Banking

MARKET REPORT: Drax boosted by UK energy emergency

Drax Group jumped to the top of the FTSE 250 risers as a surge in UK energy prices continued to roil markets.

Shares in the firm, which runs the Drax power station near Selby in Yorkshire, soared 8.8 per cent, or 38.4p, to 477p after a combination of pressures caused gas prices across Europe to hit record highs earlier this week.

Strong global demand for energy as well as low gas stocks in Western Europe and maintenance outages in producer nations such as Russia have also contributed to the rising cost of energy, with the onset of winter likely to escalate matters.

Fallback: Shares in Drax Group, which runs the Drax power station near Selby in Yorkshire (pictured), soared 8.8 per cent after gas prices across Europe hit record highs earlier this week

The crisis is already starting to hit the UK’s energy sector, with two smaller providers, Utility Point and People’s Energy, going bust earlier this week.

In desperation, the UK has been forced to return to older methods to keep the lights on, with coal plants across Britain being asked to make up the shortfall.

However, the cocktail of woes for the energy markets has proven to be a boon for Drax, with analysts at Barclays hiking their target price for the firm to 960p from 550p, saying the group had ‘significant share price upside potential’.

The FTSE 100 climbed 0.2 per cent, or 10.99 points, to 7027.48 while the mid-cap FTSE 250 jumped 0.9 per cent, or 200.03 points to 23632.84.

Stock Watch – PCI-PAL 

MARKET REPORT: Drax boosted by UK energy emergency

Shares in PCI-PAL, a provider of digital payments software, slumped after it was hit by a patent infringement lawsuit.

One of the firm’s competitors, Guildford-based Semafone, said on Wednesday it had filed lawsuits against PCI-PAL in both the UK and US, saying the company’s Agent Assist card payment technology violated Semafone patents in both countries.

However, PCI-PAL hit back on Thursday, saying the allegations were ‘unfounded’ and that it would defend itself ‘robustly’ against the claims.

Shares in PCI-PAL tumbled 12.4 per cent, or 11p, to 77.5p as a result of the news.  

Falling commodity prices and concerns over the Chinese economy were weighing on mining stocks, with Rio Tinto down 4 per cent, or 209p, at 5010p while Anglo American slipped 4.6 per cent, or 135p, to 2818.5p, Fresnillo dropped 3.7 per cent, or 31.6p, to 816.4p, Glencore fell 2.2 per cent, or 7.4p, to 333p and Antofagasta dipped 2.2 per cent, or 32.5p, to 1433.5p.

A takeover tussle is in the works as Ecotricity, a green energy firm run by Forest Green Rovers football club chairman Dale Vince, increased its offer for AIM-listed rival Good Energy to 440p per share, up from 340p previously, valuing the group at nearly £70million.

The increased bid came after Good Energy called on investors to reject the hostile approach, saying Ecotricity was ‘an unfit owner’ for the firm and that its plan for the business was ‘unsuitable’. Good Energy shares surged 17.9 per cent, or 59p, to 388p.

FTSE 250 fund manager JTC climbed 1.5 per cent, or 12p, to 798p after snapping up Missouri-based Segue Partners in a cash and shares deal. The group said the purchase will expand its presence in the US, an ‘important growth market for fund services’.

Law firm Keystone was up 10 per cent, or 76p, to 838p after posting a 118 per cent surge in profits to £4.3million the six months to the end of July.

The group said activity levels had been ‘very high’ across all of its practice areas.

DIY retailer Wickes was up 2.1 per cent, or 4.8p, at 237.2p after its profits more than trebled in the first half of 2021 as demand for home improvements surged during the pandemic.

For the six months to June 26, the FTSE 250 firm reported a profit of £46.5million, jumping from £14.5million in the same period last year. Revenues, meanwhile, rose by a third to £812million.

Mid-cap investment firm Apax Global Alpha received a lift after one of its portfolio firms, tech consultancy Thoughtworks, made a successful debut on the Nasdaq on Wednesday. Shares climbed 3.2 per cent, or 7p, to 224p.

C&C Group, the maker of Magners cider, floated up 2.7 per cent, or 6p, to 232p as the company cheered a ‘strong return to trading’ in the six months to the end of August.

The firm also said Ralph Findlay, boss of pub group Marston’s, will take over as chairman from next July.

Warhammer figurine maker Games Workshop was down 0.1 per cent, or 10p, to 11590p after the firm warned of pressure on freight costs and currency exchange rates in a trading update, although sales were continuing to grow.

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