London open: Stocks flat as bookies tumble over betting machine stake cut
London stocks were little changed in early trade on Thursday, but bookies were under the cosh as the government confirmed it will cut betting machine stakes to £2, while sterling was in focus following a report that the UK could stay in the European customs union.
At 0850 BST, the FTSE 100 was flat at 7,731.83, while the pound was up 0.1% versus the euro at 1.1437 and 0.2% firmer against the dollar at 1.3510, off earlier highs but still underpinned by a Telegraph report suggesting that the UK is set to tell Brussels it is prepared to stay in the customs union beyond 2021.
On the corporate front, bookmakers were in the red as it emerged that the maximum stake on fixed-odds betting terminals (FOBTs) will be reduced to £2 under new rules unveiled by the government. Paddy Power, William Hill, 888 Holdings and GVC were all under the cosh.
Neil Wilson, chief market analyst at Markets.com, said: "What regulators on one side of the Atlantic give, those on this side of the pond taketh away. Just as we get enthusiastic about the potential for bookmakers in the US, the UK government has decided to go ahead with the worst-case £2 limit on fixed odds betting terminals.
"The expectation is that this worst-case outcome could hit revenues by something like a fifth to a quarter at William Hill and Ladbrokes-Coral (GVC) although it is unclear to what extent punters will simply switch to alternative forms of gambling. The loss of shops (over-egged?) could hit revenues more broadly but at least online looks set to benefit. FOBTs account for around half of Ladbrokes retail revenues but the merger with GVC offers plenty of insulation."
Royal Mail was on the back foot despite new chief executive Moya Greene delivering better-than-expected final results, as the company warned that general data protection regulation laws may lead to a steeper decline in letter deliveries this year.
Hill & Smith was under pressure after saying that the stronger pound against the dollar meant that revenue at the start of the year fell versus the same period in 2017, while Sophos lost ground as the cyber security firm said it expects invoiced sales to slow to the mid-teens per cent this year.
Travel operator Thomas Cook retreated after posting a narrowing of first-half losses but saying that the UK remains a drag.
On the upside, credit checker Experian was the standout gainer as it said full-year profits fell but revenues were up, while National Grid followed close behind after reporting a 4% rise in full-year underlying pre-tax profit.
British Land was also higher after posting a drop in full-year underlying profit but a jump in its net asset value and Countryside Properties pushed up as it posted a rise in half-year completions, revenue and profit and expressed confidence in the medium term.
Ocado Group rocketed as it won a contract with US grocery giant Kroger to exclusively provide its online grocery expertise across multiple distribution warehouses across America, while Just Group racked up healthy gains after hailing a strong start to the year.
In broker note action, Restaurant Group was cut to 'sell' at Peel Hunt, while Vodafone was downgraded to 'neutral' at Citi, and Mondi was cut to 'neutral' at Goldman. National Express was knocked down to 'neutral' at JPMorgan, while Premier Oil was upgraded to 'overweight' at Barclays and Gem Diamonds was lifted to 'buy' at Canaccord.
As is usual on a Thursday, ex-dividends stocks were in play, taking 6.8 points off the FTSE 100 and 13.5 points off the 250. HSBC Holdings, Intertek, Saga, Ascential, Clarkson, Dignity and Tesco were among the companies whose stock went ex-div.
FTSE 100 - Risers
Experian (EXPN) 1,760.00p 2.98%
National Grid (NG.) 848.80p 1.96%
Antofagasta (ANTO) 1,087.50p 1.83%
British Land Company (BLND) 693.00p 1.67%
Burberry Group (BRBY) 1,894.00p 1.39%
Evraz (EVR) 505.00p 1.34%
Glencore (GLEN) 398.00p 1.26%
Fresnillo (FRES) 1,274.00p 1.11%
WPP (WPP) 1,300.00p 0.85%
SSE (SSE) 1,401.50p 0.83%
FTSE 100 - Fallers
Royal Mail (RMG) 574.80p -3.85%
Paddy Power Betfair (PPB) 8,010.00p -2.91%
3i Group (III) 954.00p -2.05%
HSBC Holdings (HSBA) 725.40p -1.81%
Intertek Group (ITRK) 5,056.00p -1.60%
Micro Focus International (MCRO) 1,336.00p -0.85%
Rolls-Royce Holdings (RR.) 833.40p -0.79%
Direct Line Insurance Group (DLG) 373.00p -0.77%
Mediclinic International (MDC) 676.40p -0.68%
Carnival (CCL) 4,929.00p -0.65%
FTSE 250 - Risers
Ocado Group (OCDO) 732.40p 32.68%
Just Group (JUST) 148.80p 5.98%
Cairn Energy (CNE) 260.01p 3.42%
Marston's (MARS) 100.97p 2.71%
Kaz Minerals (KAZ) 1,069.36p 2.09%
Tullow Oil (TLW) 259.60p 2.00%
Hastings Group Holdings (HSTG) 277.00p 1.91%
Equiniti Group (EQN) 282.50p 1.44%
JD Sports Fashion (JD.) 373.10p 1.39%
Vedanta Resources (VED) 813.20p 1.32%
FTSE 250 - Fallers
Hill & Smith Holdings (HILS) 1,346.00p -8.44%
Softcat (SCT) 650.00p -7.01%
William Hill (WMH) 298.30p -6.05%
888 Holdings (888) 298.20p -5.75%
Sophos Group (SOPH) 522.00p -5.09%
Saga (SAGA) 127.90p -4.69%
GVC Holdings (GVC) 875.00p -4.42%
Thomas Cook Group (TCG) 140.60p -3.76%
Crest Nicholson Holdings (CRST) 420.00p -2.46%
Petrofac Ltd. (PFC) 633.60p -2.37%