The FTSE 100 was broadly flat on Friday as investors assessed the latest wave of concerns about potential AI disruption that shook US stocks overnight.
London’s leading index was slightly weaker at 10,389 at the time of writing.
The selling that hit software stocks last week has spread from sector to sector this week, with price comparison companies feeling pressure before wealth management companies in the UK and US bore the brunt of panic selling.
US real estate management companies even felt the anxiety yesterday as investors fretted that their services could be replaced by AI.
“A gloomy session on Wall Street on Thursday put investors in a grumpy mood at the end of the trading week,” said Russ Mould, investment director at AJ Bell.
“Association with AI has gone from party to peril as investors reappraise what the technology means for companies.
“Some are concerned about excessive levels of spending and others fear AI will disrupt multiple industries. It all adds up to a cocktail of worries and that’s bad for market sentiment more broadly.”
But as Mould alludes to, the impact, so far, has been limited to sentiment and perceptions of future disruption, rather than real-world evidence of companies starting to lose out to AI start-ups.
Indeed, bargain hunters couldn’t resist the value FTSE 100 RELX offers after the group released a fairly strong set of results yesterday.
As one of the stocks most heavily hit by concerns about new tools from Anthropic, RELX’s results yesterday were a real litmus test of how companies were implementing AI and dealing with potential disruption. In many respects, results highlighted the company was successfully building out an AI-powered offering that was fuelling growth.
Although RELX shares were only slightly higher yesterday, the rally gained momentum on Friday, and shares added another 5%.
Other stocks swept up in the indiscriminate selling of FTSE 100 AI beneficiares including Pearson, Experian, and Sage, were also higher on Friday.
Experian rallied 3.5% while Pearson added 2%.
However, NatWest and the rest of the banking sector offset gains elsewhere after NatWest released results that failed to inspire a snap back from a heavy week of selling following the acquisition of Evelyn Partners.
NatWest shares were 2.6% lower as HSBC fell 2%. UK housebuilders were also among the stocks dragged the index lower.