The FTSE 100 tumbled on Tuesday, with UK stocks tracking a US tech sell-off amid heavy selling of SpaceX and other leading tech giants.
The tech-heavy NASDAQ closed down 1.3% overnight, and futures pointed to losses of more than 2% when cash markets opened on Tuesday.
SpaceX fell sharply overnight and is trading more like a penny stock than one of the world’s most valuable companies. SpaceX shares lost 16% yesterday and were set for a lower open today.
“The FTSE 100 was lower on Tuesday after yesterday’s tech sell-off in the US,” said AJ Bell investment director Russ Mould.
“The selling in SpaceX, as its trajectory starts to reverse following a blockbuster market debut, has had a knock-on effect on some of the UK vehicles with stakes in the business. The mining sector in London was also lower amid concern about the global economy.”
Although price action was being driven by happenings across the pond on Tuesday, UK politics were very much in focus as more Labour MPs signalled they could join the race to become the next Prime Minister.
The fact that the FTSE 100 managed to carve out gains yesterday as Keir Starmer resigned and only fell 0.3% today on the back of selling on Wall Street shows just how well markets have taken the prospect of Andy Burnham entering Number 10.
There still could be some twists and turns before a new Prime Minister is selected, but Burnham’s pledge to stick to current fiscal rules has reassured bond markets.
There were also signs of reassurance and resilience in the UK stock markets. While cyclical names fell and dragged the index lower on Tuesday, UK-focused stocks had a good showing with retailers and banks trading in the black.
Marks and Spencer and JD Sports were both more than 1% higher. Banks, Lloyds, and Barclays managed gains of 0.5%.
But the significance of the tepid gains for UK stocks was underscored by sharp declines for mining stocks. Antofagasta shares fell 6% and were the biggest fallers, and Anglo American shed 5% as investors hit the sell button on the FTSE 100’s riskier stocks.
Bunzl was the FTSE 100’s top riser, adding 2.8% on the back of an encouraging trading statement.
“After a year of pain caused by issues in its North American operations, distributor Bunzl has regained its footing and delivered good news. The timing is fortunate given speculation that activist investor Elliott has taken a position ahead of a potential campaign to drive change,” Russ Mould said.
“Bunzl has long been seen as a ‘steady as she goes’ business, delivering goods that companies need to run their day-to-day operations. Last year’s profit warning and share buyback pause took the shine off the stock. Bunzl fell to its lowest price to earnings ratio since the Covid global market sell-off in 2020 and left it vulnerable to either activist shake-up or a bid. One has subsequently emerged, and investors might now wonder if the other does too.”