MARKET REPORT: Power firms shrug off fresh windfall tax raid


Shares in power companies were among the biggest risers on the stock market despite being hit with a windfall tax.

In a bid to shore up Britain’s finances, Chancellor Jeremy Hunt unveiled a new 45 per cent levy on the profits made by electricity generators from next year.

These firms have seen their profits surge as households face soaring energy bills following Russia’s invasion of Ukraine.

On the charge: Electricity generators have seen their profits surge as households face soaring energy bills following Russia’s invasion of Ukraine

The ‘temporary’ tax raid will ‘help fund Government support for energy bills and vital public services’, the Treasury says.

But shares in the power sector rose, with British Gas owner Centrica up 5.4 per cent, or 4.72p, to 91.7p while SSE gained 1.5 per cent, or 25p, to 1669p and Drax added 5.4 per cent, or 31p, to 601p.

Laith Khalaf, head of investment analysis at AJ Bell, said: ‘It’s notable that the power companies saw a jump in their share prices, suggesting investors think the windfall tax isn’t as bad as expected.’

Hunt also launched a fresh raid on oil and gas firms, hiking the energy profits levy to 35 per cent from 25 per cent until the end of March 2028. This brings the total tax on the sector to 75 per cent.

The two measures are expected to raise around £14billion next year.

Shares in oil giant BP dipped 0.6 per cent, or 2.7p, to 478.65p while Shell fell 0.3 per cent, or 6p, to 2364.5p.

North Sea-focused Harbour Energy fell 5.9 per cent, or 19.7p, to 314p and Ithaca Energy dropped 4 per cent, or 8p, to 192p.

Banking stocks rose, however, as the sector escaped a windfall tax of its own. Lloyds was up 3 per cent, or 1.29p, to 44.42p while NatWest rose 2.5 per cent, or 6.1p, to 253p.

Stock Watch – Harland and Wolff

Harland and Wolff will build naval ships for the first time in almost 20 years.

The Belfast shipyard, which built the Titanic, has been appointed as the preferred bidder along with Navantia UK and naval architect BMT for a lucrative £1.6billion contract with the Royal Navy.

The consortium will build three ships, creating 1,200 UK shipyard jobs. 

Around £77million will be invested in Harland & Wolff’s sites from Northern Ireland to Devon. 

The shares surged 33.5 per cent, or 6p, to 23.9p.

As the Office for Budget Responsibility warned of a recession lasting a little over a year, and the Chancellor unveiled a painful £55billion package of tax rises and spending cuts, the FTSE 100 fell 0.1 per cent, or 4.65 points, to 7346.54 while the FTSE 250 rose 0.1 per cent, or 9.91 points, to 19,122.34.

The pound also slipped, but it was notable that the reaction was far calmer than after Kwasi Kwarteng’s mini-Budget in September when financial markets went into meltdown.

‘In the first instance Jeremy Hunt will therefore likely be satisfied he hasn’t broken the unwritten but important fiscal rule: don’t spook the markets,’ said Khalaf.

Halma fell 4.3 per cent, or 102p, to 2247p after profits slumped 13 per cent to £145.5million in the six months to September. 

The safety equipment maker said this was due to the £34million sale of its safety sector business in the first half of last year.

Residential landlord Grainger cashed in on soaring demand within the rental market.

The group delivered a record increase in rental income which surged 22 per cent to £86.3million for the year to September.

This was above the £83.8million pencilled in by analysts at Numis.

Grainger said this was down to increased occupancy, which was at a record-high of 98 per cent. Shares rose 1.1 per cent, or 2.6p, to 239.4p.

But commercial landlord Great Portland Estates sank 1.8 per cent, or 9.5p, to 533.5p after a loss and a fall in the value of its portfolio. The group lost £86.7million in the six months to September, having made a £62.4million profit a year earlier. And the value of its portfolio slid 3.4 per cent to £2.6billion.

Meanwhile, housebuilder Crest Nicholson fell 2.9 per cent, or 6.4p, to 214.8p following its decision to delay opening a third new division in the current financial year due to the economic turmoil.

Pub group Fuller’s rose 2 per cent, or 10p, to 502p after it said the World Cup and Christmas should boost business.

Revenue rose 45 per cent to £168.9million in the six months to September, despite soaring inflation and rising energy costs.

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