FTSE 100 down modestly after yesterday’s big sell-off, M&S upgrades profit guidance

“After Thursday’s heavy losses, investors will be relieved to see only a modest drop in the FTSE 100 this morning,” says AJ Bell Financial Analyst Danni Hewson.

“UK stocks held the line despite further weakness in Asia overnight, with retailers enjoying some strength despite signs that some of the pent up consumer spending had leaked from the high street to hospitality in July as restaurants and leisure facilities reopened.

“Public borrowing was revealed to be lower as the Government’s life support measures for the economy are gradually dialled back.

“Markets may struggle for direction until the latter part of next week given a dearth of corporate and economic updates with the Jackson Hole summit kicking off next Thursday and giving central bankers and other economic decision makers a chance to outline their plans for the next phase of the pandemic recovery.”

Marks & Spencer

“Never mind Percy Pig, how about Perky Pig. It is a mark both of how significant the latest update from high street institution Marks & Spencer is and just how miserable its recent history has been that it represents the first unscheduled upgrade to earnings in years.

“Investors have had to get used to a diet of disappointments from the retailer largely connected to its home and clothing arm.

“Until now Marks & Sparks has struggled to keep pace with the changes in shoppers’ appetites and the way they shop, i.e. increasingly over the internet as well as in store.

“It is early days but this encouraging news suggests Marks could be on the road to emulating Next which is excellent at combining its stores and its online capacity to get consumers the products they want when they want them.

“At the very least it demonstrates that the MS2 turnaround programme at Marks & Spencer led by CEO Steve Rowe, who assumed the helm a little over five years ago, is gaining some traction.

“One swallow does not make a summer, with pandemic risks and supply chain issues still to contend with, but Marks & Spencer’s confidence in lifting guidance so early in its financial year is undoubtedly a positive sign.

“The food business, which has come to the firm’s rescue time and time again in the last two decades, is still performing robustly and the joint venture with Ocado to provide a web-based offering for its produce is going well.”

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