Centrica Share Price Soars Following Windfall Tax Exemption

Summary:

Centrica's share price closed yesterday’s trading session up 1.45 per cent continuing a trend that has lasted for over a week.

Centrica’s share price closed yesterday’s trading session up 1.45 per cent. The bullish move marked the sixth day in a row that the share prices were bullish, which has resulted in a 13 per cent price gain.

The gains seen in the past few weeks come amidst an important exception by the UK government to its implementation of the windfall tax. According to reports, British lawmakers approved a 25 per cent windfall tax on oil and gas producers in the British North Sea earlier this month.

The government indicated the new tax would see it raise about £5 billion in one year, which would go into helping people struggling with soaring energy. The windfall tax was expected to be extended to power generators such as Centrica.

However, reports indicated they would be exempt from the new tax, which saw shares of major electricity generators such as Dax Group PLC, SSE Plc, and Centrica Plc rise on the news. Although the move was criticised by some who saw it as a hindrance to raising billions of pounds which would have gone to investment in renewable energy, it was positive news for Centrica and other power generator companies.

Centrica Share Price

Based on the past few trading sessions, Centrica has looked aggressively bullish. The trend also looks likely to continue. In addition, recent events, such as the exemption of the windfall tax, are also likely to play a huge part in the next few trading sessions.

For instance, the exemption has ensured that Centrica will likely meet its shareholders’ obligations, even with the rising cost of living. It has also ensured that the company’s bottom line is still on course to outperform the year-over-year data, a factor that has seen many investors’ sentiment change and become bullish for Centrica.

Therefore, in the next few trading sessions, there is a likelihood that we will continue to see Centrica’s share price continue to rise. My analysis will only be invalidated if oil and gas prices continue to rise and set new price highs. At that point, I expect a market shakeup that will see Centrica’s share price begin to fall.