Thursday, September 6: The FTSE 100 was marched lower at the open in tandem with international market indices, despite a green session for utility stocks on the back of lighter than expected government intervention in gas & electricity markets.
Shares in Sirius Minerals(-22.90%) tumbled after announcing a setback with respect to its polyhalite mine in North Yorkshire. The funding requirement for its planned potash mine has increased by $400-600m after Sirius finalised its procurement and associated risk allocations. The total capital cost of the mine has therefore been uprated to $4.2bn(previously $3.7bn) thus far. Management guide that remaining items should be in line with initial costings, though investors are likely to remain sceptical given this bombshell. On the bright side, commercial discussions in Europe and Brazil were described as “well advanced”.
Centrica(+4.27%) was the best performer in the FTSE 100, leading sector peers SSE, United Utilities amongst others higher in a favourable policy read-across. The Office of Gas & Electricity Markets(OFGEM) declared its price cap proposals will result in 11 million households in the UK getting a “fairer deal” for their energy. The regulator believes that those on the most expensive tariffs would save over £120 per annum, while customers on “poor value” deals could save £75 on average. The regulator’s proposed price cap of £1,136 a year for a typical duel-fuel customer paying by direct debit compares to analyst consensus forecasts of around £1,130. The shares of Centrica and peers have been depressed over the past twelve months as investors considered the scale and implications of regulatory intervention.
At the close European equities were lower, with the FTSE 100 -0.87%, the CAC 40 -0.31% and the DAX -0.71%.