Utilities Fall As PM May Pledges Energy Price Cap

Tuesday, 9th May: Utilities Centrica and SSE felt the wrath of PM Theresa May’s promise to cap energy prices if she is re-elected in June’s snap Election. She has vowed to introduce a ceiling on domestic energy prices that would cut tariffs for around 17 million families. Bringing Ofgem in to her argument, she said the energy regulator would be ordered to cap the costs of standard variable tariffs, of which, 70% of British households are thought to use. Sound familiar? Some have accused May of copying Labour’s proposal to freeze energy prices for 20-months in 2015, of course of which she has denied.  Centrica and SSE have both been falling since the turn of the year and dropped a further 1.19% and 1.24% respectively, paring back earlier intra-day losses.

Micro Focus was the biggest faller on the blue chip index. The group are in the process of acquiring the software assets from Hewlett Packard Enterprise, of which revenues fell 10% in the first quarter following a sharp decline in licensing and consulting sales. Although the fall in revenues isn’t reflected by Micro Focus, the fall has led to uncertainty around medium-term revenue growth, once the acquisition has been completed (thought to be September 2017). The shares of Micro Focus fell more than 10% in early London trading, before closing -5.65%, at the root of the index.

The FTSE 100 added 0.57% at the close, while European markets in France and Germany added 0.28% and 0.54% respectively. The S&P 500 set a fresh intra-day record high shortly after the US open, and is flat, at the time of writing.