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Severn Trent volatility sees water giant as one of LSE's big movers


10 August 2021

Utilities firms may be considered relatively anodyne and bland especially in the face of far more interesting big tech firms that have dominated the investment arena for years now, but this week the good old-fashioned water and power companies are among the biggest risers on the London Stock Exchange. Severn Trent, which is one of the UK's largest water supply companies, has been going from strength to strength today, up 41 points over close of business on Friday, equating to a 1.49% increase in share prices.

The sudden increase this morning is a return to an even keel for Severn Trent, whose shares went down in value significantly during the course of last week but is now one of the big movers today on London's market. Perhaps rather oddly, there is no significant news that has caused the attitude of investors to change toward a more positive outlook, and it was three weeks ago since the firm confirmed that it is on track to meet existing guidance after a strong start to the year.

Severn Trent PLC confirmed back in mid-July that it was confident of achieving at least £40 million in customer outcome delivery incentives and plans to invest between £550 million and £650 million this year. It appears that although Severn Trent stands out as a big riser today, the FTSE 100 index has been host to some degree of interest in the utilities sector as a whole, this meaning that when the top three FTSE 100 blue-chip risers are utility firms it can be considered a day during which investors are not taking risks.

Severn Trent’s results for the year to end-March 2021 showed a 17% fall in underlying profits due to new tariffs, the net impact of the pandemic on consumption and investment in its services. Lower water demand from businesses was partially offset by an increase in demand from households last year, resulting in a £50 million reduction in revenue.

A day of playing it safe has been very much the case on London's most prestigious market today.

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.18% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.
Monecor (London) Ltd is a member firm of the London Stock Exchange. Authorised and regulated by the UK Financial Conduct Authority (FCA) with Financial Services register number 124721 and the South African Financial Sector Conduct Authority (FSCA) under license number 50246.
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