London stocks benefit from strong earnings and tech sell-off
The FTSE 100 reached a new intraday record on Wednesday as strong corporate results and investor rotation away from technology and semiconductor stocks supported the UK market.
The UK’s leading blue-chip index climbed as high as 10,951 points during morning trading, its strongest level since February 27. It later eased slightly but still closed 0.3% higher at 10,908 points, just below its previous record closing level of 10,910 points.
FTSE 100 shielded from global technology declines
The FTSE 100 has been relatively protected from the global sell-off affecting technology stocks because of its heavier exposure to financial and energy companies rather than semiconductor and artificial intelligence firms.
Investor concerns over the scale of AI spending have triggered declines across global technology markets, particularly in Asia and the United States. However, London’s benchmark index has benefited from strong performances among traditional sectors.
Standard Chartered, the Asia-focused bank, and mining giant Rio Tinto both announced increased shareholder returns on Wednesday, supporting market sentiment.
AI stocks continue to decline amid spending concerns
The FTSE 100’s gains came as artificial intelligence-related companies suffered another day of losses due to concerns about whether current levels of AI investment can deliver sufficient returns.
Semiconductor markets were particularly affected, with South Korea’s Kospi index experiencing significant volatility due to disappointing results from chipmaker SK Hynix.
The index fell as much as 12.6% before recovering, eventually closing down 6%. The decline followed a nearly 11% drop the previous day, bringing the index close to its lowest level since early April.
Trading was temporarily halted for 20 minutes for the second consecutive session after an 8% decline triggered a market-wide circuit breaker.
SK Hynix results disappoint investors
SK Hynix, one of the world’s leading producers of advanced memory chips used in AI data centers, reported record second-quarter profits but failed to meet investor expectations.
The disappointment triggered a sharp sell-off, with shares falling as much as 20% before recovering to close around 10% lower. Fellow chipmaker Samsung Electronics also declined, ending the session down 5%.
Together, SK Hynix and Samsung represent more than half of the market capitalization of South Korea’s Kospi index, making their performance highly influential for the broader market.
Analysts said the reaction reflected growing concerns about how long technology companies can continue increasing spending on artificial intelligence infrastructure.
“SK Hynix delivered strong results, but in today’s AI market strong is no longer enough,” said Gary Tan, portfolio manager at Allspring Global Investments.
Investors shift toward safer technology stocks
The decline in AI-related shares also affected US semiconductor companies, with Intel, AMD, Sandisk, Western Digital and Seagate Technology all recording losses on Wall Street.
Apple benefited from the market rotation as investors moved away from AI-focused stocks. The company’s shares briefly pushed its valuation above $5 trillion, making it only the second company in history to reach that level.
Shares of Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, also declined by 3% in Taipei.
Retail investors accelerate semiconductor sell-off
Analysts noted that smaller investors had played a major role in driving semiconductor stocks higher during the recent AI rally, with some using borrowed money to increase their exposure.
While this helped fuel gains during the previous month’s surge, it has also intensified the recent correction as investors have withdrawn funds from the sector.
South Korea’s finance minister Koo Yun-cheol said the government was reviewing possible market stabilization measures following the sharp declines.
Strong earnings continue to support UK stocks
Russ Mould, investment director at AJ Bell, said the FTSE 100 benefited from its limited exposure to technology and artificial intelligence companies, combined with a series of strong corporate results.
He highlighted companies including Standard Chartered, Reckitt Benckiser and Rio Tinto, which delivered stronger-than-expected profits, increased shareholder returns, or both.
Meanwhile, oil prices continued to rise as geopolitical tensions in the Middle East supported energy markets. Brent crude climbed above $90 per barrel in London trading, gaining more than 7% after further military developments involving Iran and regional forces.
