The week’s slight second half got off to an unsurprisingly slow start this Thursday – thank god for the latest M&A action from Ocado (LON:OCDO).
The FTSE got no closer to its own record highs after the bell, with the index flat above 7740. Despite Brent Crude climbing to $79.50 per barrel, allowing oil colossi BP (LON:BP) and Shell (LON:RDSa) to continue their recent rallies, the UK index is lacking the kind of momentum it needs to hit mid-January’s all-time peak. And given the sparsity of the rest of the week’s economic calendar, those lofty aims may have to wait.
After years of starving investors of the international deal they so desperately craved, Ocado has been rattling off transformational tie-ups at an astonishing rate in the last few months. Their agreements with France’s Groupe Casino, Canada’s Sobeys and Sweden’s ICA, however, pale in comparison to what the online firm revealed this Thursday: the long-awaited adventure across the Atlantic. Ocado announced it would be partnering with US giant Kroger (NYSE:KR) in a deal that, as has become standard, involves building automated warehouses and allowing the use of its Smart Platform. This Holy Grail agreement received rapturous applause from investors, who sent Ocado 37% higher and above £8 for the first time in its history.
Helping to keep the FTSE away from its 7800-target this Thursday was Thomas Cook (LON:TCG) and Royal Mail (LON:RMG), neither stock able to justify their recent highs in the eyes of investors. The holiday operator, which had grazed £1.50 on Wednesday for the first time in almost 3 years, fell 3.5% after its broadly Spanish margin pressures carried on in the second quarter, the company unable to pivot towards higher margin destinations in the Eastern Mediterranean with the speed investors would like.
Having started the week at an all-time high, Royal Mail fell another 4% on Thursday, hitting a 3 week-plus low following a 2.5% drop in annual adjusted operating profit before transformation costs. This negated the firm’s 2% jump in revenue, that increase led by its robust European arm GLS, and a continued rise in online shopping-based parcel volume growth.
As for the pound, it’s having a bit of a mixed week. Against the dollar it is looking lousy as hell, with cable trapped at the bottom end of May’s $1.35 to $1.36 trading bracket. The currency is faring better against the euro, rebounding back towards €1.145; however even then, that’s a decent way off the €1.16 levels it was tickling this time last month.
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