The FTSE 100 was largely flat on Friday as falling banks offset relief around the AI trade after leading AI names rallied overnight.
Although the FTSE 100 dodged most of the fallout from this week’s AI volatility, investors may be disappointed it didn’t join a mini relief rally across Europe on Friday.
“The strings have been pulled back to the AI trade after a big player helped calm nerves about whether the mega spending spree on the infrastructure build-out will reap enough rewards,” explained Susannah Streeter, Chief Investment Strategist, Wealth Club.
“Nvidia’s Jensen Huang, who brings the tech world to attention whenever he has a mic, has justified his company’s investment in cloud infrastructure provider CoreWeave, saying its situation was improving. His intervention came after the company had been hit by a serious case of the jitters over its debt and financing deals.”
The German DAX was 0.9% higher at the time of writing while NASDAQ futures pointed to a slightly higher open after staging a comeback yesterday.
The FTSE 100 was down 8 points at the time of writing.
London’s leading index was almost immune to the AI jitters this week, but it isn’t immune to the Chancellor of the Exchequer lining up a tax raid on some of the UK favourite stocks – the FTSE 100 banks.
“Banking shares took a hit after speculation that Chancellor John Healey would increase tax on the sector,” said Russ Mould, investment director at AJ Bell.
“Barclays, Lloyds and NatWest all saw their share prices fall after reports that Healey might increase the current 3% surcharge on top of corporation tax back to the 8% level last seen in 2023. Doing so could potentially raise around £2 billion a year for public finances.
“Banks joined gambling firms and oil and gas producers in protesting against the idea of higher taxes in the UK, arguing such action could discourage investment and lead to job cuts. That would be counterproductive to the government’s drive to grow the economy.”
Lloyds shares were 2% lower at the time of writing, as NatWest dropped 1.9%.
The only stock down more than the banks was AstraZeneca, down 2.2%. Astra’s heavy weighting in the FTSE 100 meant there was little chance of a significantly positive session, especially as few stocks rose more than 1% on Friday.