The FTSE 100 jumped on the coattails of a US rally on Thursday after the NASDAQ broke through the milestone 20,000 mark to fresh record highs.
US tech shares have proved they still have the power to lift global investor sentiment. Strong sessions for Tesla and Google’s parent company, Alphabet, helped propel the NASDAQ to record levels, sending a wave of optimism through equity markets.
Alphabet shares rose after the tech giant announced its latest AI development.
“Alphabet unveiled Gemini 2.0 yesterday, its shiny new family of AI models that promises to be faster and smarter,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Alphabet sees these models as a step toward the next chapter in language models where they handle tasks on your behalf, with highlights like better multitasking, complex reasoning, and tool use. While it’s still early days for this tech, investors liked what they saw from a name that’s sometimes seen as being behind in the AI race.”
Although the FTSE 100 has next to no exposure to technology, hopes the US tech rally could continue helped lift sentiment.
“The FTSE 100 ticked higher on Thursday after US stocks chalked up another landmark. The Nasdaq index yesterday smashed through the 20,000 barrier for the first time,” said Dan Coatsworth, investment analyst at AJ Bell.
“The catalyst for the tech-driven rally was a benign inflation reading. This fuelled expectations for an interest rate cut when the Federal Reserve meets next week.
“The Fed is in tricky position given the uncertainty over the incoming Trump administration’s agenda and the scope for tariffs to revive inflationary pressures.”
A rate cut next week is far from nailed on, but it is the most likely scenario. However, the Federal Reserve’s approach to interest rates in 2025 will drive trade the accompanying commentary next week will have the power to move the dial for global stocks.
Positive developments in the US overnight provided a welcome distraction from the China headline-to-headline trade that has dominated the week so far.
At the time of writing, around half of the FTSE 100’s constituents were trading positively, with banks and utilities helping to support the index.
Diageo was the FTSE 100’s top riser after UBS switched its sell rating to buy with a price target of 2,920p. Diageo shares were 3.4% higher at the time of writing.
IAG continued its rip-roaring rally with another 2% rise, extending its 2024 gains to 89%.