FTSE 100 movers: M&S slumps on Ocado deal; banks on the up

London’s FTSE 100 was down 0.6% to 7,108.52 in afternoon trade on Wednesday as the pound continued to push higher.

Marks & Spencer shares suffered heavy losses after the retailer said it will slash its dividend by 40% and conduct a rights issue to raise up to £600m to fund the acquisition of a 50% share in Ocado’s UK retail business.

The joint venture will trade as Ocado.com but benefit from access to M&S's brand, products and customer database from September 2020 at the latest. Ocado was the standout gainer on the top-flight index, however, as the up-front £562.5m cash will enable it to fund investment in all the currently agreed warehouse projects for its international clients.

David Cheetham, chief market analyst at XTB, said: “While the market has reacted angrily to the news by selling M&S stock in droves, the prospects for Ocado appear far more favourable as the firm will not only receive a large chunk of cash but they will also save an estimated £15m a year in sourcing fees that are currently paid Waitrose.”

ITV retreated as it said it was in the "concluding phase of talks" with the BBC to establish a strategic partnership to launch the Britbox video-on-demand service, but reported a drop in adjusted profit for 2018 and said it was likely to be hit by falling ad sales in the first half of 2019.

Wealth manager St James’s Place was in the red as it reported a rise in full-year profits but an easing of new business growth and inflows, while corrugated packaging group Smurfit Kappa was knocked lower by a downgrade to ‘hold’ at Goodbody.

On the upside, housebuilder Taylor Wimpey advanced as it posted a 19% jump in full-year pre-tax profit as completions edged higher amid "robust" demand for new homes. In the year to the end of December 2018, profit rose to £810.7m as completions ticked up 2.9% to 15,275.

Peers Persimmon and Barratt Developments also gained ground.

Banks were in demand amid Brexit optimism, with Lloyds, Barclays and RBS all higher, while Rio Tinto rallied as the miner rewarded shareholders with a bumper special dividend worth a total $4bn as part of a $7bn payout.

FTSE 100 - Risers

Ocado Group (OCDO) 1,020.00p 3.03%
Micro Focus International (MCRO) 1,921.00p 2.84%
Taylor Wimpey (TW.) 174.97p 2.35%
Persimmon (PSN) 2,442.00p 1.92%
Lloyds Banking Group (LLOY) 62.85p 1.53%
Barclays (BARC) 167.40p 1.52%
Royal Bank of Scotland Group (RBS) 262.90p 1.12%
Glencore (GLEN) 309.90p 0.94%
Rio Tinto (RIO) 4,415.00p 0.66%
Barratt Developments (BDEV) 593.00p 0.64%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 270.60p -10.75%
Hiscox Limited (DI) (HSX) 1,565.00p -4.22%
NMC Health (NMC) 2,626.00p -4.02%
Unilever (ULVR) 3,951.50p -4.02%
Pearson (PSON) 829.40p -3.49%
ITV (ITV) 126.85p -3.39%
St James's Place (STJ) 947.40p -3.01%
Associated British Foods (ABF) 2,253.00p -2.85%
Smurfit Kappa Group (SKG) 2,204.00p -2.82%
TUI AG Reg Shs (DI) (TUI) 810.20p -2.81%