London, March 20, 2026, 15:04 GMT
National Grid NG.L dropped roughly 2% Friday, landing at 1,246.5 pence as investors continued to unload UK utilities sensitive to interest rates. Shares moved within a range of 1,244.5 to 1,284.5 pence, after closing at 1,272 pence the previous session.
National Grid had stood out among utilities after hiking its 2027 adjusted earnings per share growth forecast to 13%-15% earlier this month, just as it heads into a fresh regulatory cycle. That optimism, though, didn’t last long. Friday’s selloff underscores how fast sentiment can reverse when yields spike.
The FTSE 100 in London edged 0.1% lower as of 1039 GMT. UK energy shares dropped 0.9%. The Bank of England left rates unchanged at 3.75% on Thursday, flagging inflation as a bigger threat than weak growth. According to Reuters, traders are factoring in about a 60% chance of a quarter-point hike by April, and possibly up to three hikes before year-end.
Steady, regulated cash flows often make utilities act like stand-ins for bonds, so when government bond yields jump, these stocks can lose their luster. The UK’s 10-year gilt just hit 4.93%—a level not seen since 2008. Investec economist Sandra Horsfield called it “very dangerous” for central banks to expect an energy shock to simply fade away. Reuters
Jefferies turned up the heat on National Grid this day, downgrading the stock to Hold from Buy. Analyst Ahmed Farman, in the note, flagged the rich valuation, a lull in regulatory triggers for the year ahead, and rising real rates as hurdles for the utility. The broker stuck a 1,410 pence target on the shares.
National Grid wasn’t the only one feeling the strain. SSE slipped 2.11% on Wednesday, closing at 26.85 pounds, while Severn Trent dropped 1.92% to 31.16 pounds. Both stocks lagged behind the broader market as investors pulled back from UK defensive utilities.
The UK’s Thursday selloff made the point clear. FTSE 100 fell 2.4%, hitting its lowest in two months. Nick Saunders, Webull UK’s chief executive, said policymakers were facing “a more important battle” with inflation than with low rates. Reuters
National Grid shareholders are staring down a clear risk: persistent strength in oil and gas prices, combined with potential Bank tightening, could drive further valuation strain, despite the company’s improved growth forecast. Should energy prices ease and yields stabilize, the stock might catch a break. For now, though, the macro backdrop is in the driver’s seat.
