LONDON MARKET CLOSE: M&S Slides After Cash Call And Dividend Cut

LONDON (Alliance News) - Stocks in London ended lower on Wednesday with the FTSE 100 hindered by strength in the pound, while Ocado and Marks & Spencer saw contrasting fortunes after confirming their hotly-anticipated joint venture. The FTSE 100 index closed down 43.92 points, or 0.6%, at 7,107.20. The FTSE 250 ended down 131.47 points, or 0.7%, at 19,139.21, and the AIM All-Share closed 6.69 points lower, or 0.7% at 913.04.The Cboe UK 100 ended down 0.7% at 12,067.89, the Cboe UK 250 closed up 0.7% at 17,100.48 and the Cboe Small Companies ended up 0.1% at 11,148.72.In Paris the CAC 40 ended down 0.3%, while the DAX 30 in Frankfurt ended down 0.5%. "Stock markets in Europe finished firmly in the red as political tensions linger. Investors are still a little worried about the US-China trade spat. The euphoria that was experienced during the week on the deferral of higher tariffs on Chinese imports into the US, has been replaced by impatience about the lack of clarity over trading relations," said CMC Markets analyst David Madden. On the London Stock Exchange, Taylor Wimpey ended as the best blue chip performer, up 3.6% after the housebuilder reported its 2018 results broadly in line with market expectations and with a record cash position.Pretax profit for 2018 was GBP810.7 million, up 19% on last year. Excluding exceptional items pretax profit came in at GBP856.8 million, slightly above company-compiled analyst consensus of GBP854.0 million and up 5.5% on the GBP812.0 million generated in 2017.For 2018, the housebuilder declared a dividend of GBP499.5 million. Despite the payout, Taylor Wimpey's net cash rose to a record level of GBP644.1 million at the end of the year from GBP511.8 million in 2017.Fellow housebuilders Persimmon, Barratt Developments and Berkeley Group closed up 2.3%, 1.7% and 0.8% respectively.Rio Tinto closed up 0.9% after the Anglo-Australian miner hiked its normal payout and issued a special distribution amid "strong" 2018 results and healthy production expectations for 2019. In 2018, pretax profit widened 42% to USD18.17 billion from USD12.82 billion the year prior. This was after revenue rose 1.2% to USD40.52 billion from USD40.03 billion the year before. Underlying earnings before interest, taxes, depreciation and amortisation narrowed 2.4% to USD18.14 billion from USD18.58 billion the year before. This was broadly in line with the USD18.15 underlying Ebitda consensus, according to company-compiled figures. Rio Tinto proposed a 135.96 pence final dividend per share, up 5.0% from 129.43p the year prior. It declared a 183.55p special dividend following a series of asset sales during the year. For the full year, the dividend rose 9.5% to 232.78p from 212.56p the year before. At the other end of the large cap index, Marks & Spencer ended the worst performer, down 12% - with GBP614 million wiped off its total market value after the high street retailer said it would raise cash from investors and cut its dividend in order to facilitate its long-anticipated full online food delivery service.The food, clothing and homewares retailer confirmed forming a 50-50 joint venture with Ocado Group, which will see M&S pay GBP750 million to Ocado for a 50% stake in the joint venture, slightly less than expected. M&S will fund the deal by a GBP600 million right issue which will be launched following the publication of its 2019 financial statements. M&S also said it will rebase its dividend lower by 40% to a "sustainable level". M&S expects to pay a 7.1p final dividend in respect of its current financial year, down from 11.9p last year.Conversely, Ocado ended the second best performer, up 3.4% with the JV demonstrating the online grocer still has the brand strength to attract interest from one of the most famous retailers in the UK. It also provides relief to Ocado investors following the fire at its flagship warehouse earlier this month. "The market reaction suggests that Ocado is getting the better end of the deal. Part of that may be down to the price M&S is paying and the fact the dividend, historically a major part of the stock's appeal, has been cut significantly. On the face of it the move by M&S is a good one, although it is long overdue and the company has some catching up to do," said Ian Forrest, research analyst at the Share Centre.St James Place closed down 3.6% after the wealth manager issued caution on its flows outlook for 2019.The firm ended 2018 with GBP95.55 billion funds under management, in line with company guidance and a 5.3% increase on 2017's closing GBP90.75 billion funds under management.St James's said net inflows increased 8.1% to GBP10.28 billion from GBP9.51 billion in 2017, with gross inflows increasing 7.5% to GBP15.70 billion, in line with the company's guidance.St James's said its business continues to perform well relative to the industry, though "challenging external factors, like those currently being experienced, are not in our control and the pace of fund flows has moderated compared with last year".British Airways parent International Consolidated Airlines Group said after the market close it will return EUR700 million via a special dividend along with a regular final dividend worth separately EUR327 million. The stock closed down 3.1%. Elsewhere, FTSE Russell will announce the quarterly FTSE index review changes after the market close Wednesday with life and pensions consolidator Phoenix Group and online takeaway platform Just Eat likely to be promoted to the FTSE 100. The pound was quoted at USD1.3343 at the London equities close, higher than USD1.3263 at the close Tuesday. Sterling touched an intraday high of USD1.3350 in afternoon trade - its highest level since July amid hopes the UK will avoid crashing out of the EU without a deal.In a dramatic U-turn on Tuesday, UK Prime Minster Theresa May announced she will allow MPs to vote on an extension to the two-year negotiation period set down in the EU's Article 50 if she has not secured Parliament's approval for her deal by March 12.May had been expected to face a wave of ministerial resignations if she had maintained her refusal to countenance delay as MPs take part in a series of votes on Wednesday evening.Any extension of Article 50 will require the unanimous agreement of the remaining 27 EU states.The Commons will vote on a series of amendments to the government motion ahead of another "meaningful vote" on May's withdrawal agreement next month."The market's reading is that no-deal is very unlikely, either at the end of march or anytime. There are doubtless more twists and turns to come and as GBP/USD tests USD1.33, chasing it higher seems dangerous, but we still expect sterling to be at USD1.40 this time next year in the absence of a no-deal exit, (and at USD1.20 in the case of no-deal)," Societe Generale analyst Kit Juckes said. The euro stood at USD1.1363 at the European equities close, against USD1.1367 late Tuesday.Stocks in New York were lower at the London equities close as comments from US Trade Representative Robert Lighthizer have partly offset recent optimism about the US-China trade talks.Lighthizer, who is described as "hawkish" on trade, told members of the House Ways and Means committee China needs to go beyond pledging to buy more US goods to reach to a long-term trade agreement."We can compete with anyone in the world, but we must have rule, enforced rules, that make sure market outcomes and not state capitalism and technology theft determine winners," Lighthizer said.The DJIA was down 0.6%, the S&P 500 index down 0.7% and the Nasdaq Composite down 0.8%.In addition, investors were also keeping an eye on President Donald Trump's second summit with North Korean leader Kim Jong Un."Kim Jong Un and I will try very hard to work something out on Denuclearization & then making North Korea an Economic Powerhouse," Trump said on Twitter this morning. "I believe that China, Russia, Japan & South Korea will be very helpful!"Meanwhile, Federal Reserve Chair Jerome Powell delivered his semiannual monetary policy report to Congress. The central bank head told lawmakers the US economy remains healthy but warning about potential headwinds. Powell specifically pointed to volatility in the financial markets toward the end of 2018, calling financial conditions "less supportive of growth than they were earlier last year".Powell also cited slowing economic growth in foreign countries, particularly China and Europe, as well was uncertainty about Brexit and ongoing trade talks between the US and ChinaGold was marginally lower, quoted at USD1,321.40 an ounce at the London equities close against USD1,326.74 late Tuesday.Brent oil was quoted at USD66.66 a barrel at the London equities close, up from USD65.30 at the close Tuesday. Oil prices rose on after media reports suggested that OPEC and its allies would stick with their agreement to cut oil supply despite pressure from Trump to stop artificially tightening markets.Based on current market data, the OPEC plus group is "likely to continue with the production cuts until the end of the year", according to Reuters, citing sources. The cartel will meet in April to decide its output policy.In addition, the US Energy Information Administration reported crude stockpiles fell by 8.6 million barrels in the week through February 22. That was more than twice the drop of 4.2 million barrels reported by the American Petroleum Institute on Tuesday.The economic events calendar on Thursday has inflation readings from France, Italy and Germany at 0745 GMT, 1000 GMT and 1300 GMT respectively. In the afternoon, there are US fourth quarter GDP figures and core personal consumption expenditure prices - which is the Fed's preferred inflation gauge - at 1330 GMT. The UK corporate calendar on Thursday has full year results from insurer RSA Insurance Group, Russian steelmaker Evraz, jet engine manufacturer Rolls-Royce, pest control company Rentokil Initial, Dunhill cigarette maker British American Tobacco, Anglo-South African paper and packaging firm Mondi, oilfield services firms Hunting and Petrofac and from luxury sports car maker Aston Martin Lagonda.