FTSE 100 falls as utility sector weighs on market

London Stock Exchange trading

The FTSE 100 slipped on Thursday as it was impacted by weaker utilities and banking stocks.

London’s top utility companies took a hit after National Grid announced a rights issue to pay for infrastructure investment plans.

Shares in the power giant plunged 9%, prompting falls in United Utilities, Severn Trent and Drax as investors worried about the health of the utility sector.

Danni Hewson, head of financial analysis at AJ Bell, said: “Utility stocks were always likely to come under pressure on the news that National Grid was shaking its tin to fund network upgrades.

“But there must also be questions asked about the Labour Party’s plans for energy and where a publicly owned renewable energy company will fit into the mix.

“What kind of pressure might it heap on water companies to invest in crumbling infrastructure whilst protecting the public from significant price hikes, and how will the country’s public transport network evolve?

“Details matter and it’s hoped the next 42 days will bring more of those alongside the glossy videos and rousing stump speeches by all the parties.”

The FTSE 100 finished 31 points, or 0.37%, lower to end the day at 8339.

Sterling fell slightly against the dollar, down 0.086% at 1.271 US dollars as markets closed in London. It was 0.08% down against the euro, at 1.174 euros.

Elsewhere in Europe, Germany’s Dax nudged upwards, finishing 0.06% up, while France’s CAC 40 ended up 0.13%.

Stateside, the S&P 500 had a strong start following the news of strong first quarter earnings from chipmaker Nvidia.

The index was up 0.21% as markets closed in London, while the Dow Jones was down 0.68%.

In company news, Nationwide revealed lower earnings over the past year but said it handed out a record amount of cash to its members.

The building society reported a statutory pre-tax profit of £1.8 billion for the year to April 4, down about a fifth from the £2.2 billion reported this time last year.

The lender said the decline was largely due to the £344 million handed out to members in June last year, as well as it passing on interest rate rises to savers.

Nationwide shares fell 2.1% on Thursday.

Meanwhile, shares in Hargreaves Lansdown jumped higher after the firm rejected a £4.7 billion takeover approach from a consortium led by private equity firm CVC Capital and Abu Dhabi’s wealth fund.

Hargreaves saw its stock surge as much as 18% in Thursday morning trading after revealing after market close on Wednesday that it had rebuffed a proposal of 985p a share for being too low.

It marks the latest in a long line of takeover swoops for UK-listed companies as firms on the London Stock Exchange come under siege.

The group’s shares finished 9.2% up.

Royal Mail owner International Distribution Services (IDS) indefinitely delayed the release of its annual trading update, originally scheduled for early Thursday morning, as the group heads towards a potential overseas takeover.

London-listed IDS said its auditor, KPMG, has asked for more time to complete its work on the results statement.

The company did not give a new date for publishing its results.

The price of a barrel of Brent crude oil was down by 0.07%% to 81.6 US dollars as markets were closing in London.

The biggest risers on the FTSE 100 were St James’s Place, up 22.2p to 488p, Scottish Mortgage Investment Trust, up 30p to 900p, Rolls-Royce, up 12.4p to 440.4p, Persimmon, up 37p to 1471.5p, and Ocado, up 8.6p to 352.1p.

The biggest fallers on the FTSE 100 were National Grid, down 122.5p to 1005p, RS Group, down 53p to 760p, Severn Trent, down 136p to 2503p, United Utilities, down 53p to 1024p, and Smith & Nephew, down 32.4p to 982.6p.

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