FTSE dips with midterms still in the balance, Marks & Spencer warns of difficult outlook, Next buys Made.com brand out of administration and Taylor Wimpey sees sales fall and cancellations rise

“The red wave promised overnight turned out to be more of a pinkish swell with the result of crucial midterm elections still in the balance as trading began in the UK on Wednesday morning,” says AJ Bell Investment Director Russ Mould.

“Amid the uncertainty the FTSE 100 was modestly lower. A continuing slide in oil prices, as initial excitement about a reopening of the Chinese economy has waned, helping to put energy stocks under continued pressure.

“What might have greater impact on markets than the latest political ructions across the Atlantic are the inflation figures due out in the US tomorrow as traders play their usual game of trying to guess when the Fed might finally pivot away from rate rises.”

Marks & Spencers

“UK retail institution Marks & Spencer has been making a better fist of things of late but it is in a difficult spot right now.

“It doesn’t sit in the luxury space where the clientele is insulated from cost-of-living pressures nor does it offer the kind of value on offer from discount chains and grocers. Instead, Marks is wedged in a kind of squeezed middle and that’s reflected in both a big drop in underlying profit and a gloomy outlook.

“There were some bright spots among the dark clouds with trading reasonably resilient and the company enjoying decent fashion sales. This is quite the turnaround from a period where Marks & Spencer’s tired clothing offering was a real Achilles heel for the group.

“This is also a more efficient business with a stronger balance sheet to weather what is sure to be a difficult period.

“That position is testament to the progress which has been made and Marks & Spencer shareholders will hope that not all of that is unpicked by the current consumer turmoil.”

Next/Made.com

“As had been widely speculated Next is buying the brand, website, and IP of failed furniture retailer Made.com as it enters administration.

“The deal shows that there was nothing wrong with the proposition as such, just the way the business was run.

“As Made.com CEO Nicola Thompson observed in a candid statement that the company could not survive in a world where there wasn’t stable demand, low inflation, and a cost-efficient global supply chain.

“Next has the scale, experience and retail savvy to adapt to changing economic circumstances and it has done so successfully in the past, suggesting it can turn Made.com into a successful and lucrative brand.”

Taylor Wimpey

“Anyone who read Persimmon’s update yesterday would have been in no doubt about what to expect from its housebuilding peer Taylor Wimpey.

“And, sure enough, the company has cut its volume outlook in the face of sharply falling sales rates and a big increase in cancellations.

“The latter is a particular issue for Taylor Wimpey and its rivals as the visibility implied by forward reservations is therefore undermined.

“It’s something of a miracle that it has taken this long for housebuilders like Taylor Wimpey to feel this kind of pain. Cost-of-living pressures have been mounting for some time, mortgage rates were already bubbling higher before the mini-budget which really brought them to the boil and the cost of raw materials and labour have been going up.

“The major contrast with Persimmon’s latest missive is Taylor Wimpey made no hints about having to rebase the dividend, although that may still come as the group looks to lay the foundations for a recovery when the housing and mortgage markets stabilise.”

These articles are for information purposes only and are not a personal recommendation or advice.