The FTSE 100 opened down 0.2% at 7,1,92.72 despite a stronger start across European markets as UK betting companies were hit by new rules and shares in Royal Mail dropped.
The pound rallied 0.6% from the recent record lows as it reacted to news that the UK may stay in the customs union to trade at $1.3533. The Euro was also firm at $1.809. The runaway performer this morning was Ocado with shares rising 37% after the online supermarket group said that Kroger, the second largest retailers in the US, will invest £183 million as part of a technology and partnership deal. The deal marks Ocado’s entry in the lucrative US grocery market, the biggest in the world, and it gives Kroger exclusive access to the Ocado technology in the US.
Royal Mail shares fell 4.5% after the company said its profits declined despite a 2% increase in revenue. Its adjusted operating profit was down 2.5% to £694 million. More worryingly, the company expects that new European Union rules on data protection will lead to a decline in the volume of letters sent across Britain, particularly those of a marketing nature. Royal Mail’s revenues increased to over £10 billion in the last financial year as its parcel division outside the UK continued to expand.
A surprise change in UK betting rules hit betting companies William Hill and Paddy Power with their shares dropping 4.9% and 3.9%, respectively, after the open. The government decided to restrict the maximum stake on fixed-odds betting terminals to £2 to protect vulnerable gamblers who at present can bet up to £100 every 20 seconds on electronic casino games. William Hill generates around 50% of its retail revenues from such terminals and anticipates that the new rule will result in its shops making losses.
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