The FTSE 100 was down 0.3% to 7,489.7 in midday trading on Tuesday, as reports, initially by the FT, rolled in that the UK government looked set to impose a windfall tax on £10 billion of excess profits from electricity generators.
The spiking cost of living has spurred calls for the government to intervene and lift some of the pressure from struggling households on the back of rising energy bills, after the energy price cap rose 54% in April and inflation hit a 40-year high of 9%.
However, calls for a windfall tax have been met with comments that the measures might serve to undercut green energy investment in the sector.
“The Government wants to raise money to help households hit by a sharp rise in energy bills,” said AJ Bell investment director Russ Mould.
“While it is right that some support should be given to those most in need during these difficult times, the way in which new funds are raised means the Government runs the risk that energy companies slow down investment in new green projects which could make it harder for the country to hit its net zero emissions targets.”
SSE shares tumbled 8.6% to 1,750p and Harbour Energy fell 3.7% as a investors scrambled from the stock on the back of windfall tax fears.
BP and Shell also suffered a hit from the speculation, as their shares fell 1.5% to 422.1p and 1.1% to 2,359p, respectively.
Meanwhile, an exodus of advertisers from US tech companies saw app developer Snapchat tumble 31% in after-hours trading after its CEO warned of a lowered revenue and profit outlook for June, with Meta dropping 7%, Pintrest sliding 12% and Alphabet dipping 4% across the Atlantic.
Marketing-reliant groups in the UK followed the trend, with ITV shares falling 3.7% to 71.5p and WPP falling 3.6% to 930p.
Barclays shares gained 3.1% to 162.4p as a result of the banking giant’s highly-anticipated £1 billion share buyback scheme, which is set to launch today.
The programme had been delayed due to an over-issuance of US securities earlier this year, which pushed the buyback date from its scheduled launch in March.
The buyback will reportedly cover ordinary shares only, with no American depository receipts, and will be cancelled in a move to lower share capital.
