FTSE 100 leads Europe higher as bond markets calm

The FTSE 100 outperformed global peers on Thursday, encouraged by domestic economic data and lower bond yields, benefiting from a lower exposure to technology stocks, which continued to be volatile.

In London, the FTSE 100 index ended up 115.49 points, 1.1%, at 10,840.35. The FTSE 250 climbed 64.00 points, 0.3%, to 24,424.77, but the AIM all-share fell 2.82 points, 0.4%, to 765.09.

London’s gains came as investors shifted away from technology stocks amid fears about the future of capex spending, Chinese competition and expected returns from artificial intelligence.

Kathleen Brooks, research director at XTB said the AI trade was experiencing a “major shake-out”, and the market was ignoring strong earnings beats as investors fret about strong inflation, amid an increase in Fed rate hike bets.

She added that when the “AI trade sells off, the UK is the harbour in the storm”.

In European equity markets on Thursday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt added 0.3%.

In Frankfurt, semiconductor firm Infineon lost 4.8%, while Siemens Energy, which provides power solutions to data centres, shed 2.6%, both well above earlier lows.

In New York, markets were mixed. The Dow Jones Industrial Average was up 1.0% at the time of the closing bell in London on Tuesday. The S&P 500 edged up 0.1%, and the Nasdaq Composite faltered 0.4%.

On Wall Street, chip makers Nvidia, Advanced Micro Devices and Broadcom fell 2.2%, 4.4% and 1.9% respectively.

“Tech investors are getting uncomfortable with the amount of debt being used to fund the AI build-out,” said Dan Coatsworth, head of markets at AJ Bell.

He added: “There is a growing fear that big names in the tech space are running too fast, and they’re primed to trip up. Reports about Anthropic’s third-quarter revenue suggest it isn’t growing as fast as expected, which added to fears that the AI euphoria might be hard to sustain.”

The Financial Times reported that Anthropic has told investors that its third-quarter revenue rose nearly 50% to 16.8 billion dollars.

Revenue increased from 11.5 billion dollars in the second quarter, although growth slowed sharply from the previous quarter, when revenue more than doubled from about 4.8 billion dollars.

More encouragingly for equities, bond yields eased despite the higher US inflation figures on Wednesday.

The yield on the US 10-year Treasury was quoted at 5.10% on Thursday, narrowed from 5.26% at the same time on Wednesday. The yield on the US 30-year Treasury was quoted at 5.42%, down from 5.57%.

David Morrison, analyst at Trade Nation, said it appeared that comments from Federal Reserve members, vice chairwoman for supervision Michelle Bowman and San Francisco Fed president Mary Daly, calmed investors somewhat by persuading them that there was no need for the Feds to rush to raise rates again this month, following September’s increase.

The pound was quoted at 1.3254 dollars, up from 1.3152 dollars. Against the euro, sterling nudged up to 1.1828 euro from 1.1826 euro.

The euro firmed to 1.1204 dollars from 1.1121 dollars. Against the yen, the dollar was trading at 158.16 yen, down from 158.86 yen.

In the UK, figures showed that the economy proved more resilient than expected in August, posting surprise growth as a rebound in manufacturing offset weakness in services and construction.

August’s minor growth, which defied forecasts of a decline, followed a more convincing stride made in July and means that UK GDP is on track to top a Bank of England forecast for the quarter ended September 30.

Gross domestic product rose 0.1% month-on-month in August, the Office for National Statistics said, beating expectations for a 0.1% decline. Growth slowed from 0.4% in July, while June’s expansion was revised up to 0.4% from 0.3%.

Rob Wood at Pantheon Macroeconomics said: “We think GDP is on track to grow by a somewhat hard to believe 0.7% quarter-to-quarter in Q3, above the MPC’s latest forecast of 0.4%, and far above its expectation from just a couple of months ago of 0.1%.”

Mr Wood said the main short-term risks remained another hit to growth from uncertainty surrounding the October budget and higher energy costs increasingly dragging on consumers.

“But a relatively early fiscal statement and a chancellor aiming for a ‘beige’ Budget mean we should see a smaller growth hit than last year,” he added.

Credit checker Experian led the FTSE 100 risers, up 5.9%, with telecoms firm BT up 4.3%, and accountancy software provider Sage up 5.6%.

JD Sports Fashion climbed 4.3% as it hosted analysts in Orlando.

While there were no updates to financial guidance or targets, management focused the discussion on how they plan to drive growth and profitability in the US sporting goods market.

Computacenter, a beneficiary of strong data centre spending, led the fallers, down 5.6%. Technology-focused trusts Polar Capital Technology and Scottish Mortgage Investment Trust declined 4.7% and 1.2% respectively.

Antofagasta fell 4.1% as it reported lower third-quarter output and 2027 guidance than hoped.

The London-based miner focused on Chile sees copper production in 2027 between 630,000 and 690,000 tonnes compared to company-compiled consensus of 692,000 tonnes.

“Given the weaker than expected 2027 copper output guidance, we expect 2027 consensus Ebitda could fall by mid single digits,” said JPMorgan analyst Patrick Jones.

The miner is also facing strike action from two unions at its Centinela mine.

On the FTSE 250, THG leapt 16% as it edged up 2026 earnings guidance and said that whey prices were easing, which should support margins in its Protein division.

Dunelm jumped 7.9% as it backed guidance and said sales had picked up after a slow start to the September quarter.

“Following a series of recent downgrades, today’s reiteration of FY27 [pretax profit] expectations has brought relief,” said Georgina Johanan, retail equity analyst at JPMorgan.

Also in the green, XPS Pensions rose 7.7% after saying it expected full-year results to come in slightly ahead of expectations, following strong revenue growth in the first half.

Heading lower, Weybridge-based packaging firm Mondi shed 8.1%.

It reported that input costs were higher than expected as energy-related costs continued to rise through the third quarter, along with anticipated increases in wood costs in central and eastern Europe.

Gold was quoted at 4,152.39 dollars an ounce, up from 4,089.77 dollars.

Brent oil was quoted at 106.33 dollars a barrel, up from 105.67 dollars.

The biggest risers on the FTSE 100 were Experian, up 159.0p at 2,855.0p, Sage Group, up 60.5p at 1,133.5p, Compass Group, up 1.3p at 32.7p, JD Sports Fashion, up 3.8p at 92.2p and BT Group,up 8.4p at 206.9p.

The biggest fallers on the FTSE 100 were Computacenter, down 305.0p at 5,160.0p, Polar Capital Technology Trust, down 31.5p at 646.5p, Antofagasta, down 146.0p at 3,426.0p, Weir, down 108.0p at 2,614.0p and Ithaca Energy, down 7.2p at 291.6p.

There are no significant events scheduled in Friday’s local corporate calendar.

Friday’s global economic calendar has housing starts data in Canada, eurozone inflation figures and a US industrial production report.

In the UK, Bank of England Governor Andrew Bailey is due to give a speech.

Contributed by Alliance News.