London Report: Vodafone and Marks weigh down on FTSE
SELL-OFFS in mobile operator Vodafone and retailer Marks & Spencer dragged down Britain’s blue-chip equity index yesterday, after disappointing forecasts from both companies.
The benchmark FTSE 100 index closed down by 0.6 per cent, or 42.55 points, at 6,802.00 points.
Vodafone took the most points off the FTSE as it fell by 5.5 per cent to 205.3p after it said core earnings would decline in 2015 due to investment spending needed for its business.
Analysts at Societe Generale said the company’s results were lacklustre, but Strand Capital managing director Kyri Kangellaris said Vodafone was a stock worth buying on the dip.
“There’s no doubt that it’s still a good company in the long run. I’d look to pick some up if it fell down to the 200p or 195p level,” he said.
Clothing and food retailer Marks & Spencer also fell 1.1 per cent after it warned that a new website would take four to six months to “settle in”, affecting the performance of its general merchandise business in the three months to end-June.
The fall in M&S’s share price impacted the shares of rival high street retailers, with Tesco falling 1.9 per cent while WM Morrison declined by 2.1 per cent.
The FTSE 100, which is up by roughly one per cent since the start of 2014, hit its highest level in more than 14 years last week but has since slipped back.
Hantec Markets analyst Richard Perry said the FTSE was beginning to stall after last week’s run-up, while Intertrader chief market strategist Steve Ruffley added the FTSE needed to break and hold above 6,900-7,000 points to re-ignite the rally.
“We have failed to break 6,900 but more importantly have not tested 7,000 points. If we are going to see a continued rally, then the psychological and historic 7,000 must be broken,” said Ruffley.
Meanwhile elsewhere in Europe, shares and peripheral bonds buckled for a second day running as political angst offset optimism over fresh support from the ECB.
The premiums demanded by investors to hold Spanish, Italian and Portuguese bonds rather than German Bunds rose to two-month highs amid growing nervousness about this week’s EU elections.
The Dax lost 0.21 per cent, while the Cac was down 0.39 per cent.