Sterling plummets but generators of gas rise to the FTSE 100 summit

The pound plummeted yesterday, but London’s top index was propped up by rises in energy companies and banks, which breathed a sigh of relief following the chancellor’s statement.

SSE and British Gas owner Centrica saw their shares push towards the top of the FTSE 100 after their gas generation arms escaped unscathed from the windfall tax on energy generators.

“We’ve seen some significant moves because of today’s UK budget, which painted a bleak outlook for the economy over the next two years and a 7% drop in disposable incomes for UK consumers,” said CMC chief markets analyst Michael Hewson.

“The best performing shares have, somewhat counterintuitively, been SSE and Centrica, despite the announcement of a 45% levy on the ‘excess profits’ of low-carbon energy generators from January 1.”

The news the banking surcharge tax would be reduced from 8% to 3% helped out many of the UK’S biggest lenders, pushing Lloyds, Natwest, Standard Chartered and Barclays into the green.

The FTSE 100 ended the day down just 4.65 points, closing at 7,346.54.

But for the second budget in a row, sterling took a pounding.

By the time stock markets closed in London, the currency had lost more than 1% against the dollar, trading at around 1.18.

“The pound has come under pressure, and gilts have sold off, sending yields higher after the Chancellor of the Exchequer outlined a budget that was long on tax hikes and short on spending cuts,” Mr Hewson said.

In Europe, the Dax index rose by 0.2%, while Paris’s Cac 40 fell by 0.5%.

New York’s S&P 500 dropped 0.6% and the Dow Jones fell 0.1%.

The biggest risers on the FTSE 100 included Centrica, up 5.08p at 92.06p, Lloyds Banking Group, up 1.32p at 44.45p, Imperial Brands, up 56p at 2,109p, and SSE, up 39p at 1,683p.

The biggest fallers included Ocado, down 54.4p at 671.6p, Hargreaves Lansdown, down 47.6p at 823.6p, and Harbour Energy, down 17.9p at 315.8p.

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The pound has come under pressure