FTSE 100 hits all-time record close, Ocado surges on US deal

The London Stock Exchange Group offices are seen in London December 29, 2017. — Reuters pic
The London Stock Exchange Group offices are seen in London December 29, 2017. — Reuters pic

LONDON, May 18 — Strong oil prices helped Britain's top share index seal its highest ever closing level yesterday while online grocery retailer Ocado rocketed up 44 per cent after signing a deal with US grocer Kroger.

The FTSE 100 climbed 0.7 per cent to close at 7,787.97 points, just a whisker away from its record intraday high of 7,792.56 points hit in mid-January.

The mid-cap FTSE 250 index hit a new record high, surpassing its previous mid-January record, up 0.9 per cent on the day. For both indices it marked a full recovery from the turmoil which had dented markets globally since January.

Heavyweights Royal Dutch Shell and BP drove the biggest gains, up 2.1 per cent and 1.4 per cent respectively as oil prices broke the US$80 (RM316) a barrel barrier.

The star of the session was Ocado, whose shares shot up as much as 81 per cent in intra-day trading before closing up 44 per cent after it announced that US retailer Kroger would use its technology.

“We think this is just about as positive a deal as could have been expected to have been announced by Ocado,” analysts at Barclays said, adding “the company now has an extremely credible partner in the largest grocery market in the world.”

“This does not preclude other deals outside of the US and given Kroger's size, they could commit to materially more customer fulfilment centres than the 20 announced, in our opinion,” said Goldman Sachs analysts.

Gambling stocks were initially bruised by the British government's decision to cut the top stake on betting terminals to £2 (RM10.70).

But they ended the day higher as investors expressed relief the regulatory uncertainty was over, and looked instead to the potential benefits from a US high court ruling which could lead to states legalising sports betting.

Ladbrokes Coral parent GVC and William Hill, which operate some of the 182,000 gaming machines in Britain, recovered to rise 5 per cent and 4.2 per cent respectively.

Large-cap gambling stock Paddy Power Betfair rose 1.9 per cent.

“While £2 max stakes is a negative for the sector, if the implementation date is pushed back past 2020, online taxes come in later and the impact to Ebitda is less bad than feared, then there may be a sense of relief today,” said Barclays analysts.

Leading the FTSE 100 was Experian, the world's biggest credit data company, adding 5.6 per cent after saying 2018 would be another year of growth and reporting revenues for its full financial year grew more strongly than expected.

Royal Mail on the other hand tumbled 7.2 per cent after it warned the decline in letter volumes may come in at the higher end of its forecast range while the British holiday company declined 3.1 per cent after reporting first-half earnings.

Among smaller companies, Mothercare jumped 24.4 per cent after the struggling mother and baby products retailer said it would ask investors for £28 million as part of a restructuring plan that would see a further 50 stores close. — Reuters

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