Power firms up on tax pledge | Heathrow ‘sorry’ Scotgold record
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4.45pm: Power surge
Utilities firms were stronger after Downing Street said the UK government is not planning to extend the windfall tax to electricity or infrastructure companies.
Asked if there were plans to extend the “energy profits levy” to power generators, an official said: “We would not seek to make any new policies or major fiscal decisions.
“So there’s no plans to do that. We will continue to evaluate the scale of the profits and consider appropriate steps, but there’s no plans to introduce or extend that to that group.”
Martin Young, an analyst at Investec, said: “We have consistently argued against a windfall tax given that we believe it would jeopardise much-needed investment in the electricity system.
“We would like to think that common sense has prevailed, but given the magnitude of likely bill increases, we cannot rule out the incoming prime minister taking a different view.”
Drax shares rose by 6%, Centrica 3.4%, and SSE by 3.2%.
BA parent IAG was weaker amid further travel chaos, as Heathrow said it had axed more than 60 flights and warned it may ask airlines to cut more services as it struggles to cope with the sudden return of travellers.
After spending almost the entire session under water the FTSE 100 index closed flat at 7,196.59(+0.35 points).
7am: Heathrow recovering
Heathrow Airport said the growth in passenger numbers over the last four months matches the rate of expansion over the last 40 years.
In an update stating there were signs of recovery, it said nearly six million passengers travelled through Heathrow in June.
By the end of July it will have as many people working in security as it had pre-pandemic. It has also reopened Terminal 4 to provide more space for passengers.
In a traffic update, Heathrow management said rebuilding capacity quickly is “very challenging” after the significant reductions in resource across the entire aviation supply chain.
“Arrivals punctuality is very low as a result of delays at other airports and airspace congestion across Europe and this has compounded the challenge of resource constraints for the airport, airlines, ground handlers and government agencies,” it said.
“In spite of this, we have been able to provide a good level of service for the vast majority of passengers.
“However, despite our best efforts there have been periods in recent weeks, where service levels have not been acceptable, with long queue times, delays for passengers with reduced mobility, bags not travelling with passengers or arriving late, and we want to apologise to any passengers who have been affected by this.”
7am: Scotgold record
The Scottish gold mine at Cononish near Loch Lomond produced record gold concentrate last month, beating its previous record in April. Second quarter gold production to the end of June totalled 3,531 ounces, a 188% increase on Q1.
Scotgold Resources CEO, Phil Day said, “This has been our strongest quarter yet for Scotgold, characterised by record gold production which exceeded guidance, record gold sales translating into significant cash generation and continued progress on the ground to meet our production and operational targets.
“In the short term, we are focusing on our transitional optimisations at Cononish, undertaking low capex initiatives to continue to drive the production ramp up.
“We remain impressed with Cononish’s high-grade gold geology and anticipate that the operations and cost control discipline of our team will enable the mine to be even more cash generative and profitable as it moves from phase 1 to phase 2 production.”
Investors remain nervous amid worries that the US may be set to impose sharp rise in interest rates to quell rising prices at the next meeting of the Federal Reserve later this month, followed by a second three-quarter point hike in September.
There are also growing concerns about a fresh spike of Covid-19 cases in China.
With China pursuing a zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another lockdown, with Shanghai residents having only emerged from a two-month confinement in June.
Shanghai recorded more than 120 Covid cases over the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
The Shanghai Composite was down 1.8%, while the Hang Seng index in Hong Kong was down 3.1%. The S&P/ASX 200 in Sydney was down 1.1%. Japan’s Nikkei 225 index was up 1.2%.
Brent oil was trading at $106.35 a barrel on Monday morning, firm from $106.00 late Friday.