London’s blue-chip index closed marginally higher on Wednesday, with the FTSE 100 finishing up 0.02% as investors digested a significant energy policy announcement.
The UK Office of Gas and Electricity Markets announced a 4% hike in the energy price cap for the December quarter, putting further pressure on already stretched consumer finances.
Based on Ofgem’s existing typical domestic consumption values, the annual bill for a household paying by direct debit will rise to 1,723 pounds sterling in October, up from 1,663 pounds previously.
The government moved to soften the blow by scrapping the 5% value-added tax on all electricity bills from October 1, 2026, through March 31, 2027.
Clare Maio, global lead partner at KPMG UK, said: “Removing VAT from domestic electricity has softened the impact of the latest increase for already stretched household budgets.”
Maio added: “But more is needed for businesses as well, as high energy prices feed into wider costs. Improving the competitiveness and predictability of UK energy costs will be essential to unlocking investment, supporting industry and delivering economic growth.”
Oil markets also shaped sentiment, with reports that the US and Iran may work toward a new ceasefire deal in the coming days providing some direction for traders.
Deutsche Bank Research expects these non-definitive but encouraging headlines to push oil prices to their “biggest weekly decline since June,” while Iran and Oman discussed setting up an interim joint maritime corridor in the Strait of Hormuz.
In index news, FTSE Russell signaled that sports betting and gaming company Entain (ENT.L) and homebuilder Persimmon (PSN.L) will exit the FTSE 100 in its September reshuffle.
Budget airline easyJet (EZJ.L) and oil and gas company Ithaca Energy (ITH.L) are set to join the blue-chip index as replacements following the reshuffle announcement.
Persimmon (PSN.L) bucked the trend among the affected stocks, climbing 1.56%, while easyJet, Ithaca, and Entain fell 0.50%, 0.89%, and 2.11% respectively.
Precious metals miner Hochschild Mining (HOC.L) was among the session’s standout performers, surging 6.31% after reporting a sharp jump in interim profit attributable to equity shareholders.
Hochschild’s profit attributable to equity shareholders climbed to $189.7 million from $90.9 million year over year, with revenue rising strongly to $844.4 million from $520 million.
RBC Capital Markets noted that Hochschild raised cost guidance by approximately 10% to $2,380-$2,500 per ounce, reflecting higher gold and silver prices compared to initial budget assumptions based on $3,200 per ounce gold and $34 per ounce silver.
“The new guidance is in line with our forecasts, and the upcoming guidance change had been signalled with Q2 results, so we think this should not catch the market by surprise,” RBC Capital Markets said.
In deal news, AEW UK REIT (AEWU.L) abandoned its pursuit of fellow London-listed real estate investment trust Alternative Income REIT (AIRE.L), citing a lack of support and a competing offer from the target’s major shareholder Glenstone REIT.
AEW UK REIT shares edged up 0.19% following the announcement, while Alternative Income REIT closed down 1.71% as the failed merger bid drew to a close.
