Londonâs benchmark index slipped on Friday, with the FTSE 100 falling 15 points to 10,575, as sharp losses in utility stocks offset a broadly positive global backdrop. The decline of around 0.14% came despite optimism in international markets, highlighting how domestic policy concerns can quickly weigh on investor sentiment.
The biggest drag on the index came from the utilities sector after UK Chancellor Rachel Reeves confirmed plans to decouple electricity prices from gas costs. The proposal, described as a âsignificant changeâ to the long-standing pricing mechanism, rattled investors and triggered a sell-off in key energy names. SSE dropped 5.2%, while Centrica fell 4.9%, making them among the worst performers on the FTSE 100.
The UKâs current marginal pricing system allows gas-fired power plants to set electricity prices across the market, even when cheaper renewable energy dominates supply. While the government argues that breaking this link could reduce household energy bills, investors are concerned about the potential impact on profitability and long-term returns for utility companies. The lack of detailed implementation guidance has added to uncertainty, forcing traders to reassess valuations across the sector.
Beyond utilities, the broader market tone remained cautious. The FTSE 100 underperformed its European peers, with Germanyâs DAX rising 0.2% and Franceâs CAC 40 gaining 0.3%. The divergence reflects how UK-specific developments continue to influence London-listed stocks more heavily than global factors.
Oil prices also weighed on sentiment, retreating after renewed optimism around geopolitical developments. Brent crude slipped 1% to $98.43 per barrel, while US benchmark WTI declined 1.4% to $89.89. The pullback followed comments from former US President Donald Trump, who suggested a potential deal with Iran could be reached soon, raising hopes of increased oil supply. Lower oil prices tend to pressure energy stocks, further contributing to weakness in the FTSE 100.
In the corporate space, Workspace Group saw one of the sharpest declines of the day, with shares plunging 15% to around 318p after issuing a profit warning. The flexible office provider cited rising interest costs, declining rental income and higher operating expenses as key challenges. Its total rent roll fell 1.4% to ÂŁ127.3 million, while rent per square foot dropped to ÂŁ41.96. Although occupancy improved slightly to 79.4%, the market reacted negatively to the outlook, particularly as the company continues to sell assetsâsome at steep discounts, including one transaction completed at 44% below its previous valuation.
While large-cap stocks struggled, smaller companies delivered strong gains, reflecting selective investor appetite for growth opportunities. ITM Power surged more than 35% after announcing a partnership with Rheinmetall on a defence-related e-fuels project. The collaboration, part of the Giga PtX initiative, aims to build decentralised plants across Europe, boosting demand for electrolysers and positioning ITM Power within the growing energy security and synthetic fuels market.
Premier African Minerals rose 17% after reporting progress at its Zulu lithium project, where a new flotation plant is nearing completion. The company also highlighted improving export conditions in Zimbabwe, which could support future production. Meanwhile, Optima Health gained 4.4% after delivering full-year EBITDA around 10% ahead of expectations, driven by strong second-half performance and recent acquisitions.
Elsewhere, Quantum Helium raised ÂŁ5 million to advance its US-based projects, while MedPal AI secured ÂŁ3 million to expand its GLP-1 weight-loss platform. These developments underline continued investor interest in niche sectors such as healthcare technology and alternative energy, even as broader markets show signs of fatigue.
Another notable update came from Greencoat UK Wind, which warned that plans to scrap Carbon Price Support from 2028 could reduce its net asset value by 3p to 5p per share. Although the company noted that the importance of the mechanism has declined as renewable energy becomes more dominant, the announcement added to concerns around policy risk in the energy sector.
Investor sentiment remains mixed heading into the weekend. On one hand, global markets have been buoyed by easing geopolitical tensions and record highs in US equities, with the S&P 500 and Nasdaq recently posting fresh gains. On the other, uncertainty around UK policy changes and sector-specific pressures have led to a more cautious tone in London.
Analysts note that markets are currently in a âwait-and-seeâ phase, particularly as investors monitor developments around the potential extension of a US-Iran ceasefire. Any progress on that front could further stabilise oil prices and support global equities. However, without clearer signals from UK policymakers, domestic sectors such as utilities may continue to face volatility.
Looking ahead, the FTSE 100âs direction will likely depend on a combination of global risk appetite, commodity price trends and clarity on government reforms. Investors are particularly focused on how the proposed energy pricing changes will be implemented and whether safeguards will be introduced to protect returns for infrastructure-heavy companies.
For now, the index remains near historically elevated levels, but Fridayâs pullback highlights the fragility of sentiment when policy uncertainty enters the equation. As markets balance optimism over global developments with caution at home, traders are likely to remain selective, favouring sectors with clear growth visibility while avoiding areas exposed to regulatory shifts. For deeper global market insights, investors can also follow updates on Yahoo Finance.
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