cent, or 7.25p, at 303.25p.

Overall, the FTSE 100 was down 13.98 points at 4,367.28, while the FTSE 250 gained 112.74 points to 6,264.37.

Sentiment was mixed, with strength in mining and the oil and gas sectors offsetting weakness in financial and retail stocks. Rio Tinto surged after unveiling plans to cut debt by $10bn (£6.7bn) by the end of 2009. Rio's plans answered market concerns about its debt pile, and the stock ended at first place on the Footsie, up 20.35 per cent, or 256p, at 1514p. The wider sector perked up as commodities rose with Vedanta Resources, at second place on the benchmark index, gaining 14.68 per cent, or 90.5p, to 707p, and Antofagasta, at fifth place, advancing to 456p, up 8.12per cent, or 34.25p.

Banks, including Standard Chartered, at 750p, down 6.02 per cent, or 48p, and the Royal Bank of Scotland at 68.5p, down 2.28 per cent, or 1.6p, were unsettled after Credit Suisse highlighted the possibility of a "broad, complete removal of profits in 2009 and 2010" across the European sector if economic conditions deteriorate sharply.

The First Capital Connect operator FirstGroup lost 2.52 per cent, or 10.25p, to 397p after Goldman Sachs added the stock to its widely followed "conviction sell" list, saying: "Next financial year we expect School Bus (where higher fuel and labour costs will offset the benefit of synergies), Greyhound, UK Rail and UK Bus profits will be well below consensus expectations owing to higher costs and weaker volume."

Back on the upside, Wood Group, up 8.81 per cent, or 14.8p, at 182.8p; Stagecoach, up 5.22 per cent, or 6.7p, at 135.1p; Lonmin, up 6.19 per cent, or 38.5p, at 660p; Fresnillo, up 1.51 per cent, or 2.1p, at 141.1p; Petrofac, up 7.23 per cent, or 21.5p, at 318.75p, mounted a show of strength before the FTSE index review, the results of which, released last night, were based on prices at the close on Tuesday and confirmed the relegation of all five to the FTSE 250.

Elsewhere, on the FTSE 250, Johnston Press, up 2p at 12p; Trinity Mirror, up 1p at 54p last night, and Mecom, up a slight 0.05p at 1.5p, were given their marching orders from the mid-cap index. Other leavers include Taylor Wimpey, up 0.09p at 10p, and Premier Foods, up 6p at 23.75p.

Randgold Resources, up 6.97 per cent, or 177p, at 2717p, is among those moving up to the FTSE 100.

In other movements, Game Group, the video games retailer, retreated to 123.5p, down 6.79 per cent, or 9p, after a disappointing update from Electronic Arts, the video games maker.

Imperial Energy, up 6.79 per cent, or 68p, at 1,070p, continued to trade below ONGC Videsh's 1,250p bid price despite some supportive comment from JP Morgan, which said that, contrary to recent market concerns, Imperial shareholders were likely to accept the offer by the end of the tender period later this month, arguing: "The highly concentrated institutional shareholders structure will help to reach the 90 per cent app-roval limit in time."

Among smaller companies, Mano River Resources surged after ann-ouncing the completion of a deal with Severstal, the Russian mining group, to develop its Putu Iron Ore project in Liberia.

The move marks Severstal's first foray into Africa and sent Mano's shares rocketing to 2.375p, up 26.67 per cent, or 0.5p.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power