By Barbara Kollmeyer
London stocks were generally lower on Wednesday, with heavily weighted HSBC dragging the index lower, along with British Land, though Marks & Spencer was a bright spot after well-received results.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.03% dipped 0.1% to 7,019.67, while the yield on 10-year U.K. gilts /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y -1.96% fell 3 basis points to 0.76%. A steepening yield curve helps banks borrow more cheaply and then lend at higher rates of interest. A falling yield curve works in the opposite way.
Investors have been carefully watching central banks for signs that they might start backing away from accommodative policies put in place to combat the pandemic. The Federal Reserve has been out in front with comments to reassure investors over inflation.
Shares of HSBC /zigman2/quotes/208272822/composite HSBC +0.72% /zigman2/quotes/203901799/delayed UK:HSBA +0.32% dropped over 1%, with other banks such as NatWest /zigman2/quotes/203233010/composite NWG +1.83% and Barclays /zigman2/quotes/208409333/delayed UK:BARC +1.39% /zigman2/quotes/208409333/delayed UK:BARC +1.39% down 2% each.
On the FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX +0.22% , shares of Marks & Spencer /zigman2/quotes/206225481/delayed UK:MKS +1.60% surged 9%. The retailer swung to a pretax loss for fiscal 2021 on lower revenue, but said for the first six weeks of fiscal 2022, business was ahead of a two-year-earlier comparative. Marks & Spencer also warned over continued uncertainty and rising costs due to the pandemic and Brexit, but analysts were looking at the positives.
“MKS is emerging from COVID with a stronger B/S [balance sheet] and 21/22has started well, as improving mobility has led to 2-year stack growth in both corecategories,” said a team of analysts at Jefferies led by James Grzinic.
Shares of Royal Mail /zigman2/quotes/204213037/delayed UK:RMG -1.13% continued to rise, a day after FTSE Russell said the multinational postal service and courier company would return to the FTSE 100 index after more than two years away, replacing engineer Renishaw, /zigman2/quotes/200921567/delayed UK:RSW -0.16% , which joined just in March. Royal Mail shares rose 1.5% and Renishaw shares rose 0.8%.
Shares of British Land /zigman2/quotes/210491538/delayed UK:BLND +0.91% slid over 4%, after the real-estate company said pretax losses narrowed, but revenue fell in fiscal 2021 as the pandemic hit rental collections and portfolio valuations. Russ Mould, investment director at AJ Bell, noted it’s the third straight annual loss for British Land.
“The company has been selling assets to bolster its balance sheet and is reshaping its portfolio to bring it more up to date, managing to sell retail assets above their book value,” said Mould.
“It will need to do more of this as its new strategy under recently appointed CEO Simon Carter sees it focus attention on London offices, mixed-use sites and retail parks where it believes it can add value by repositioning them as logistics, residential and office space,” he said, in a note to clients.