Friday, February 8, 2019 - 10:25

“The FTSE 100 held firm on Friday at 7,090 with investors likely to be relieved that yesterday’s 1.1% decline didn’t turn into something uglier as the week came to a close. “Markets in other parts of Europe fared less well, including a 0.2% decline in Frankfurt’s DAX index despite a positive surprise on a piece of economic data. German exports rose more than forecast in December, up 1.5% month-on-month versus expectations of just 0.2% growth. “Japanese shares were volatile with the Nikkei 225 index falling 2% to 20,333. Packaging container manufacturer Toyo Seikan and industrial machinery group IHI were among the top fallers as investors continued to worried about global growth and trade wars,” says Russ Mould, Investment Director at AJ Bell.


"The utilities sector was supposed to be a safe, boring part of the market to invest in, offering a predictable stream of income from regulated returns and limited share price volatility.

"Not any longer it seems, with SSE the latest name in the space to undermine this image. Political pressure has been a big factor in the industry's more chequered recent history

"Topically, given the current focus on Brexit, it is an EU court ruling which lies behind today's profit warning from the company. "A Government scheme paying the likes of SSE to provide back up during periods of high demand basically ruled to be state aid.

"The firm also faces the question of what to do next with its energy services business after the failed merger of its consumer-focused arm with npower.

"The established UK energy providers have faced two challenges, with easier switching leading to a competitive threat from smaller challengers and an energy price cap putting margins under severe pressure.

"Investors will be awaiting a promised update before the end of March eagerly so the company can focus on regulated networks and renewables where it sees greater potential."

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market comment is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.

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