Taylor Wimpey, M&S and US Data
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Taylor Wimpey, M&S and US Data

Taylor Wimpey, M&S and US Data


Trading Features / Strategies from Simon Denham of Capital Spreads.

And the pain continues. M&S and Taylor Wimpey produced a real shocker yesterday morning but initially, somehow, the FTSE actually managed to shrug off the disastrous news and at one point was trading 80 points up on Tuesday’s close. It was not until the US joined the fray that a bit of sense seemed to drift into proceedings and down we came once more to close 53 lower. This morning the opening level is forecast to be another 30 points lower at around 5390 having been as low as 5365 in late Futures trading last night.

Taylor Wimpey’s inability to get a fund raiser off the ground really hit the market as we have become used to stock holder routinely stumping up the cash for emergency capital requirements. It is always a shock to discover that there is a limit to what shell shocked investors will stomach. With the property ‘slump’ only about six months old it was obvious that investors would rather see the stock crumble than throw good money after bad. If all the developers are in this much trouble already when a recession is still (just) not actually here what the hell does the future hold in six to twelve months time. The lending banks are unlikely to put themselves further into hock over the Builders expensively acquired Landbanks and we now have the very real possibility that many of the major developers will go to the wall. If so many people are willing to sell their holdings in Taylor Wimpey at 28p to 33p it is because a lot of people think that zero is the final destination. The lenders and bond holders will end up owning the various Landbanks, the share holders will have lost all and the builders will become yet another name plaque on the ‘Marconi’ wall of fame.

Marks & Spencer is a slightly different matter in that they are not burdened with debt and a long term investor can see (through a telescope) the possibility of hope on the horizon. The 20% plus fall in the stock added to the falls already in place now mean that the price is 67% off the highs and is now around the lows of the pre Sir Stuart era. Given that there was also a share consolidation in the intervening years the company is actually worth considerably less than it was under the ‘mismanagement’ of the previous administration.


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This is slightly unreasonable as overall sales for the UK (not ‘like for like’) were actually flat which would indicate that although times are tough the company is likely to hold onto market share which will stand it in good stead when things get better.

To add to all the pain we get two pieces of data today which will probably add to the burden. The ECB is expected to raise interest rates to fight inflation and over in the States we will get the big number of the month, the Non Farm Payroll (NFP) figures. Neither of these events are likely to add to growth prospects although if it means a weaker pound (on the terms of interest rate differentials) then exporters might have something of a boost. Unfortunately the effects of higher interest rates are likely to slow the Euro economy even more which will make exporting to it rather academic.

The NFP is forecast to come in down 60k which some might think is a tad optimistic given the crude oil, energy, base materials and food price impact on businesses in recent months. If even Starbucks is planning to close 600 outlets you have to believe things are tough over the pond.



The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.


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Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.

'Taylor Wimpey, M&S and US Data' edited by SD, updated 03-Jul-08



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