FTSE lower on open as Royal Mail and betting companies slide

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 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.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.