The FTSE 100 opened up higher on Friday, which was at odds with a sell-off in the US technology that saw investors rotate out of stocks such as Nvidia, Tesla and Meta into an array of sectors that have been overlooked in the recent rally.

The interest in more ‘traditional’ sectors helped spark a rally in European indices that aren’t dominated by technology companies and have a greater exposure to the wider economy.

“The tech-light FTSE 100 has opened higher, taking a cue from yesterday’s session in overseas markets,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“In a rare occurrence of late, the S&P 500 equal weight index, which is less focussed on the technology-dominated mega-caps, outperformed the headline S&P 500, climbing 1.1% while the latter fell 0.9%. Tesla fell 7.4%, giving up much of the gains seen so far this month, and Wall Street darling NVIDIA’s shares were down 5.6%. Given its staggering performance on all but the shortest time horizons, some profit-taking and indeed diversification is not unhealthy.”

There was a notable interest in cyclical FTSE 100 shares on Thursday, with Rightmove topping the leaderboard, followed closely by JD Sports.

The risk-on nature of trade on Friday was reinforced by the selling of defensive sectors such as utilities and precious metals stocks. United Utilities was the top faller, down 1.7%, while Severn Trent retraced some of yesterday’s gains.

Attention will be on the US session and whether AI-related stocks can bounce back from the sell-off overnight, and if buying in the across the rest of major indices continues.

Investors will also be mindful a string of UK data suggests the economy isn’t as weak as people first thought putting the chances of an interest rate cut next month at risk.

“Right now, a strong economy is a bit of a double-edged sword for MPC policymakers assessing which way they will jump come 1 August,” said AJ Bell head of financial analysis Danni Hewson.

The FTSE 100 rose on Thursday after UK GDP beat expectations and the FCA announced new listings rules which combined to help improve sentiment around UK stocks.

UK GDP grew faster than expected in May as the construction industry surprised the naysayers with a boost in activity. The UK’s obsession with the weather has much broader implications than the subject of small talk and was a key factor in May’s strong GDP reading.

“May’s warmer weather meant the sun shone on the construction industry in May. The sector grew by 1.9% in volume terms in May 2024, following a 1.1% fall in April with increases in new work and repairs and maintenance keeping builders busy,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

London’s leading index was 0.25% higher at the time of writing, although the housebuilders didn’t join a rally largely driven by utilities.

“As England football fans nurse some headaches, UK markets have opened higher after GDP figures came in better than expected and Wall Street continued on its record run,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“GDP grew by 0.4% in May, compared to a consensus of 0.2%. The consumer-led recovery is taking shape, buoyed by the return of real income growth and improved housing activity. The double-edged sword for markets is that if GDP runs too hot, it’ll likely make the Bank of England’s rate-cutting decision a little tougher.”

Questions about the possibility of a Bank of England rate cut were reflected in a stronger pound, which kept a lid on gains in overseas earners.

FTSE 100 gainers

The London Stock Exchange Group rose after the FCA announced a revision to its listing rules to help promote London as a listing destination.

“These changes should be welcomed, as they will with other recent changes (e.g. British ISA) increase the attractiveness of the UK equity market,” said James Lowen, Senior Fund Manager of the JOHCM UK Equity Income Fund.

“However, the changes to date have been incremental, and more will need to be done e.g. mandated domestic allocations for pensions funds, removal of stamp duty, to fully restore the UK market competitiveness on the World stage and remove the material valuation discount the UK trades on, that itself, puts off new companies listing on the market.”

Severn Trent was the top riser after releasing a positive trading update in which the group said performance was in line with expectations and outlined plans for investment in infrastructure.

“Severn Trent has reported another strong start to the year and remains on track to meet guidance forecasts. However, there are some potential problems for the company bubbling beneath the surface,” said Mark Crouch, analyst at investment platform eToro.

“A distinct lack of investment in the country’s water infrastructure has almost become a throwaway line in recent years, with water companies accused of prioritising profits over safety and quality while running something of a monopoly, given the lack of competition.”

Severn Trent shares were 4% higher at the time of writing.

Tekcapital’s Guident has been awarded a grant from the Space Florida-Israel Innovation Partnership program. The project aims to incorporate low-latency satellite connectivity into Guident’s autonomous vehicle remote monitoring service, helping improving self-driving vehicle safety and reliability.

Set to begin in July 2024, the initiative will utilise non-geostationary satellite technology to create a communication system between autonomous vehicles and remote control centres. The technology is aimed at addressing limitations in terrestrial network coverage, allowing for continuous operation of self-driving vehicles in all weather types and geographical areas.

Tekcapital shares rose after the news was released on Thursday.

Guident is collaborating with Israeli satellite communications company NOVELSAT on this project. NOVELSAT specialises in next-generation content connectivity solutions and will contribute its broadcast and broadband technologies to the project. The partnership aims to enhance network capabilities for autonomous transportation.

The project focuses on developing a system architecture that combines artificial intelligence with satellite communications intended to improve the safety, efficiency, and reliability of autonomous vehicles, which could influence the future of transportation.

As the autonomous vehicle industry develops, Guident’s Space Florida-supported project is aimed at addressing challenges in vehicle communication and control, promoting the adoption of self-driving vehicles through road safety and efficiency.

“At the heart of this project is our commitment to advancing teleoperation safety through rigorous research and testing. We aim to ensure the highest safety and performance standards for autonomous vehicles equipped with this pioneering communication system,” said Dr. Dennis Morgen, Guident’s Vice President for Product and Project Management commented.

“This grant will propel us forward in developing an effective remote monitor and control solution with Space Florida’s invaluable support and strategic expertise.

“This project marks a significant milestone in Guident’s dedication to innovation in autonomous vehicles and monitoring solutions. With a talented team of researchers, engineers, and industry experts, we believe Guident is poised to impact the future of AV transportation.”

The industry has broadly welcomed new FCA rules to attract exciting companies to London’s exchanges, but there is a general consensus that the changes should be the beginning of a comprehensive package of measures to improve London’s standing on the global stage. 

The FCA have published new rules for listings that aligns the UK with international markets in an effort to bolster London’s ailing equity markets.

The policy statement released today, beginning with ‘The UK’s capital markets are the engine room of our economy’, outlines an array of changes to listings rules, including amendments to shareholder voting requirements and abolishment of the ‘premium’ and ‘standard’ lists, which are to be replaced by a single category.  

UK authorities have been under pressure to act to support London’s capital markets, and today’s FCA policy statement is a direct result of initial work started by the last government.

“A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors. That’s why we are acting to make it more straightforward for those seeking to list in the UK, while retaining vital protections so investors can help steer the businesses they co-own,” said Sarah Pritchard, Executive Director, Markets and International, at the FCA.

“Regulation is only part of the answer in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list. We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market and thank everyone who has contributed to this work so far.”

With the FCA doing their part to help promote the UK’s capital markets with these early and targeted rule changes, the industry will also have to do theirs to capture the interest of global companies seeking a listing.

“The FCA has simplified the rules for companies looking to list in the UK,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown. “This comes after the UK has been shunned by companies, both new and existing, due to an overcomplicated system and valuations that lag some of the overseas markets on offer. Simplified listing rules are a first step, but there’s still more work to be done if the UK wants to regain a reputation for nurturing exciting new businesses.

London was once seen as a global power house for international companies seeking to raise capital. However, the number of companies listed in London has plummeted and the IPOs have slowed to a snail’s pace. 

The reaction to today’s rules changes has been positive and seen as a step in the right direction, yet some signal the new Labour government has its work cut out to take London back to its former glory.

“Any policy change that can incentivise or encourage more firms to list in the UK should be welcomed with open arms,” said Dan Moczulski, Managing Director UK, eToro.

“There is a lot of talk about growth from our new government right now. To deliver it, we need a thriving capital market. This requires an environment where companies see the UK as an attractive place to list, and where investors want to invest. 

“The virtuous cycle is clear: more companies listing in the UK attracts more investors, both domestic and global, boosts share prices, and generates more wealth, which in turn encourages even more companies to list. This is arguably the holy grail for our economy in terms of growth. While Jeremy Hunt set his sights on this goal, it’s now up to Rachel Reeves to make it a reality. Hopefully these new rules can help generate momentum for further policy initiatives, laying the foundation for a more dynamic and prosperous UK capital market.”

The FTSE 100 was firmly higher on Wednesday as the index took its lead for the Asian and US sessions which closed at, or very near, record highs.

London’s flagship index was 0.6% higher at the time of writing on Wednesday.

“The FTSE 100 regained some of the ground lost yesterday as a combination of airlines and precious metals miners helped give the market a lift,” said AJ Bell investment director Russ Mould.

“This followed gains in Asia and on Wall Street overnight, with Japan’s Nikkei 225 attaining a new record level.

“Testimony from Federal Reserve chair Jerome Powell before the US Senate saw him flag a return to normality in the labour market. While he made no commitment on rate cuts, jobs data is one of the most important influences on the Fed’s decision making because tight labour market conditions and rapidly rising wages can lead to inflation becoming entrenched”

The Fed chair’s testimony was shrugged off by markets which continue to fixate on AI-related technology shares propping up US indices such as the S&P 500.

“US indices are still hanging close to record highs, with enthusiasm over AI possibilities and hopes for a soft landing for the economy still buoying sentiment,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Eyes will now be drawn to tomorrow’s Consumer Price Inflation report for indications about the future direction of travel. Another shift lower in headline inflation is expected, which should help maintain the largely optimistic outlook. A reading of 3.1% year-on-year is expected in June, down from 3.3% in May.”

The FTSE 100’s gains were broad on Wednesday, with all but 13 constituents trading in positive territory at the time of writing.

Airlines were among the top gainers with IAG soaring 3.4% and Easyjet adding 2.7%. IAG was the beneficiary of a broker upgrade, and Easyjet embarked on the trip higher in sympathy.

One of the few fallers was Barratt Developments after the housebuilder said it expected completions to fall again next year after a pretty dismal year’s trading in 2024.

“Barratt’s full-year trading update showed that it’s hard to build momentum when the entire housing market has been on unstable ground. The group completed around 14,000 new homes this year, which was towards the top end of group guidance, but still marks a big drop off from the prior year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Buyers are very sensitive to mortgage availability and affordability pressures. Although there have been improvements on this front over the second half of the year, further easing of mortgage rates will be necessary for activity to pick up significantly.”

Barratt Developments shares were down 1.3% at the time of writing.