FTSE 100 slips from two-year high as Tesco, M&S fall despite upbeat outlook

London’s FTSE 100 on Thursday eased from a two-year high touched in the previous session, after a stronger pound hit some dollar earners and as retailers Tesco (LON:TSCO) and Marks & Spencer fell despite raising their profit forecasts.

The blue-chip FTSE 100 index slipped 0.2%, with large international companies Diageo (LON:DGE) and Unilever (LON:ULVR) falling as sterling hit fresh highs against the dollar. [GBP/]

Shares of Tesco and Marks & Spencer dropped 1.8% and 6% in morning trade as the companies raised their forecasts, as expected, after a strong Christmas performance.

“This response seems a little churlish but may have more to do with the fact that the shares are close to their highest levels in 11 months and it certainly doesn’t mean they can’t go higher longer term,” CMC Markets analyst Michael Hewson said about Tesco.

Tesco and M&S have gained 19% and 80% over the past year, marking a strong recovery from the pandemic-induced selloff.

Laura Hoy, an analyst at Hargreaves Lansdown (LON:HRGV) said, M&S shares have “climbed markedly higher since the start of the pandemic, and it will take a lot more than a nudge to profits to sustain those expectations.”

The FTSE 100 is on track for its fourth consecutive week of gains as heavyweight energy, mining and banking stocks have helped it outperform the wider European index and UK’s mid-cap index this year.

Fashion chain ASOS (LON:ASOS) jumped 10% after the company said it would move to the main stock market listing, broadening its possible shareholder base but reiterated its downgraded outlook.

The domestically focussed mid-cap index eased 0.3%, pulled down by a 19% drop in Countryside Properties after its chief executive officer stepped down and a disappointing trading update.

British oilfield services and engineering firm Wood Plc rose 14.7% add to the top of the mid-cap index after it said that selling a division under its consulting business is the best option to deliver value for shareholders.