London’s blue-chip index edged lower on Wednesday morning, weighed down by a rise in Britain’s household energy price cap and lingering geopolitical uncertainty, even as its mid-cap peer and continental counterparts pushed higher.
The FTSE 100 slipped 0.3% in morning trade, lagging behind both the FTSE 250 — which climbed 0.7% — and its European counterparts. Frankfurt’s DAX gained 0.7% and Paris’s CAC 40 rose 0.5%, as investors on the continent maintained their optimism over ongoing US-Iran peace negotiations, despite fresh US military strikes on Iranian targets.
Energy Cap Hike Weighs on Utilities
The main drag on the FTSE 100 came from the utilities sector after Ofgem announced that the household energy price cap would rise by 13% from 1 July, equating to a rise of £18 a month for the average dual-fuel household. The new annual cap stands at £1,862, up from £1,641. Ofgem Chief Executive Tim Jarvis cited “continued volatility in global energy markets” driven by the ongoing conflict in the Middle East as the reason for the increase.
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British Gas owner Centrica fell 2.1%, SSE shed 1.3%, National Grid retreated 1.2%, and Severn Trent fell 1.1% in early trade.
BP Tumbles on Chairman Removal
BP remained one of the index’s most notable fallers, extending Tuesday’s losses after the oil giant ousted chairman Albert Manifold with immediate effect following “serious” concerns raised over “governance standards, oversight and conduct.” The board appointed Ian Tyler as interim chair.
BP shares were down around 4% on Tuesday and have fallen 1.6% so far today.
Melrose Industries also remained under pressure following a chemical incident at GKN Aerospace’s Garden Grove facility in the US.
Risers: M&S and JD Sports Lead the Way
On the upside, Marks & Spencer has gained 2.9%, while JD Sports Fashion climbed 4.9% and IAG — owner of British Airways and Iberia — rose 2.6%, .
Kingfisher, the owner of B&Q and Castorama, has also recovered from early weakness after yesterday reaffirming full-year guidance despite a 0.9% dip in first-quarter sales.
Geopolitical Backdrop
The broader market tone remained cautious as hopes for a resolution to the US-Iran conflict were tempered by fresh American military strikes on Iranian targets. Brent crude was trading around $93.50 a barrel on Wednesday morning, having fallen over 3%.
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