Tuesday’s Master Investor Market Report

• The FTSE 100 fell 103.47 points to 6,432.21.
• The FTSE 250 tumbled 230.35 points to 17,212.93.
• The FTSE All Share decreased by 28.49 points to 3,573.98.
• The FTSE AIM All Share finished 8.25 points lower at 750.26.
  

Chinese shares dropped once more despite the Government acting to support prices. Brokerages and mutual funds were encouraged by state owned margin finance providers and liquidity support from the Central Bank. IG Market Strategist Bernard Aw expects the authorities to take further steps to stabilise markets in the near future.

Sales during the quarter ended 27th June at Marks & Spencer (MKS) exceeded the worst case scenario that analysts had feared. Food performed well and womenswear was not as negative as anticipated. Shore Capital commented that  the update was broadly in line with expectations and that “noting the stock sits circa 10% below its recent highs, we remain positive and expect a robust performance today“. Marks & Spencer shares dropped by 535p.

Morgan Stanley upgraded chip maker ARM Holdings (ARM) to “overweight” from “equal weight” and increased the firm’s target price by 200p to 1,180p. The bank’s analysts write that concerns about a potential slowdown in the smartphone market had created a buying environment and said that ARM was currently at its lowest price to earnings ratio of the last 5 years. Shares in the company fell by 5p to 1,031p.

Ultra Electronics (ULE) has won a new contract with Rolls-Royce worth £18 million. Under the terms of the deal Ultra will design and develop reactor control and cooling systems for Royal Navy submarines. Shares in Ultra declined by 20p to 1,709p.

Internet clothing retailer Asos (ASC) said that sales for the 4 months ended 30th June were up 20% over the prior year and that full year revenues should be towards the upper end of existing guidance. Growth was concentrated in UK markets as adverse currency movements somewhat dented the impact of improvements elsewhere. The number of active users rose by 11%. Asos shares sank 245p to 3,606p.

Stagecoach (SGC) has lost the contract to operate the South West trains franchise from February 2017. No direct award will be made and there will instead be a tender process. Management had been confident in having the franchise extended until 2019. The shares dropped 9.2p to 394.2p, which Brewin Dolphin explained by saying that “the market tends to price in future rail franchises on a probability adjusted basis“.

Tomorrow’s news today

Galliford Try (GFRD), Taylor Wimpey (TW.) and Booker Group (BOK) will publish trading updates tomorrow morning.

Quote of the day

“Pennies do not come from heaven. They have to be earned here on earth.”
– Margaret Thatcher