MARKET REPORT: Power firms shrug off fresh windfall tax raid

Stocks in energy companies were among the biggest gainers in the stock market, despite a windfall tax.

In a bid to bolster UK finances, Chancellor Jeremy Hunt unveiled a new 45 per cent levy on electricity producers’ profits from next year.

These companies have seen their profits rise as households face skyrocketing energy bills following the Russian invasion of Ukraine.

The “temporary” tax strike will “help fund government support for energy bills and vital public services,” the Treasury Department says.

But shares in the energy sector were up, with UK gas owner Centrica rising 5.4 per cent or 4.72 pence to 91.7 pence, while SSE gained 1.5 per cent or 25 pence to 1669 pence and Drax up 5.4 per cent or 31 pence to 601 pence.

Laith Khalaf, head of investment analysis at AJ Bell, said: “It’s notable that the energy companies saw their share prices rise, suggesting investors think the windfall tax isn’t as bad as expected.”

Hunt also launched another attack on oil and gas companies, raising the tax on energy profits to 35 percent from 25 percent until the end of March 2028. This brings the total tax on the sector to 75 percent.

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

Shares in oil giant BP fell 0.6 percent, or 2.7 pence, to 478.65 pence, while Shell fell 0.3 percent, or 6 pence, to 2,364.5 pence.

North Sea-focused Harbor Energy was down 5.9 percent, or 19.7p, to 314p and Ithaca Energy was down 4 percent, or 8p, to 192p.

However, bank shares rose as the sector itself escaped a windfall tax. Lloyds rose 3 percent, or 1.29p, to 44.42p, while NatWest rose 2.5 percent, or 6.1p, to 253p.

Stock watch – Harland and Wolff

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

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

The consortium will build three ships, creating 1,200 jobs at the British shipyard.

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

Shares rose 33.5 percent, or 6 pence, to 23.9 pence.

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

The pound also fell, but it was noted that the reaction was much calmer than after Kwasi Kwarteng’s mini-budget in September, when financial markets collapsed.

“At first, therefore, Jeremy Hunt will probably be satisfied that he has not broken the unwritten but important tax rule: don’t scare the markets,” Khalaf said.

Halma was down 4.3 per cent, or 102 pence, to 2,247 pence after profits fell 13 per cent to £145.5 million in the six months to September.

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

Residential landlord Grainger benefited from the rising demand in the rental market.

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

This was more than the £83.8m forecast by Numis analysts.

Grainger said this was due to higher occupancy rates, which stood at an all-time high of 98 percent. Shares rose 1.1 percent, or 2.6 pence, to 239.4 pence.

But commercial landlord Great Portland Estates fell 1.8 percent, or 9.5 pence, to 533.5 pence after a loss and a fall in the value of its portfolio. The group lost £86.7 million in the six months to September, after making a profit of £62.4 million a year earlier. And the value of his portfolio fell by 3.4 percent to £2.6 billion.

Meanwhile, homebuilder Crest Nicholson fell 2.9 percent, or 6.4 pence, to 214.8 pence after deciding to delay the opening of a third new division in the current fiscal year due to the economic turmoil.

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

Sales rose 45 percent to £168.9 million in the six months to September, despite high inflation and rising energy costs.