After rebounding strongly on Tuesday, the FTSE 100‘s (FTSEINDICES: ^FTSE) renewed optimism only lasted two days before sinking back this morning, falling by 37 points in early trade and dragging much of the index down with it, while the FTSE 250 (INDEXFTSE: MCX) dropped 50 points in the first hour of trading.
Russian armed forces completed their annexation of Ukrainian navy assets by storming the minesweeper Cherkessy, while the International Monetary fund (IMF) agreed a $14-$18bn bailout to help Ukraine meet debt payments and avert a possible debt default. The country’s interim government has also raised gas prices by 50% to domestic customers, with further rises scheduled until 2018.
Closer to home, energy regulator Ofgem called for an investigation into the UK’s “Big Six” firms — SSE (LSE: SSE), Scottish Power, Centrica (LSE: CNA) (NASDAQOTH: CPYYY.US), RWE Npower, E.On and EDF Energy– over fears that competition isn’t working well amid continued high prices for customers, causing shares in SSE to lose 37p in early trade.
Conversely, the continuing Ukraine conflict could lead to a decrease in supplies of natural gas out of Russia, which could then hike gas prices in Europe for the likes of Centrica, and we might see energy companies with exposure to Europe raising prices and boosting profits — shares in Centrica went against the grain and rose by 1% in early trade.
