LONDON (Reuters) - Sell-offs in mobile operator Vodafone and retailer Marks & Spencer capped Britain’s main equity index on Tuesday after both companies unveiled disappointing forecasts.
Vodafone said core earnings would fall in 2015 and M&S cut its capital expenditure estimate, with some brokers saying this implied a downgrade to 2015 earnings.
“It’s all about future forecasts and the market is not receiving them well,” said Manoj Ladwa, head of trading at TJM Partners.
Their stocks, down 3.5 percent and 2.3 percent respectively, were the top fallers on FTSE, which was down 7.63 points, or 0.1 percent, at 6,836.92 points at 0749 GMT .
The index, which hit a 15-year high on Thursday, was holding above support at 6,800, corresponding to last week’s low, in a sign investors were prepared to buy into market dip.
“The FTSE is not showing signs of a selloff from here,” said TJM’s Ladwa, who expected the market to head towards 6,900 points.
Vodafone was responsible for most of the FTSE’s fall on Tuesday, knocking 7.9 points off the index.
The company’s weak update compounded a disappointing reporting season for telecoms companies, which are struggling with stiff competition and the need to step up spending.
Around 75 percent of the telecoms services companies in the STOXX Europe 600 index which reported results through May 19 missed analyst estimates, the highest proportion among all European sectors, StarMine data showed.
Vodafone plans to invest around 19 billion pounds over the next two years, which includes the money assigned as part of its investment programme called Project Spring, resulting in lower earnings next year.
“(Vodafone) makes substantial investments in order to make a clearer distinction between the quality of its network and the competition,” analysts Espirito Santo wrote in a note.
“Should this be achieved, then alongside an improving macro environment Vodafone shares should benefit, however at this juncture, visibility of success is low and competitive forces remain substantial.”
Reporting By Francesco Canepa; Editing by Andrew Heavens