European markets edge higher as UK awaits energy bill support package


op European markets gained on Tuesday amid speculation that newly appointed Prime Minister Liz Truss is set to unveil a £90bn energy bill support package.

Consumer stocks hovered closer to the top of the FTSE 100 with stocks like Next, JD Sports and Kingfisher all making gains.

This indicated that investors have a more positive outlook on consumers’ purchasing power in the coming months should the government subsidize skyrocketing energy bills.

The FTSE 100 was up 13.01 points, or 0.18%, at 7,300.44 when markets closed on Tuesday.

Joshua Mahony, senior market analyst at online trading platform IG, said: “In the short term, this [energy package] It looks like an effective way to provide greater certainty and relieve pressure on the Bank of England, but the long-term consequence will no doubt result in another pile of debt that will ultimately have to be paid for through higher taxes.”

A huge sell-off in British government bonds pushed interest rates, known as yields, to their highest levels since 2011 as investors anticipated sweeping energy support measures that put a strain on the country’s finances.

But this failed to drastically alter the pound, which rose against the US dollar after falling to a 37-year low on Monday as overseas traders eagerly awaited election news. The pound was up 0.15% against the dollar at 1.1546 and was down 0.08% against the euro at 1.165.

Other major indices in Europe managed to recover after Monday’s losses. The German Dax was up 0.87% and the French Cac 40 was up 0.19% by the end of the day.

In the US, after a delay at the start of the week, the S&P 500 was up around 0.35% and the Dow Jones up 0.2% by the time European markets closed.

Meanwhile, the price of Brent crude oil was substantially lower compared to the significant increases on Monday. It was down 2.2% at $93.61 a barrel as markets closed.

In company news, Berkeley Group shares rose on Tuesday after the homebuilder said it was on track to meet its earnings expectations for the year.

The announcement gave investors some positive news after reports this week that the home building sector is under pressure amid a housing market contraction.

Shares of the company rose 126 pence to 3,573 pence when markets closed.

The DS Smith packaging business also reported operations in line with market guidance, as higher cost packaging prices will offset rising energy costs. DS Smith shares rose 9 pence to 272 pence.

Meanwhile, Vertu Motors sounded the alarm over its electricity costs, which it said will rise from October after its fixed-price power deal ends.

The car dealer group said it had performed strongly in the first half of the year, but warned that price inflation and rising energy costs could hit vehicle supply going forward.

Vertu shares were down 0.25 pence to 46.5 pence by the end of the day.

The biggest risers in the FTSE 100 were Hargreaves Lansdown, up 37p to 835p, Centrica, up 3.28p to 81.94p, Lloyds, up 1.78p to 45.23p, Rightmove, up 23.8p to 616.6p, and Howden Joinery, up to 21.4p at 574.6p.

The biggest losers in the FTSE 100 were Ashtead, down 105p to 4,207p, BP, down 10.65p to 452.7p, BT, down 3p to 142.15p, Shell down 40p to 2,308.5p, and AstraZeneca, down 134p to 10 514p.

Leave a Comment