The FTSE 100 was dragged lower on Monday as concerns about the US tech sector crept into European equities.
Wobbles started in Nvidia last week after the chipmaker tanked on Friday. This led to a lower close in US equities, sapping some of the enthusiasm for technology shares. Weakness continued on Monday, with Meta falling 3% as the SP 500 started the session in the red.
Although the US tech sector fundamentally has little to do with UK shares, the ‘magnificent 7’ has been a source of optimism for global equity traders. Cracks are starting to appear in the AI-inspired rally, and traders are reacting accordingly.
With a lack of UK-centric news to buoy markets, the Non-Farm Payrolls played on investors’ minds as questions around when the Federal Reserve would first cut rates dented sentiment.
“The UK index’s limited tech exposure may have spared it from losses given the weakness on Wall Street originated in that sector. Artificial intelligence star Nvidia was a notable underperformer as investors absorbed a mixed jobs report,” said AJ Bell investment director Russ Mould.
“The influential non-farm payrolls data was a real curate’s egg of a release. The headline number was higher than expected but revisions to previous data suggested the unemployment rate was at its highest in two years. Lower wage growth will have encouraged the idea rate cuts are on the way but the hints at a cooling economy suggest the landing may not be as soft as the market would have liked.”
Entain was the FTSE 100’s biggest faller, losing 3% and extending a losing streak, which has seen the betting company lose almost 30% of its value.
St James’s Place was also a heavy faller after several brokers lowered their price targets for the beleaguered wealth manager.
The best performers on Monday were shares that had suffered weakness over the past few weeks. Miners and Imperial Brands were stronger.
Housebuilders were among the top risers as bargain hunters stepped into weakness caused by Jeremy Hunt’s dull budget. Rightmove also joined the action.
Admiral was the FTSE 100’s top gainer after Berenberg raised its target to 2,973p from 2,961p. Admiral shares were 3% higher.
