𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Stock prices in London closed mixed on Monday, with Middle East tensions, AI slowdown fears and caution ahead of a flurry of central bank meetings keeping investors on their toes.

In London, the FTSE 100 index ended up 47.13 points, 0.4%, at 10,697.57.

The FTSE 250 shed 141.25 points, 0.6%, at 23,834.48, and the Aim all-share declined 5.83 points, 0.7%, to 785.04.

In European equities on Monday, the Cac 40 in Paris dropped 0.8% and the Dax 40 in Frankfurt slipped 0.5%.

In New York, the Dow Jones Industrial Average was down 0.4% at the time of the closing bell in London.

The S&P 500 fell 0.7%, and the Nasdaq Composite declined 0.7%.

Leading tech stocks hit the brakes on Wall Street as a call from leading artificial intelligence executives to slow the technology weighed on chipmakers and other companies.

On Saturday, Anthropic chief executive Dario Amodei advocated for a co-ordinated slowdown of AI development to better understand the risks, drawing support from other industry leaders such as Sam Altman, who runs OpenAI, the owner of ChatGPT.

Chip makers including Nvidia, Advanced Micro Devices and Intel fell 3.1%, 5.9% and 5.4%.

But cybersecurity specialists Palo Alto and Crowdstrike benefited, rising 13% and 15% respectively.

On Monday, US President Donald Trump attacked what he called a “sick conspiracy” against AI, rejecting calls for regulation.

Mr Trump said the US needed to keep the lead on AI to beat superpower rival China.

“The only control or ‘guardrails’ that AI needs is a STRONG AND SMART (High IQ!) PRESIDENT, and the USA. has that, in spades!” Mr Trump said in a post on his Truth Social network.

Kathleen Brooks, research director at XTB, said if the warning from AI bosses is a sign that hyper scaling AI compute and infrastructure has reached its end point then it will have “massive repercussions” for financial markets, and it could also lead to a “sharp sell off” in chip stocks and other components of the AI trade.

“It is worth remembering that over 50% of the S&P 500’s sectors are AI-linked, and the top hyper-scalers make up a third of the weighting of the main US blue chip index.

“Any change in the AI trade will have big ramifications for US indices,” she noted.

In London, software stocks previously knocked back by fears of AI displacement thrived.

Accountancy software firm Sage advanced 5.3%, data provider London Stock Exchange Group jumped 2.9%, and Relx, which provides scientific, technical, legal and medical information and analytics, climbed 5.2%.

Elsewhere, attention was focused on events in the Middle East and upcoming central bank meetings in the US, UK and Japan.

On Wednesday, the Federal Reserve is expected to increase the target range for the federal funds rate by 25 basis points to 3.75% to 4.0%, reflecting a strong inflation print on Friday and chairman Kevin Warsh’s expressed determination to bring inflation back to the 2% target.

JPMorgan analyst Michael Feroli said: “We think it’s a closer call than the market is pricing, but at the end of the day the chair’s repeated stern warnings on inflation intolerance risk institutional credibility absent some action to back it up.”

In the UK, the Bank of England is expected to leave interest rates at 3.75%.

“Recent weeks have seen significant increases in wholesale energy prices, a larger rise in headline inflation than the bank had expected, and strong growth data,” Goldman Sachs analyst James Moberly said.

“At the same time, the unemployment rate has increased and there are still few signs of strong second-round effects.”

As such, Mr Moberly expects the Monetary Policy Committee to hold rates with a 6-3 vote “most likely”, though there is “some risk of a 5-4 split”.

The pound was quoted at 1.3481 dollars on Monday, down from 1.3523 dollars at the same time on Friday.

Against the euro, sterling rose to 1.1679 euro from 1.1648 euro a day prior.

The euro faded to 1.1541 dollars, from 1.1605 dollars.

Against the yen, the dollar was trading at 154.59 yen, up from 153.58 yen.

The yield on the US 10-year Treasury was quoted at 4.96%, widening from 4.93%.

It had earlier reached 5.01%, its highest level since October 2023.

The yield on the US 30-year Treasury was quoted at 5.34%, stretched from 5.32%.

Meanwhile, oil prices jumped after Saudi Arabia closed a key pipeline amid the Middle East war.

Brent oil was quoted at 108.30 dollars a barrel late in London on Monday, up from 104.73 dollars late on Friday.

Russ Mould, investment director at AJ Bell, said the price rise “adds to existing inflation fears which were stoked last week by the latest US consumer price index data remaining at elevated levels”.

In contrast, gold was quoted at 4,291.66 dollars an ounce on Monday, down sharply from 4,375.02 dollars on Friday.

Lower metal prices weighed on Antofagasta, down 5.4%, despite receiving an upgrade to “buy” from broker Berenberg.

Fresnillo, which fell 3.4% in light of the weaker gold price, announced that Mario Arreguin plans to step down as chief financial officer after a 37-year stint at the firm.

Rodrigo Sandova will succeed Arreguin as chief financial officer designate, with effect from next Monday.

Rising bond yields kept housebuilders under pressure, with Barratt Redrow down 3.3%, Persimmon 2.0% lower and Taylor Wimpey off 2.0%.

On the FTSE 250, GlobalData slumped 19% as the data, analytics, and intelligence firm warned full-year adjusted earnings before interest, tax, depreciation and amortisation will be below market expectations.

The biggest risers on the FTSE 100 were Sage Group, up 50.5p, at 1,008.5p, Relx, up 128.0p at 2,603.0p, GSK up 84.0p at 1,854.5p, Smith & Nephew, up 40.0p at 1,048.5p and AstraZeneca, up 446.0p at 12,154.0p.

The biggest fallers on the FTSE 100 were Halma, down 202.0p at 3,432.0p, Antofagasta, down 204.0p at 3,586.0p, Weir, down 122.0p at 2,600.0p, Fresnillo, down 102.0p at 2,912.0p and Barratt Redrow, down 9.3p at 276.2p.

Tuesday’s local corporate calendar has half-year results from Princes Group and full-year earnings from Keir Group and Alumasc, among others.

Tuesday’s global economic calendar sees a raft of data in China overnight, including industrial production, retail sales and unemployment.

In the UK, unemployment and average earnings figures are due for release with the New York empire state manufacturing index in the US.

– Contributed by Alliance News