The FTSE 100 has shaken off any concerns about disappointing Nvidia earnings and pushed higher on Thursday with banking and consumer stocks among the top risers.
Although Nvidia shares fell after the company announced results last night, the drop can be attributed to profit-taking rather than any major concerns with the numbers. There certainly wasn’t anything in the numbers to suggest the AI theme was coming to an end or that there was any slowdown in momentum.
“The FTSE 100 ticked higher despite a technology-led sell-off in the US overnight and a negative after-hours reaction to Nvidia’s results – the lack of tech stocks in the UK index proving a rare boon on Thursday morning,” said AJ Bell investment director Russ Mould.
“Consumer-facing names were getting some love from the market along with resources stocks on a quiet day in London for corporate news.”
We mentioned yesterday that the FTSE 100 has shown remarkable resilience throughout August’s volatility. Although there are many occasions that investors wish they had a greater weighting to US tech than FTSE 100, today’s 0.3% gains for the FTSE 100 is a reminder of the defensive nature of the index and its ability to preserve value when other markets are under the cosh.
Banks rebound
UK banks rebounded a day after a comment in an FT article suggested the Labour government could be eyeing up banking profits in their upcoming tax raid budget.
“UK banking stocks came under some pressure yesterday after reports suggested the new government may be looking at additional taxes on the sector,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“There’s precedent here, the sector already suffers from elevated taxes in the form of the bank levy and corporation tax surcharge. Details are thin on the ground but given any tax would likely be UK focused, this would impact domestic players like Lloyds and NatWest more so than those with a global presence.”
Any concerns about the impact of additional taxes were short-lived, as the government itself is yet to signal that it was planning additional taxes on banks. Lloyds shares rose 1%, and Barclays ticked 1.6% higher. After a strong rally in recent weeks, things could become very interesting for banking stocks should Rachel Reeves drop in any hints to back up yesterday’s jitters.
Diageo was the top faller after one of its peers posted soggy results. Diageo has released a series of disappointing updates, and it appears that peers are experiencing their problems, suggesting that its woes may persist.