The FTSE 100 eased back from a record high on Wednesday as UK-centric sectors, including retailers and housebuilders, weighed on the index.
London’s leading index had started the session higher, but gains evaporated as the session progressed, leaving it trading marginally negative.
UK investors digested several conflicting narratives on Wednesday, as US shares remained choppy and the UK macro picture grew increasingly cloudy.
Concerns around AI lingered in US stocks yesterday after Softbank announced the sale of its Nvidia stake and AI infrastructure play Coreweave issued negative guidance.
“SoftBank’s decision to sell its entire stake in Nvidia dragged the chip maker lower and also saw selling in the Japanese tech investor,” said AJ Bell investment director Russ Mould.
“This, plus the negative reaction to yesterday’s weaker than expected full-year guidance from AI infrastructure provider CoreWeave, suggests some growing nervousness about valuations in the artificial intelligence space.”
Notwithstanding weakness in AI stocks yesterday, US futures rose on Wednesday as attention shifted to the end of the US government shutdown. The NASDAQ was set to open 0.5% higher when cash trading begins.
“Macro news has also provided a tailwind for markets – with the US shutdown nearing resolution after a record 43 day run,” said Emma Wall, Chief Investment Strategist, Hargreaves Lansdown.
The FTSE 100’s decoupling from US futures can be attributed to ongoing concerns about the UK economy. Poor jobs numbers continued to weigh on retailers Tesco, Next, and Sainsbury, while housebuilders were hit by a soggy update from Taylor Wimpey.
“Taylor Wimpey’s sales momentum slowed in the third quarter, as uncertainty ahead of Rachel Reeves’ Budget later this month has been weighing on the housebuilding market,” Emma Wall said.
“Unsurprisingly, buyers are holding off from signing on the dotted line in case the Chancellor’s announcement brings beneficial tax changes to property buying. With Christmas hot on the heels of this delayed Budget, disincentivising people to move during the festive period, there’s unlikely to be much of a pick-up in sales activity until the new year.”
FTSE 100 Persimmon and Berkeley Group fell between 2%-3%.
SSE was the FTSE 100’s top riser after announcing a capital raise to fund a proportion of its £33bn investment in its network. SSE rose over 12% as the renewables energy provided the capital raise alongside a strategy update and interim results.