Energy firms rally after windfall tax is ruled out

ENERGY stocks topped London’s premier index after fears over a second windfall tax cooled.

In her first outing at PMQs, Liz Truss said she was ‘against’ the idea of levying a tax on energy firms, which could deter investment. The Prime Minister said: ‘I believe it is the wrong thing to be putting companies off investing in the United Kingdom.’

Her remarks calmed investors’ nerves, many of whom were worried that she would use the tax to support her energy plans.

Earlier this year, the Government had rolled out a 25pc windfall tax on oil and gas producers.

As a result of Truss’s reassurance, shares in SSE rose 3.9pc, or 66.5p, to 1753.5p and British Gasowner Centrica gained 2pc, or 1.6p, to 83.54p.

Among the mid- caps, Drax surged 6pc, or 39p, to 691p and Energean inched up 0.08pc, or 1p, to 1245p.

But, despite the relief rally in energy stocks, markets once again found themselves under pressure following Tuesday’s boost. The

FTSE 100 dropped 0.9pc, or 62.61 points, at 7237.83 and the FTSE 250 lost 0.05pc, or 9.36 points, to 18811.48.

As the pound slid against the dollar, caution swept through London’s markets.

The growing sense of unease and worries over a possible recession saw retailers pull back from their previous surge, with Primarkowner Associated British Foods down 3.6pc, or 54.5p, to 1455p and Next dropping 2.3pc, or 140p, to 6048p after JP Morgan slashed its target price to 6000p from 7280p.

Ocado shares slid 0.1pc, or 1p, to 733.8p despite appointing Hannah Gibson to take over its retail arm after Mel Smith stepped down last month. Gibson, head of its technology business at the online grocer, takes over this month at Ocado Retail, its joint venture with Marks & Spencer (down 5.9pc, or 7.65p, to 122p).

Ocado Retail was launched in 2019 when M&S bought 50pc of its online shopping arm for £750m and the partnership lets shoppers buy M&S products through the Ocado website.

Only days after suffering a cyberattack which disrupted bookings on its websites and apps, IHG received a boost from analysts.

The owner of Holiday Inn and Crowne Plaza was praised by Deutsche Bank for its ‘resilient business model’ as well as its ‘healthy balance sheet.’

The broker said it believes the resilience of the US market will help the hotel chain owner to outperform despite the looming recession.

Deutsche Bank maintained its ‘ buy’ rating but trimmed the stock’s target price to 5520p from 5700p as IHG shares rose 0.7pc, or 34p, to 4618p. In the second-tier,

NCC Group rose 10.6pc, or 21p, to 219p on the back of a US private equity firm circling tech firm GB Group, which shot up 24pc, or 125p, to 647p.

NCC, which operates in the same space as GB Group, has also been tipped as a takeover target. US private equity sharks have been circling British tech firms since the turn of the year, buoyed by the weak pound.

Analysts say that many British investors do not understand tech firms and as a result they are heavily undervalued.

In adland, M&C Saatchi revealed it has forked out £8.4m fending off two takeover bids over the past six months.

The advertising giant rejected takeover approaches from communications group Next Fifteen and Vin Murria’s investment vehicle AdvancedAdvT.

In its half-year results, profits fell to £300,000 for the six months to June 30 from £4.8m over the same period last year.

M&C Saatchi shares dropped 4.8pc, or 7.8p, to 154.4p.