The FTSE 100 held firm above the 8,500 level on Wednesday as investors prepared for a swathe of US tech earnings in the wake of the emergence of AI model DeepSeek and the Federal Reserve’s interest rate decision later today.
London’s leading index has so far been largely immune to the volatility in major US tech shares after the Chinese AI chatbot flew to the top of App Store downloads.
However, earnings from Tesla, Microsoft, Meta and Apple over the next couple of days could provide more of a catalyst for global equities as the world’s largest technology companies provide insight into underlying demand from their customers.
It must be noted that the likes of Apple, Meta, and Amazon were largely unscathed by DeepSeek, with the impact felt most by chipmakers such as Nvidia.
“Calm has descended on financial markets after the AI upheaval, which triggered a wave of selling, with investors seeing sharp falls as a buying opportunity,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Focus is switching to today’s key Fed meeting and the direction of interest rates in the US. Rates being kept on hold is seen as a slam dunk prospect but there will be keen interest in chairman Jerome Powell’s words about the future path ahead, particularly given recent jitters about the prospects of a rate hike this year, which still right now looks unlikely.”
With a raft of companies worth over a trillion dollars set to update the market in the very near term and the Fed’s interest rate decision this evening, traders seem unlikely to take big bets on stocks, and the FTSE 100 ticked gently higher Wednesday.
Recent reports that investment banks are now pencilling in five rate cuts by the Bank of England in 2025 make UK-centric stocks an interesting place to deploy capital. This was again evident in gains for Marks & Spencer, NatWest and British Land on Wednesday.
There has been a relatively sharp reversal in UK interest rate expectations in early 2025 that has all of a sudden made the sell-off in some retailers, banks, and housebuilders look overdone.
IAG rose and BP fell as traders reacted to a falling oil price on the back of Trump tariff concerns. After a relatively benign first few days in office, Trump is making up for lost ground in disrupting financial markets with his latest suggestions threatening to flood the market with supply.
The Scottish Mortgage Investment Trust rose for a second day as US tech shares recovered. The FTSE 100 investment trust counts SpaceEx, Amazon, and Meta in its top holdings and is the UK’s premier vehicle for gaining exposure to US tech shares with a market cap of nearly £13bn.