Energy stocks take a hit from Prime Minister’s price cap pledge
Mrs May sent British Gas owner Centrica and SSE into free fall after pledging to fix the “broken energy market” as part of her Tory party conference speech.
Shares in utility stocks took a late hammering on Wednesday after Prime Minister Theresa May reignited her plans to enforce a price cap on energy bills.
Mrs May sent British Gas owner Centrica and SSE into free fall after pledging to fix the “broken energy market” as part of her Tory Party conference speech.
The FTSE 100 Index closed down 0.53 at 7,467.58, with Centrica and SSE dropping 11.6p to 179.3p and 45p to 1,367p respectively.
The Prime Minister, whose speech was marred by a persistent cough and a comedian handing her a mock P45, said the draft legislation for the price cap would be published as early as next week.
Across Europe, Germany’s Dax was up by 0.5%, with the Cac 40 in France slipping by 0.1%.
On the currency markets, the pound regained some lost ground as traders took some encouragement from an economic update on Britain’s powerhouse services industry.
The pound was up 0.2% against the US dollar at 1.327 following a report that services sector growth bounced back from an 11-month low in September.
The closely watched Markit/CIPS services purchasing managers’ index (PMI) showed a reading of 53.6 last month, up from 53.2 in August and above economists’ expectations of 53.2.
UK still growing but, excluding the slowdown surrounding last year’s referendum, Q3 PMI readings have been the worst since Q1 2013. pic.twitter.com/YLF7XhjqRo— Chris Williamson (@WilliamsonChris) October 4, 2017
A reading above 50 indicates growth.
Sterling was also marginally ahead versus the euro at 1.128.
The price of oil was also clocking gains after the latest slew of US oil inventory data showed stockpiles falling by around six million barrels.
Brent crude rose by 0.4% to 55.95 US dollars a barrel as traders took the fall as a signal that excessive American inventories are now in decline.
In UK stocks, supermarket giant Tesco was sitting among the biggest blue-chip fallers despite boss Dave Lewis unveiling the first dividend payout for three years following a surge in half-year profits and sales.
The group posted a better-than-expected 27% rise in group underlying earnings to £759 million for the six months to August 26 after it notched up its seventh quarter in a row of rising sales.
UK like-for-like sales in the second quarter lifted 2.1%, although this marked a slowdown against 2.3% in the previous three months.
Mr Lewis cheered the group’s move to resume paying shareholder dividends for the first time since it was thrown into crisis after an accounting scandal in 2014, with a 1p-a-share interim payout.
Shares in Tesco were down 6.1p to 183.9p, with Sainsbury’s also dropping 5.9p to 241.6p and Morrisons down 4.7p to 231.9p.
Away from the top tier, Topps Tiles came under pressure after the firm reported a slump in full-year sales and warned over profits.
The group expects revenue for the 52 weeks to September 30 to fall from £215 million to £211.6 million after like-for-like sales declined 2.9% over the year.
For the final quarter of the year, like-for-like revenues decreased 3% as Topps pointed to “challenging” market conditions.
As a result, the firm said it expects profits to come in at the lower end of market expectations.
Shares were down more than 2%, or 1.8p to 73p.
The biggest risers on the FTSE 100 Index were WPP up 39p to 1,403p, Anglo American up 33p to 1,430p, Mondi up 43p to 2,119p, Ferguson up 90p to 5,150p.
The biggest fallers were Centrica down 11.6p to 179.3p, Tesco down 6.1p to 183.9p, SSE down 45p to 1,367p, Sainsbury down 5.9p to 241.6p.