Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Marks & Spencer suffers credit rating downgrade ahead of its full-year results

The British retailer will unveil its full-year results on Wednesday, with the retailer coming under scrutiny for its Covid-19 response after it joins list of ‘junk’ investments by Standard & Poor’s.

Video poster image

Marks & Spencer (M&S) will unveil its full-year results on Wednesday, with the retailer coming under scrutiny for its Covid-19 response after joining list of ‘junk’ investments by ratings agency Standard & Poor’s (S&P).

The British retailer isn’t alone on S&P’s ever-growing list of companies deemed risky for lenders, with the ratings agency stripping 24 companies of their investment grade status in 2020 amid the economic fallout from the virus.

In fact, the agency believes that it will likely be forced to downgrade as many as 111 companies to junk status this year, including the likes of British Airways, Virgin Money, ITV and fellow retailer Next.

Since the downgrade, M&S has a credit rating of BB+ which will likely increase its cost of borrowing, putting added pressure on the retailer amid a challenging trading environment.

The company’s balance sheet is also not on the most secure footing, with M&S holding around £1.65 billion worth of debt on its books.

Investors are eager for an update on the company’s performance on Wednesday and what steps its management will take to strengthen the financial well-being of the company.

M&S closed at 85p per on Tuesday.

Covid-19 will weigh heavy on retail sector, says Morgan Stanley

In a note to clients, analysts from Morgan Stanley explained why they believe the retail sector will be weighed down by the Covid-19 crisis for some time and are not convinced that an easing of lockdown restrictions will see retail stocks rebound.

‘We do not subscribe to the view that easing of lockdown measures represents the beginning of the end of COVID-19’s impact on the retail industry,’ Geoff Ruddell, equity analyst at Morgan Stanley, said. ‘Changes to consumers’ lifestyles, and thus their spending behaviour, are likely to last much longer.’

‘We expect social distancing measures, of varying degrees of severity, to continue until a vaccine has become widely available (hopefully in summer 2021),’ he added.

But analysts at Morgan Stanley remain optimistic about M&S, with the US-based investment bank upgrading its rating for the stock to ‘overweight’.

Morgan Stanley did lower its target price for the stock to 160p per share, but that still implies a potential upside of 86% based on where the stock closed on Tuesday.

M&S puts spring stock in hibernation

Most fashion retailers are stockpiling spring lines in preparation of massive stock clearance sales for when shops are allowed to reopen in June.

But in order to avoid participating in an all-out discount war, M&S and other large retailers like Next and Debenhams have instead decided to store a proportion of spring clothing and home products in warehouses until next year – in the hope that fashion trends haven’t moved on too much.

British retailer Next said that it had identified £330 million worth of stock from its season that could be 'carried forward' into 2021 - representing around 15% of its total stock for the spring and summer seasons in 2021.

‘This product is generally basic products, for example summer t-shirts and chinos,’ Next said in a statement.

How much does it cost to buy UK shares with IG?

There are three ways to ‘buy’ UK shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).

Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.

Cost to get exposure to Lloyds stock

Spread betting CFD trading Share dealing
Action Buy £160 per point Buy 16,000 share CFDs Buy 16,000 shares
Capital required to open £2000 £2000 £10,000
Total fees £20.88 £20.88 £16

Ready to start trading shares? Open a live account or practise on a demo.

Note: Amounts do not include overnight funding charges and taxes. Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access
Learn more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.