The FTSE 100’s safe-haven attributes have been on display this week as memory chip and AI-related stocks sank globally, while London’s leading index managed to carve out gains.
The Footsie’s ascent was measured, but considering most other major indices are trading in red over the same period, UK investors focusing on their domestic market have done relatively well.
Memory stocks have taken a beating this week after astronomical gains, as the launch of a new Chinese LLM threatens a ‘Deepseek 2.0’ moment for the AI trade.
Escalation in the Middle East also hit sentiment as Iran and the US appeared to be moving towards engaging in a full-blown war.
London’s leading index was broadly flat at the time of writing after starting the session on the front foot.
“The FTSE 100 managed to shake off a big sell-off in Asian markets to trade modestly higher on Friday morning,” said AJ Bell investment director Russ Mould.
“The index’s contingent of defensive utilities and tobacco stocks, as well as its big energy names, helped it advance when many of its global counterparts are stuck in the mud.
“The news from the Middle East suggests that a restoration of the fragile peace in the region is some way off. Oil prices remain elevated, although have not yet threatened the $100 per barrel levels seen earlier this year.
“However, the renewed surge in energy markets is creating concern that the recent moderation in inflation will prove short-lived.”
This concern was reflected in the FTSE 100 on Friday, with a clear divide between cyclical and non-cyclical shares.
As highlighted by Russ Mould, the top of the leaderboard was dominated by those stocks considered ‘safer’ by investors. British American Tobacco was the top riser, adding almost 3%. Vodafone and Severn Trent were not too far behind.
Miners were among the worst hit. Antofagasta, Anglo American and Glencore were down between 1%-3%.
Burberry was the top faller after releasing a trading statement that failed to ignite investor confidence. The luxury brand recorded growth in key markets, but the outlook was less than convincing.
Adam Vettese, market analyst for etoro, says: “Burberry shares opened lower this morning after the release of its Q1 trading update, as investors weighed steady but unspectacular progress in the group’s turnaround.”
“The update showed further sequential improvement in comparable store sales, extending the momentum seen in the six months to March when the group returned to 2% growth for the year, with a strong 5% in Q4 driven by Greater China and the Americas. Management highlighted ongoing strength in core categories such as outerwear and scarves, alongside benefits from store productivity initiatives and e-commerce.”
“However, the market had hoped for clearer evidence of accelerating momentum or more bullish commentary on the outlook. With store traffic remaining challenging and the macro environment still uncertain, the update was viewed as in-line rather than a catalyst for upgrades.”