FTSE 100 falls 2.29%: Rolls Royce stalls while Ocado fliesOn May 29, 2020 by Thomas Belayneh
The FTSE 100 shed 2.29% on Friday to close at 6,076.60 as investors feared the announcements of potentially severe sanctions by the US against China, following the Chinese parliament’s formal approval of the controversial new national security law for Hong Kong.
Following three straight days of rallying, the FTSE 100 closed lower on the day for the first time in a week. However, this wasn’t enough to dent the recent optimism as the index gained for a second week in a row and was up 1.14%.
Ocado group (Ticker:OCDO) rose by 4.23% as today’s largest riser on the index held a virtual fireside chat, hosted by Berenberg, with over 300 investors taking part.
Investors had been concerned about the company’s capacity to take on and extend existing deals, even in light of the surge in demand for online grocery deliveries, however, its CEO Tim Steiner today confirmed the opposite and heralded new partnerships with manufacturers to create their cutting-edge robots.
Sid Shaikh, Ocado engineering’s head of product development, touts the company’s ten-year lead versus other online-grocery offerings on software and a five-year lead in terms of hardware. However, with Amazon partnering with Morrisons recently, it remains to be seen whether Ocado can hold on to its competitive edge in logistics.
Rolls Royce (Ticker:RR), the British engineering group, cratered 14.86% today to 271.6p following Standard & Poor’s move to cut its debt rating to junk.
More bad news followed in Ako Capital’s sale of its entire 5.2% stake in the company enabled by an accelerated bookbuild run by investment bank, Morgan Stanley – 96.7 million shares were placed at 318p.
The group is well known for its aircraft engines and remains 59% down from its pre-Covid lockdowns trading levels, amid new aircraft orders plummeting with many airlines struggling to even remain solvent, as travel restrictions have all but halted flights and taken a heavy toll on ticket sales.
Rolls Royce earlier this month announced 9,000 job cuts with most of these due to fall in the aerospace engineering division.
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