London’s blue-chip index closed marginally higher on Wednesday, with the FTSE 100 (^FTSE) gaining 0.02% as investors digested a series of significant market developments.
The UK Office of Gas and Electricity Markets announced a 4% hike in the energy price cap for the December quarter, placing fresh pressure on already strained household budgets across the country.
Based on Ofgem’s existing typical domestic consumption values, annual bills for households paying by direct debit will rise to 1,723 pounds sterling from October, up from 1,663 pounds previously.
The government moved to soften the blow by scrapping the 5% value-added tax on all electricity bills from October 1, 2026, through to March 31, 2027, offering some limited relief to consumers.
Clare Maio, global lead partner at KPMG UK, said: “Removing VAT from domestic electricity has softened the impact of the latest increase for already stretched household budgets. But more is needed for businesses as well, as high energy prices feed into wider costs. Improving the competitiveness and predictability of UK energy costs will be essential to unlocking investment, supporting industry and delivering economic growth.”
Oil markets also influenced sentiment, with Deutsche Bank Research expecting encouraging reports of a potential US-Iran ceasefire deal to push prices to their biggest weekly decline since June.
Iran and Oman were additionally reported to have discussed establishing an interim joint maritime corridor in the Strait of Hormuz, adding further complexity to the geopolitical picture affecting energy markets.
In index reshuffling news, FTSE Russell signalled that Entain (ENT.L) and Persimmon (PSN.L) will exit the FTSE 100, while budget airline easyJet (EZJ.L) and Ithaca Energy (ITH.L) are set to join the blue-chip index in September.
Persimmon closed 1.56% higher on the news, while easyJet, Ithaca Energy, and Entain fell 0.50%, 0.89%, and 2.11% respectively during the session.
Hochschild Mining (HOC.L) was among the session’s standout performers, surging 6.31% after interim profit attributable to equity shareholders jumped to $189.7 million from $90.9 million year over year.
The precious metals miner also reported revenue climbing sharply to $844.4 million from $520 million, underscoring a strong period of earnings growth driven by elevated commodity prices.
RBC Capital Markets noted that Hochschild raised cost guidance by approximately 10% to $2,380-$2,500 per ounce, reflecting higher gold and silver prices compared to initial budget assumptions based on $3,200 per ounce gold and $34 per ounce silver.
In deal news, AEW UK REIT (AEWU.L) abandoned its pursuit of Alternative Income REIT (AIRE.L), citing insufficient support and a competing offer from the target’s major shareholder, Glenstone REIT.
AEW UK REIT shares edged 0.19% higher by the close, while Alternative Income REIT slipped 1.71% as the failed takeover approach drew to a conclusion.