Kitchen sinking at M&S, profits on target at DC

London open

The FTSE 100 was called 55 points higher by City of London traders on Wednesday morning, extending its strong gains from the previous day.

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Full year profits at Marks & Spencer fell 18.5% as new chief executive Steve Rowe engaged in what appeared to be come canny 'kitchen sinking', warning that the current year's profits will be hit by his plan to turnaround the clothing business. Rowe pushed through a £200m charge on non-underlying items that dragged down profits for 53 weeks to 26 March, with underlying pre-tax profits rising 4.3% to £689.6m on sales up 2.4% to £10.6bn.

A trading update from Dixons Carphone revealed annual pre-tax profits are likely to reach top half of its guidance as the retailer gained market share in electricals and mobile in most of its key markets. Like-for-like revenue in the fourth quarter rose 5%, meaning for the full year it rose 5%, helped by a 9% surge in the Nordic region that made up for a flat 16 weeks to 30 April in Greece.

Concluding its report into a 'universal postal system', the postal regulator has decided not to impose any new new price controls on Royal Mail’s wholesale or retail products but it kept the cap on stamp prices and proposed tightening some rules in the the 'access' market where rival operators collect and sort mail before handing it over to Royal Mail to complete delivery. Ofcom said it would closely monitor the company as it was concerned Royal Mail "has the potential to cross-subsidise its parcels business through its letters business – where it has a much larger market share and an established delivery network – in a way that might disadvantage other parcel operators".

Newspaper round-up

Greece's international creditors have bought time to secure the country's financial future after agreeing broad but inexact principles to ease its debt mountain and break an impasse between Germany and the International Monetary Fund. After almost 11 hours of talks in Brussels, eurozone finance ministers and the IMF agreed to a range of measures to restructure Greece’s debts when its €86bn bailout ends in 2018 — but put no figures on the concessions and left them subject to political decisions by eurozone countries. – Financial Times

The boss of one of Britain’s biggest estate agent chains appears to have called the top of the property market, saying there has been a big slump in demand from buyers after the nation has “reached the limit” on house prices. Paul Smith, whose company operates Haart, Felicity J Lord, Spicer McColl and Darlows chains across the UK, said there was “trouble in paradise” and sellers would have to cut prices to find buyers. – Guardian

US agricultural business Monsanto rejected a $62bn takeover offer from German drugs and crops giant Bayer yesterday as it believes the current proposal is “incomplete and financially inadequate”, but said it is willing to engage in further negotiations. The firm said it was “open to continued and constructive conversations” with Bayer to assess whether a transaction “in the best interest of Monsanto shareholders can be achieved”. - Telegraph

British banks are increasingly willing to scrap the accounts of charities, small businesses and fintech firms in a bid to cut the cost of regulatory compliance and anti-money laundering controls, according to a report commissioned by the Financial Conduct Authority. Official crackdowns on money laundering and corruption have forced banks to work harder to ensure they are not inadvertently letting dirty money into the financial system. – Telegraph

US close

US stocks finished higher on Tuesday as oil prices rose and data showed new house sales surged more than expected in April.

The Dow Jones Industrial Average increased 1.22%, the S&P 500 climbed 1.37% and the Nasdaq gained 2.0%.

At the same time oil prices increased with West Texas Intermediate crude up 1.4% to $48.81 per barrel and Brent up 0.90% to $48.79 per barrel at 2142 BST.