By Callum Keown
British retail giant Marks & Spencer looks set to be dumped out of the FTSE 100 along with software company Micro Focus and insurance giant Direct Line.
The FTSE’s quarterly reshuffle will be based on closing prices on Tuesday and announced after the market close on Wednesday.
Any company falling to 111th or lower in market cap is automatically dropped from the blue-chip index and into the FTSE 250.
Firms will be promoted if they move into the top 90, replacing the lowest ranked FTSE 100 member.
RELEGATED (subject to last-minute share price movements)
Marks and Spencer
A founding member of the FTSE 100, the high street giant’s relegation highlights the U.K. retail sector’s woes in recent years. M&S’s earnings have steadily fallen as it has failed to compete with online retailers and been slow to revamp its clothing ranges. The share price has fallen 21% this year and has lost 45% of its value over the past two years. As of Tuesday the company’s £3.6 billion market cap was 113th in the index. Fellow retailers Sainsbury’s and Morrisons fell close to the drop zone but avoided falling out of the blue-chip index.
The largest UK-based tech firm was safely in the FTSE’s top 90 companies by market cap before its first half results last week. The software company warned full-year sales could drop 6-8% on last year’s due to a deteriorating macro-environment — it had previously forecast a 4-6% revenue drop. The warning sent shares down 24%.
Direct Line Insurance
The motor insurer’s stock has dropped to its lowest level since the end of 2014 as the sector has faced regulatory pressures and falling car insurance premiums. A competitive market has proved challenging for Direct Line, which now looks likely to drop out of the FTSE 100.
The Russia-based gold and silver miner has frequently moved in and out of the FTSE 100 and looks set for a return to the big time as its shares have climbed 46% this year. The rising price of gold /zigman2/quotes/210034565/delayed GC00 +0.38% , which hit six-year highs last month, has driven the stock’s recent surge.
The London-headquartered drugmaker has had a strong year so far and recently raised its full-year expectations after new product launches boosted first-half profits. Its share price has risen 19% so far in 2019.
British aerospace firm Meggitt also looks set to sneak into the FTSE 100. The company’s restructuring has shown signs of taking off with accelerated revenue growth, despite the problems faced by Boeing /zigman2/quotes/208579720/composite BA -5.41% , one of its major customers.