London, March 21, 2026, 15:08 GMT
National Grid shares in London dropped to 1,233 pence by Friday’s close, slipping 3.1% and notching a third day of losses as traders dumped utilities facing higher borrowing costs. The FTSE 100 also shed 1.4% on the day — that’s three weeks down in a row for London’s benchmark.
This shift stands out, undercutting what had seemed a sturdier narrative from the company just weeks earlier. Back on March 2, National Grid projected adjusted earnings per share growth of 13% to 15% by 2027 as the new UK regulatory cycle kicks off. Still, by Friday’s close, the shares had dropped roughly 13.7% from the 1,428.5p peak reached on that same day.
Interest-rate expectations did the heavy lifting. The Bank of England kept rates parked at 3.75% on Thursday, cautioning that tensions in the Middle East might push inflation higher. That was enough for traders to start betting on two quarter-point rate hikes before year-end. “The risk of inflation is a more important battle at this point,” said Webull UK CEO Nick Saunders. Reuters
The 10-year UK government bond yield topped 5% by Friday, marking levels not seen since the global financial crisis as traders recalibrated bets on when central banks might ease up. “Expectations for a rate cut are fading fast,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. ING’s Padhraic Garvey flagged the risk of “a further build-up” in pressure if the war persists. Reuters
Energy’s the spark here. With the Strait of Hormuz effectively shut, Reuters reported on Saturday, a hefty 20% of the world’s oil and LNG shipments have been stopped since Feb. 28. Britain faces outsized risk: roughly 30% of its electricity still comes from gas, and over 70% of British homes rely on it for heat. Though household bills are reviewed quarterly, some analysts in the Reuters report see the price cap jumping 10% come July.
The environment hits National Grid particularly hard; as a capital-intensive regulated network operator, it’s exposed. Reuters market data put its total debt at 47.5 billion pounds as of end-2025. The company operates electricity and gas networks across Britain and the northeastern U.S., so any move higher in funding costs grabs investors’ attention—despite revenue staying relatively steady.
Losses spread across the sector. SSE slid 3.0% on Friday, United Utilities dropped 2.2%. The European utilities index tumbled 2.7% as investors pulled back from these defensive, dividend-paying names.
Brokers started sounding the alarm. On Wednesday, Jefferies analyst Ahmed Farman cut National Grid to hold, setting a 1,410 pence price target. He pointed to the stock’s premium price and flagged higher real rates as a drag on sentiment.
There’s room for a swift turnaround in the bearish view if the energy shock fades. Over the weekend, Reuters reported Iranian gas exports to Iraq are back online, and Tehran signaled it’s prepared to allow Japanese-linked ships through Hormuz. Meanwhile, Prime Minister Keir Starmer plans talks with senior ministers and Bank of England Governor Andrew Bailey next week to address the war’s squeeze on living costs. But with supply risks lingering and rate expectations still rising, National Grid shares could remain under pressure, despite the company’s March outlook upgrade.
