3 Min Read
(Reuters) - Energy companies Centrica and SSE were among the worst-performing stocks on FTSE on Tuesday, after Prime Minister Theresa May vowed to cap energy prices if she was re-elected in June.
While the blue-chip index .FTSE ended up 0.6 percent at its highest level since early April, big declines stole the limelight.
May pledged to introduce a ceiling on domestic energy prices that would cut tariffs for around 17 million families. She said energy regulator Ofgem would be ordered to cap the costs of standard variable tariffs, the package used by two-thirds of customers in Britain.
"The government has stated that two-thirds of customers are on the higher 'standard' rates, and clearly if the cap is below this level this will hit margins directly," said Edward Park, director of the investment committee at Brooks Macdonald.
"But the government will need to be careful not to cause excessive pressure on the energy market as capex in areas such as 'smart meters' are also viewed as helping retail customers make informed decisions," he added.
The cap could cost Centrica up to 200 million pounds, Neil Wilson of ETX Capital estimated.
Micro Focus (MCRO.L) fell 5.6 percent to the bottom of the FTSE after it flagged a 10 percent revenue drop at Hewlett Packard Enterprise (HPE.N), the company it's in the process of acquiring for $8.8 billion.
Asset manager Henderson HGGH.L benefited from a UBS upgrade and rose to join the top mid-cap gainers, up 2.3 percent and on track for its best day in six months. UBS analysts see its acquisition of U.S. fund manager Janus as "transformational" for the firm.
"Significantly enhanced scale, distribution and diversification see it better equipped to deal with ongoing headwinds from a gradual global shift to passive (management) and rising regulatory costs," they said in a note.
Meanwhile the broker's downgrade of Card Factory (CARDC.L) to "neutral" after the shares rallied weighed on the stock, down 1.2 percent.
Reporting by Helen Reid and Danilo Masoni; Editing by Mark Trevelyan