BUSINESS LIVE: MPC rate decision; Thames fined over divi payout; Henry Boot buys Stonebridge

Richard Hunter, head of markets at Interactive Investor:

‘UK markets followed the global lead and sagged helplessly at the open. The markdowns were almost universal, with the largest falls being felt in the mining sector, as well as those with significant US exposure such as Barclays, Entain and Ashtead Group, while Scottish Mortgage also made an unwelcome appearance given its own technology focus.

‘British American Tobacco was also lower having been marked ex-dividend, with some minimal strength in the defensive utility stocks and a weaker sterling offering virtually no resistance.

‘The losses reduce the gains for the FTSE100 in the year to date to 4.8%, undoing some of the progress previously made. The premier index has now moved to being comfortably over 4% away from the highs recorded in May, with few prospects of a positive catalyst in sight.

‘The more domestically focused FTSE250 has borne the additional burden of being seen as something of a barometer for the wider UK economy, with its gains being pared to just 3.2% so far this year following this latest bout of weakness.’

Housebuilder Henry Boot will take full ownership of Stonebridge Homes after buying the reamining 50 per cent of the premium regional specialist.

The transaction is structured to complete in three tranches over the next five years with the total purchase price linked to the performance of Stonebridge, the group said.

Boss Tim Roberts said: ‘This transaction represents an important strategic milestone for Henry Boot, allowing us to acquire full ownership of a high growth builder of premium residential homes that we already know well through our existing 50% share in the business.

‘The acquisition of Stonebridge also further cements our position in the U.K. house-building sector, a market which currently benefits from a number of supportive structural and political tailwinds, while at the same time simplifies Henry Boot’s structure.

‘The consideration is performance linked, and the phased structure is designed to generate strong returns whilst maintaining gearing within our optimum range of 10-20%. All of this gives us confidence that this transaction will help drive enhanced shareholder value over the medium term and will be a significant part of our plans for growth.’

The boss of one of Britain’s biggest investment platforms claimed the Government is ‘taxing the stock exchange out of existence’ as he called for stamp duty on share trading to be scrapped.

Richard Wilson, chief executive of Interactive Investor, said action was needed after figures showed the London market has suffered the largest exodus of companies since 2009 this year.

German sandal maker Birkenstock posted higher sales and profits as ‘ugly’ clogs prove a hit with shoppers.

Sales jumped 21 per cent to £1.5billion over the year to September 30 and profits more than doubled to £159million.

Household water bills will rise by an average of £94, or 21 per cent, over the next five years after regulator Ofwat signed off steep price hikes.

The increase in bills will pay for upgrades to pipes and reservoirs that water firms argue are sorely needed – but will also go towards paying investors.

Environment Secretary Steve Reed said this week that consumers would be ‘angry’ at the hikes to the cost of water.

Thames Water will be fined £18million for breaking dividend payment rules, as regulator Ofwat takes action against water firms that do not link payouts to performance for the first time.

Debt-saddled Thames Water, which has 16 million customers, has become a poster child for Britain’s broken water sector following accusations investors have for decades plundered companies for dividends while neglecting infrastructure and the environment.

Ofwat had tightened rules on water companies’ dividend policy in May last year, telling firms to stop the payment of dividends if they are of poor financial health.

The regulator said Thames Water made interim dividend payouts totalling £37.5million to its holding company, Thames Water Utilities Holdings Limited, in October last year and further payouts of about £158.3million in March 2024.

The regulator, which oversees the privatised water and sewerage industry in England and Wales, said it would claw back value from £131.3million of dividend payments using price control so customers do not lose out on tax benefits.

‘(This) is a clear warning to the whole sector: We will take action against companies who take money out of these businesses, where performance does not merit it,’ Ofwat’s chief David Black said in a statement.

Nissan shares clocked up their biggest gain in nearly 40 years after it entered merger talks with Japanese rival Honda.

A deal that could also include Mitsubishi Motors, in which Nissan is the top shareholder with a 24 per cent stake, and would create the world’s third-largest carmaker with 8m sales a year – behind Toyota (11.2m) and German giant Volkswagen (9.2m).

Nissan shares jumped 24 per cent but remain down 25 per cent this year. Honda fell 3 per cent.

The Bank of England will later today reveal its Monetary Policy Committee’s decision on the direction of interest rates.

Base rate is expected to be held at its current level of 4.75 per cent, amid fears of an inflationary resurgence.