Yahoo Finance What to Watch: Big stock swings for Ocado, M&S, Ted Baker, Metro Bank
Here are some of the top business, market and economic stories you should be watching today in the UK, Europe and abroad:
Movers & shakers: Ocado and M&S
The investment community was reacting strongly to the big deal announced between Ocado (OCDO.L) and Marks & Spencer (MKS.L) on Wednesday.
Shares in Ocado were surging again, up about 3% in morning trading after reports of a tie-up pushed the stock up by 12% on Tuesday. However, M&S was leading the FTSE 100 index (^FTSE) down with a 9% drop, erasing virtually all its gains of 2019.
The newly announced joint venture between M&S and the online supermarket pioneer will give the long-running British retailer a full online food delivery service for the first time.
Under the deal, M&S will buy a 50% share of Ocado’s UK retail business for up to £750m ($994m).
M&S said it would finance the deal by raising £600m from investors and cutting its dividend by 40%. This part of the announcement led investors to sell M&S stock.
“Investors were happy with the deal outline yesterday but they won’t be too chuffed that the board is slashing the dividend by 40%,” said Neil Wilson, chief market analyst at Markets.com.
Rude awakening for Ted Baker and Metro Bank
Shares in Ted Baker (TED.L) fell by up to 18% to a three-month low on the London Stock Exchange on Wednesday morning after the fashion retailer forecast profit would get hit by swings in foreign exchange rates, higher costs and inventory write-downs.
Traders also had a visceral reaction to the unexpected announcement that Britain’s Metro Bank (MTRO.L) would have to raise £350m from investors after an accounting error slashed its market value. It also said it would slow its expansion plans amid “challenging” market conditions.
Shares in the bank were down by about 20% in morning trading.
Global stock market overview
European stock markets were all dipping in morning trading, with the FTSE 100 leading the way down with a 0.8% loss.
A big drop in shares in Beiersdorf (BEI.DE) were dragging down Germany’s DAX (^GDAXI) by about 0.6%.
And shares in Air France-KLM (AF.PA) were cratering – down about 11% in morning trading – after the Dutch government said it had built up a 13% stake in the airline. The move highlighted tensions between France and the Netherlands over control of the company.
In Asian markets, the mood was mixed with some indices posting modest gains and some declining.
Across the Atlantic ocean, US stock futures were dipping by about 0.3% ahead of the opening bell.
Investors are also keeping a close eye on the US-North Korean summit in the Vietnamese capital of Hanoi, which begins on Wednesday.
“Global risk appetite is likely to receive a solid boost if talks between US President Donald Trump and North Korean leader Kim Jong Un end on a positive note,” said Lukman Otunuga, a research analyst at FXTM.
“It must be kept in mind that stock markets still remain influenced by US-China trade developments, global growth concerns and other geopolitical risk factors. Any fresh news on the trade front or rising geopolitical risks will play a role in where global stocks close this week,” he wrote in a research note.
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