FTSE 100 falls as M&S cost warning leads retailers lower

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UK’s blue-chip FTSE 100 index fell on Wednesday as Marks & Spencer’s dire cost outlook rattled retailers, while results from a crucial U.S. midterm election start to roll in.

The index was 0.3% lower by 0948 GMT, while the domestically-oriented FTSE 250 also lost 0.7%.

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Marks & Spencer shed 6.2% as it warned of a “gathering storm” of higher costs and pressure on household budgets, while reiterating that full-year profits would fall.

“M&S doesn’t sit in the luxury space where the clientele is insulated from cost-of-living pressures nor does it offer the kind of value on offer from discount chains and grocers,” said AJ Bell investment director Russ Mould.

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The broader retail sector fell 1.5%.

The subindex has slumped nearly 38% this year, far more than the FTSE 100’s 1.3% decline, as businesses struggle to beat falling demand and rising costs.

Next fell 1% on announcing it will buy Made.com after the online furniture retailer ran out of cash.

Investors braced for U.S. inflation data due on Thursday and awaited the results of midterm polls that could signify a power shift in Washington.

“Global markets are looking forward to a gridlock scenario, where it puts some checks and balances on things and a market positive generally,” said Patrick Armstrong, chief investment officer at Plurimi Wealth.

“And since global equities are linked, when the U.S. markets rally, other markets rise in sympathy.”

Broadcaster ITV fell 5.8% as it forecast slightly lower ad revenue for 2022 and flagged a high degree of economic uncertainty.

Taylor Wimpey said it would build fewer-than-expected homes this year and joined rival Persimmon in flagging increasing stress in the housing market with rising mortgage rates. Shares of the UK housebuilder fell 0.4%.

Energy stocks declined 0.8%, tracking crude prices as industry data showed U.S. crude stockpiles rose more than expected. (Reporting by Johann M Cherian in Bengaluru; editing by Uttaresh.V and Devika Syamnath)