A selloff of US tech and Asian shares weighed on global markets on Thursday, with the FTSE 100 dropping below 10,300 as China-focused stocks dragged the index lower.
London’s leading index was down 0.8% at the time of writing as investors ignored positive developments in the Middle East and focused on an AI-related selloff of US tech shares sparked by Broadcom’s results.
“Domestic pressure on Donald Trump to end the war with Iran and a reported ceasefire between Israel and Lebanon have swung the pendulum once again for markets,” says AJ Bell head of markets Dan Coatsworth.
“Selling on Wall Street last night and in Asia earlier today gave way to a more positive mood as trading began in Europe on Thursday.”
US tech shares were down in the dumps on Thursday with NASDAQ futures falling another 1% after a soft session yesterday. The losses were sparked by Broadcom’s results, which, despite beating analyst estimates, failed to meet investors’ sky-high expectations.
Matt Britzman, senior equity analyst, Hargreaves Lansdown, said: “Broadcom delivered another eye-catching update, but this was a classic case of very high expectations meeting a market that wanted perfection.
“Revenue was broadly in line, earnings beat, and AI demand remains extremely strong, with management pointing to another sharp step-up in AI semiconductor revenue next quarter. But with the shares down around 14% in pre-market trading, investors are punishing anything that falls short of exactly what they wanted to hear.”
In the UK, the FTSE 100’s Asia-focused contingent was the main drag on the indices as HSBC, Prudential, Rio Tinto, and Standard Chartered tumbled.
Concerns about the war in the Middle East and the selling of Asian chipmaker giants sparked the move, which looks a little drastic given the diversity of the FTSE 100 companies in question. But this may be an early sign of a reality check, as energy prices remain elevated and no lasting peace in the Middle East in sight.
Prudential was the FTSE 100’s top faller, losing an eye watering 8%. Standard Chartered fell 7%.
UK-centric stocks were among the best performers. JD Sports shares gained 3% and were the FTSE 100’s top risers. Housebuilders were also in favour as investors sought out value.