Ocado, Mothercare, Royal Mail, Hill & Smith

Ocado’s partnership with US food chain Kroger sent shares in the food ordering and distribution specialist soaring 42 per cent to a record high of 791.8p and the top of the FTSE 250.

The partnership accord takes the company into the US market and involves Kroger subscribing for 33m new Ocado shares, equivalent to 33 per cent of its current share capital at a value of £183m.

Kroger will have exclusive rights in the US over Ocado’s technology in return for monthly fees. The deal follows two others struck recently with Sobeys of Canada and France’s Groupe Casino, extending Ocado’s reach beyond the UK, where its main business is online delivery for Waitrose and Wm Morrison.

As Laith Khalaf, senior analyst at Hargreaves Lansdown, points out, Ocado’s rally could leave some investors with burnt fingers:

As one of the most shorted stocks in the UK stock market, this deal will be a poke in the eye for the hedge funds who have bet against Ocado because of its eye-watering valuation. However, its share price is looking forward to future earnings based on licensing out its online delivery technology, rather than the revenues it’s currently making from food retail. The short sellers were hoping Ocado wouldn’t deliver on its international expansion plans; that position now looks like a badly busted flush.

Mothercare rose 24 per cent as the baby products retailer unveiled a restructuring plan that includes the closure of 50 stores — about a third of its UK outlets — as well rent reductions on more than 20 others. It also announced a refinancing plan which includes an issue of new equity to raise £28m, as well as revised debt facilities of £67.5m.

The return of the Brent crude oil price to $80, for the first time since 2014, helped shares in oil majors. Royal Dutch Shell rose 0.8 per cent, BP gained 0.4 per cent and Tullow Oil rose 4.7 per cent.

Hill & Smith, the engineer which makes of road safety equipment, fell 7.7 per cent after it said revenue and underlying operating fell in the first quarter of the 2018 calendar year

Analysts at Numis cut their rating on the stock from “hold” to “add”, pointing to a 23 per cent rally for it over the past three months.

Royal Mail fell 5.2 per cent after it reported a sharp drop in annual profit and warned that new EU data protection rules would hit its letters business. The decline, which was the biggest singe fall on the FTSE 100, cut the stock’s year-to-date gain to 25 per cent.

But bookmakers bounced back from early losses caused by news of a major victory by campaigners in persuading the UK government to restrict top stakes on betting terminals to £2. After weighing on the London market at the opening of trading, Paddy Power Betfair rose 1.7 per cent and William Hill gained 2.5 per cent.

Altice was prominent among the Euro Stoxx 600 gainers, climbing 8.7 per cent after investors hailed signs of a tentative recovery at the French unit of the telecoms and cable group.

Reporting by Cat Rutter Pooley, Michael Hunter and Joshua Oliver in London

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