ondon’s top index slumped on Wednesday as the new Chancellor warned banks that the Government would need to borrow more money in the short-term to fund an energy bills freeze.
Newly-appointed Prime Minister Liz Truss is expected to announce a plan on Thursday to cap energy bills in England, Scotland and Wales at around £2,500, with investors waiting to find out exactly how many billions of pounds it will cost the Government to fund.
And recession fears have not subsided, with oil prices crashing further during the day – which dragged down natural resources stocks on the FTSE 100.
London’s top index closed the day down 62.61 points, or 0.86%, at 7,237.83.
“Fears over a prolonged slowdown has seen oil prices slide to their lowest levels since February, as well as acting as a drag on UK natural gas prices, which have slipped to their lowest levels since the end of July”, Michael Hewson, chief market analyst at CMC Markets UK said.
“This has weighed on the basic resources and energy sector over recession concerns, pulling the FTSE 100 sharply lower, though the rest of Europe’s markets have been slightly more resilient.”
The pound hit the headlines again on Wednesday after slipping to a new 37-year-low against the dollar as UK investors brace for the costly energy package.
Sterling dipped as low as 1.1403 dollars on Wednesday afternoon, surpassing the low of 1.1412 seen in March 2020 when the pandemic struck. The pound managed to regain some ground at the end of the day and was up 0.03% against the dollar at 1.147 and up 0.1% against the euro at 1.1538.
Brent crude oil slid 3.79% to 89.31 dollars a barrel by the end of the day.
In company news, Halford’s share price shot up after the motoring and cycling retailer reported higher sales over the past 20 weeks as it was boosted by its growing car repairs business.
The company told shareholders that its sales were over 30% higher than the same period last year and that its full-year profits are in line with expectations. Shares were up by 20.8p to 154.3p at the end of the day.
Barratt Developments posted record annual figures with pre-tax profits reaching £1.05 billion, up 15% on the previous year.
But the UK’s biggest housebuilder added fuel to the fire of reports that Britain’s housing market is cooling, saying there are signs that weekly buyer reservations were falling.
Shares in the FTSE 100-listed company were down 8.1p at 414.1p.
Meanwhile, advertising and marketing giant M&C Saatchi reporting shrinking profits and said it had spent £8.4 million fielding takeover moves.
Shares in the group fell as it said its pre-tax profits had fallen to £300,000 in the half year to June 30, down from £4.8 million in the same period last year.
Its share price was down 7.8p to 154.4p when markets closed.
The biggest risers on the FTSE 100 were SSE, up 66.5p to 1,753.5p, Fresnillo, up 16.8p to 701p, Centrica, up 1.6p to 83.54p, Flutter Entertainment, up 195p to 10,275p, and Hargreaves Lansdown, up 15.2p to 850.2p.
The biggest fallers on the FTSE 100 were Standard Chartered, down 25.8p to 576.8p, Glencore, down 18.6p to 468.25p, Associated British Foods, down 54.5p to 1,455p, Vodafone Group, down 3p to 110.18p, and Tesco, down 6.6p to 249.3p.