FTSE hits troubled waters as utility companies struggle

The FTSE lagged behind its rivals. Germany’s Dax index was trading flat, while Paris’s Cac 40 was up 0.4%.

Shares in water dropped on Thursday. (Andrew Matthews/PA) (PA Archive)

The FTSE 100 embarked on troubled waters on Thursday as it under-performed against most of its international peers.

The top index in London was pulled down by the performance of Thames Water, which is facing questions about whether it might need to be placed into special administration.

The business’s woes turned gazes to the rest of the UK’s utilities sector, pushing shares in listed water companies lower.

By the end of the day, Severn Trent and Pennon Group’s shares had dropped 3.5%, while United Utilities saw a 2.8% fall.

“The increased media focus on Thames Water’s problems and a possible nationalisation, has shifted the balance of risks towards the entire sector,” said CMC Markets analyst Michael Hewson.

“It has also brought a sharper focus over how these water companies spend their money, and could be regulated in the future, with criticism over leaky pipes and sewage discharges invites greater regulation.”

Although not the only struggling companies, their fall helped push the FTSE 100 down by 0.4%, or 28.8 points to 74,71.69.

The FTSE lagged behind its rivals. Germany’s Dax index was trading flat, while Paris’s Cac 40 was up 0.4%.

In New York, the S&P 500 was 0.4% higher shortly after European markets closed, while the Dow Jones was up 0.9%.

The pound had dropped 0.1% to 1.262 dollars by the end of the day.

In company news, retailer B&M saw its shares shoot to the bottom of the FTSE 100, down 6.5%, after the business revealed its results for the first three months of the financial year.

Revenue was up 13.5% and sales in the UK were 11.3% higher.

Mr Hewson said: “Today’s share price weakness may have more to do with the fact that the shares traded at their best levels since February 2022 yesterday, amidst disappointment that management decided not to upgrade guidance.”

Elsewhere, Moonpig reported a 5.2% rise in revenue to £320 million, but said that profits were put under pressure by rising costs.

The business said that under-pressure customers are sending fewer cards and choosing cheaper gifts.

But it upped prices, meaning that the average order value rose from £7.70 to £8.20. Shares in the business were up 3.8%.

The biggest risers on the FTSE 100 were Barclays, up 2.98p to 151.32p, Ocado, up 10.4p to 540.2p, 3i, up 29p to 1,910.5p, Standard Chartered, up 9p to 677.6p, and Glencore, up 4.4p to 438.4p.

The biggest fallers on the FTSE 100 were B&M European, down 38.6p to 552p, Rentokil, down 29.8p to 600.8p, Rolls-Royce, down 7.1p to 148.7p, WPP, down 34.4p to 816.8p, and Tesco, down 9p to 246.9p.