CFD Traders Diary
Slashed Dividend Upsets M&S shareholders
19/5/2009
Given that money on deposit yields virtually no interest these days, a blue chip retailer such as Marks & Spencer (MKS) shouldn't have to pay a huge dividend to attract hoards of investors looking for decent income. But England's finest came some way short this morning, after announcing a 30% plus drop in pre-tax profits and a dividend cut to match. Given that M&S described the outlook for the rest of the year as "challenging", it is little surprising that the share price is down 7%.
The other heavyweight reporting today is mobile telecom group Vodafone (VOD). Exceptional items and one-off charges, particularly relating to Continental Europe, obscured the overall financial picture. Broker Execution judged the full year performance to be slightly ahead of expectations, and cited hopes that the ongoing cost cutting program will offset the effects of the economic downturn. Shares were off just 0.5%.
But the London stock market as a whole was on a firm footing today, bolstered by the Dow's best showing in over a month, after clear signs from US housing data that the market could be turning the corner. The other driver for UK stocks was a rather interesting report stating the UK Government may already be ready to sell out of its stakes in nationalised banks RBS (RBS) and Lloyds Banking (LLOY). Clearly any such idea would only be entertained on the basis that there is a substantial profit to take, rather like the £1bn the Bank of England claimed to have made yesterday through its interventions during the Credit Crunch.
Sticking with the financials, interdealer broker ICAP (IAP) once again proved that it is one of the more successful plays in the sector despite the recent crisis. ICAP's success was largely due to contributions from astute acquisitions, while the numbers showed 2008 pre-tax profits managed to edge up another few percent to a new record, encouraging the share price to add 8% to reach its best level since September.
And fortunes seemed to be on the turn for sugar and sweeteners group Tate & Lyle (TATE), which saw its share price rocket 9% after announcing it had appointed new CEO Javed Ahmed, who will take over in the autumn
