The FTSE 100 rose on Monday as investor sentiment improved, while Computacenter soared on a profit upgrade.
That said, it’s probably too early to say we’re out of the woods yet, and today’s bounce could prove short-lived should there be an escalation in the Middle East or US tech comes under further pressure.
This week’s UK budget and the election in Brazil will add a political element to this week’s trading.
“The FTSE 100 made a solid start to Budget week as oil prices eased back and despite weak trading across Asia,” said AJ Bell investment director Russ Mould.
“The key yardsticks for how markets are feeling about the UK ahead of Chancellor John Healey standing at the despatch box – the pound and gilts – are holding steady two days out.
“The political situation is more volatile in Brazil, with the surprise victory of incumbent Luiz Inacio Lula da Silva in a knife-edge presidential election over his opponent Flavio Bolsonaro – perceived as more market-friendly – putting futures in Brazilian currency, bond and equity markets under pressure.”
The follow-through to UK markets from Brazil looks to be minimal so far.
The vast majority of FTSE 100 shares were higher at the time of writing, with energy and utilities bringing up the rear. BP was the top faller.
Computacenter was the FTSE 100’s top riser after releasing a well-received profit-guidance upgrade, driven by strong demand from some of the world’s leading AI firms.
“There may be wider doubts about the sustainability of the current AI spending splurge but for now Computacenter is one of a small but successful cohort of UK-listed names benefiting from the theme,” Russ Mould said.
“A big upgrade to full-year profit guidance is matched in significance by a huge uplift in the order book to record levels, up by a third since the end of June.
“Computacenter is effectively acting as a middleman in the AI infrastructure build-out, procuring, assembling and installing the complex hardware required to run artificial intelligence models.”
Computacenter shares were 10% higher shortly before midday in London.
The London Stock Exchange Group and Experian were in negative territory as Computacenter rose, highlighting two buckets of FTSE 100 stocks: those that benefit from improved AI sentiment, such as Computacenter, and those susceptible to disruption concerns, like London Stock Exchange Group and Experian.
Babcock shares were 4% to the good amid a general bid in defence stocks across Europe. BAE Systems were 2% higher.