Government spending jitters torpedo Ultra Electronics

SHARES in troubled defence contractor Ultra

Electronics were torpedoed yesterday on fears that the Government will delay its defence review, leaving future earnings hanging in the balance.

Ultra nosedived as much as 9.4pc after reports surfaced that the Ministry of Defence could push back its spending decisions while it looks to plug a £20bn black hole in funding.

The FTSE-250 firm shed 28pc of its value in just two days in November after it delivered a grim prognosis on the UK defence market and its chief executive was dramatically ousted following a profits downgrade.

Ultra warned then that the MOD cancelling or delaying multiple programmes had impacted its orders. Investors were spooked again yesterday by more signs of uncertainty from Whitehall.

Its shares were also put under pressure by City analysts at both Berenberg and JP Morgan trimming their price targets.

Berenberg analyst Charlotte Keyworth told clients to brace for management to deliver another gloomy outlook for 2018, adding that more earnings downgrades were likely. Shares plunged back towards November’s eight-year low, tumbling 96p to £12.94.

Elsewhere, British Gas owner Centrica and United

Utilities topped the FTSE 100 risers’ board after analysts at Credit Suisse argued that British utilities had been oversold amid the biggest sector shake-up since they were privatised almost three decades ago.

With Labour threatening to take utilities back into public hands and the Conservatives implementing energy price caps, investors have backed off, but analyst Mark Freshney argued that the worst case scenario is already priced into British energy suppliers.

Boosted by an upgrade to “outperform”, Centrica enjoyed its best day of trading in three months, climbing 3pc (4.4p) to 146.2p, while United Utilities followed close behind, gaining 2.3pc (18p) to 817.8p.

Meanwhile, United Utilities boss Steve Mogford dumped £1.7m worth of shares despite the firm’s valuation languishing close to the two-and-a-half-year lows it hit in November.

Insurer Admiral dipped 56.5p on a downgrade from JP Morgan while

Gear4music slipped 47p to 725p despite revealing a Christmas sales boost.

Stocks continued to climb to fresh record peaks with markets shrugging off a disappointing labour report in the US. The FTSE 100 lagged its buoyant peers in Europe but still closed at a record high, advancing 28.34 points to 7,724.22.