The FTSE 100 rebounded on Tuesday as London’s leading index shrugged off the emergence of DeepSeek in a broad rally led by UK-centric stocks.
A minor rebound in US tech shares on Tuesday went a long way toward lifting sentiment globally as the fallout from sharp declines in stocks such as Nvidia looked to be contained for now.
“Panic on Wall Street sent US tech stocks into a deep slump yesterday and prompted a big debate about whether the AI infrastructure winners will now be dethroned,” said Russ Mould, investment director at AJ Bell.
“Nvidia crashed by nearly 17% which sounds dramatic but only pulled the stock back to October 2024 levels. Someone who has owned Nvidia shares since before summer last year should still be sitting on decent gains, even after yesterday’s pullback.
“It looks like the Wall Street bloodbath was short-lived as Nvidia’s shares are trading 1.4% higher in pre-market trading and futures prices point to small gains for both the Nasdaq and S&P 500 today.”
A slight uptick in sentiment from the US coupled with interest rate traders’ pricing of more UK interest rate cuts in 2025 created the perfect backdrop for a rally in UK-centric stocks.
A softer UK economic outlook is translating into a shift in expectations for the number of interest rate cuts this year, which is feeding through into interest for companies reliant on the UK for income.
Housebuilders were a big beneficiary of hopes of more interest rates, with Barratt Redrow and Persimmon rising over 2%. Howden Joinery rose 3% in sympathy.
JD Sports jumped 4% as bargain hunters picked up the stocks after a sharp fall following a profit warning early in 2025.
A broker upgrade to ‘buy’ for ‘hold’ for Spirax sent shares in the engineering group 4% higher.