Stock CFD trading thwarted by exit of energy and utility companies? Not today!


The past few months have proven very uncertain for a large percentage of the British public as a very unusual circumstance took the energy and utilities market by storm.

Since the summer of 2021, over 20 energy and utilities companies have exited the British market, many of which have gone bankrupt due to the rising cost of oil and gas and the inability of these companies to be able to pass that cost on to their customers.

This has created what is being described as a 'cost of living crisis' as the remaining large energy providers have now been left to onboard those whose services have ended, meaning that bills have gone up for a large percentage of the UK population.

Some of the now defunct energy companies were privately held, however some had their stock publicly listed on the London Stock Exchange, meaning that they were sizeable entities in their own right.

It would therefore be quite understandable for investors and traders to shy away from utilities or energy company stocks at this point in time, especially given the ultra-conservative approach many firms have taken in trying to absorb some of the increased logistical, supply chain and raw materials cost themselves in order to avoid passing it onto customers who are already cash-strapped and therefore could end up getting into debt with their bills, that energy companies may well be not in favour.

Actually, that is not quite the case, as United Utilities PLC, a large British water company, is experiencing a steady increase in investor confidence.

Its value was relatively flat during November, however all of a sudden at the end of the month United Utilities stock began to rise going from £10.94 per share on November 17 to £10.95 by November 26.

Suddenly, the price dropped on December 1, but this morning it has risen once again and recovered very quickly shortly after the opening bell at the London trading session.

Currently, United Utilities is trading at £10.90 per share which is 0.6% up on yesterday, and 1.35% over the weekly moving average.

Whilst these do not necessarily sound like large movements, they are for a utilities company at this particular time, and the trendline that shows investor confidence with steady upward growth with a minor blip of downward volatility yesterday which was very quickly recovered.

Therefore, United Utilities performance on the London market is perhaps a breath of fresh air to traders who have previously enjoyed the blue chip, evergreen nature of utility companies and have recently had their plans thwarted by the exit of many energy firms from the market.

Going with the flow has certainly a double meaning on this occasion!

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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