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Centrica shares crash as clients walk

Stock markets in Europe are mixed this morning as the FTSE 100 continues in the downward trend that started around midday yesterday, and the weakness in the pound may be cushioning the decline. 

The DAX is also slightly lower on the session and the strength of the euro is likely to weigh on the market. 

Centrica shares are down 17.5% after the company stated it lost 823,000 UK home clients in four months. The energy provider also stated its full-year earnings would be 12.5% below their estimates. A decision to hike their prices seems to be the reason for the drop-off it customers. The share price has been in decline since July 2013 and it has now fallen to a level not seen since 2003. If the bearish sentiment continues the stock could target 125p.

Shares in Mitchells and Butlers are down 7.6% after the company revealed a lower than anticipated full-year profit, and also announced it would not pay an interim dividend next year. The pub operator stated that adverse currency movements and higher wage costs ate into profits. The pulling of the interim dividend did the damage as it sends out a suspect message about their cash flow situation. The stock hit a four month low today, and if the negative move continues it could fall to 220p.

EUR/USD is stronger on the day helped by impressive purchasing manager index (PMI) reports from France and Germany. France posted its strong set of services data since May 2011 and German manufacturing is at its highest level since the financial crisis. These updates confirm the two largest economies in the eurozone are continuing to grow, and this justifies the European Central Bank’s (ECB) decision to trim in the size of the monthly bond buying scheme in the New Year, and we could see the euro continue it broad rally versus the US dollar.

GBP/USD is a touch softer today after a having a positive run this week. The latest UK GDP data showed the economy grew by 1.5% in the third-quarter, on an annual basis, and that was in line with economists’ expectations. Sterling has been climbing against the US dollar since March, and it is likely the trend could continue.

The New York Stock Exchange (NYSE) is closed today as the US celebrates Thanksgiving.



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