The FTSE 100 ended lower on Thursday as a tech sell-off and surging oil prices put equities firmly on the back foot.
“Concerns about the sustainability of AI spending hurt… markets and rising oil prices stoked concerns about the threat posed by inflation,” commented AJ Bell investment director Russ Mould.
In London, the FTSE 100 index ended down 27.85 points, 0.3%, at 10,725.03. The FTSE 250 ended 228.07 points lower, 0.9%, at 24,211.71, and the AIM all-share shed 12.19 points, 1.6%, at 750.93.
In European equity markets on Thursday, the CAC 40 in Paris ended down 1.4%, while the DAX 40 in Frankfurt fell 1.1%.
In New York, markets were also in retreat. The Dow Jones Industrial Average was down 0.3% at the time of the closing bell in London on Thursday. The S&P 500 was 1.1% lower and the Nasdaq Composite slid 2.0%.
The global equity market falls came as concerns about the Middle East conflict pushed oil futures higher, spurring inflation fears, while investors fretted whether hefty spending on AI will pay off for technology companies.
On Wall Street, Meta Platforms slid 5.6% despite reporting better than expected third quarter revenue, as chief financial officer Susan Li said its AI agent Muse’s computing intensity means that expanding its user base will require significant investment and she expects total serving costs to rise.
Elsewhere, IBM was down 1.1%, Lam Research was 10% lower and Tesla fell 0.9% after earnings.
Trade Nation analyst David Morrison said it was a “worrying reversal in investor sentiment” after Wednesday’s tech-led gains.
Morrison called the market reaction to the updates and the overall effect this has had on the chip sector and other AI-adjacent stocks “concerning”.
“Not only does it show that upside momentum has waned significantly, but that intermediate support levels are creaking dangerously,” he added.
“The common denominator appears to be revived concerns over AI infrastructure spending plans. The future commitments are enormous. Yet there’s little clarity over when, or even if, there will be a return on planned expenditure,” he said.
Elsewhere, Nvidia chief executive Jensen Huang told CNBC that demand for neoclouds is “off the charts”, but that capital is scarce and impeding growth.
Also weighing on the market mood was renewed strength in the oil price, stoking inflation fears.
Brent was quoted at 111.18 dollars a barrel at the time of the London equity market close on Thursday, up from 109.14 dollars at the same time on Wednesday.
Oil prices climbed after The New York Times reported, citing sources, that the US and Israel have plans for renewed strikes against Iran following next month’s midterm US elections.
President Donald Trump also told reporters late on Wednesday that Washington is not negotiating with Tehran and that something will happen “fairly soon”.
Meanwhile, Saudi oil titan Aramco told remaining staff to evacuate from its headquarters on Thursday, two sources briefed on the matter told AFP, as disruption deepens in Saudi Arabia following weeks of Houthi attacks.
The move came after a late-night attack on Dammam airport, also in Saudi Arabia, killed two people and injured eight others.
Houthi attacks have caused widespread problems for Saudi Arabia, the world’s top oil exporter, closing Riyadh’s airport for days and forcing the postponement of a major investment conference.
Against the dollar, the euro eased to 1.1201 dollars from 1.1225 dollars. Against the yen, the dollar was trading at 157.20 yen, down from 158.13 yen.
The pound was quoted at 1.3365 dollars, down from 1.3389 dollars. Against the euro, sterling edged up to 1.1933 euros from 1.1930 euros.
The yield on the US 10-year Treasury was quoted at 5.02%, narrowed from 5.11%. The yield on the US 30-year Treasury was quoted at 5.33%, down from 5.41%.
Back in London, a slew of blue-chip names updated on trading in the September quarter with Rentokil Initial and London Stock Exchange Group among the winners.
Pest control company Rentokil gained 8.6% as it backed expectations and announced a 200 million dollar (£149 million) share buyback.
RBC Capital Markets analyst Andrew Brooke said: “The Q3 update was better than the market feared and further highlighted stability in the US business, as improvement initiatives start to take hold.”
London Stock Exchange Group gained 7.7% as it lifted its annual guidance and confirmed a deal to acquire Octus for 3.54 billion dollars (£2.72 billion), “creating a leading proposition” in credit and private market data.
Founded in 2013, New York-based Octus is a provider of credit solutions across intelligence, data and analytics, serving customers across private, illiquid and distressed credit.
London-based exchange operator and provider of market data LSEG said the deal is expected to be immediately accretive to its Data & Analytics organic revenue growth.
Weighing on the FTSE 100 were weak mining stocks as metal prices fell. Antofagasta, Anglo American, Fresnillo and Endeavour Mining were down 6.2%, 5.6%, 6.5% and 3.9% respectively.
Gold was quoted at 4,054.71 dollars an ounce, down from 4,139.04 dollars. Silver was 4.6% lower and copper declined 2.7%.
J Sainsbury came under pressure as the company reported slowing sales growth amid a competitive UK grocery scene.
The food retailer ended 2.2% lower as it said like-for-like sales excluding fuel climbed 1.2% in its second quarter, shy of company-compiled market consensus of 1.9%.
AJ Bell analyst Russ Mould said there were signs of “stuttering momentum” in the second quarter.
“Sainsbury’s is having to work hard to maintain its profitability and the contrast with Tesco, where margins are improving, will do nothing to dampen speculation about Sainsbury’s pursuing a merger in the sector.”
Sky News, earlier in October, reported that Sainsbury’s held discussions on a potential merger with grocery peer Morrisons earlier this year.
On the FTSE 250, well received trading updates supported Rathbones and Renishaw, up 4.4%, and 0.2%, respectively.
But Inchcape plunged 9.3% as it lowered its earnings and margin guidance for 2026 to reflect a “challenging situation in Australia”, which overshadowed volume growth elsewhere.
In a trading update, the London-based automobile distributor said: “Australia remains a challenge – our key brand has underperformed, with deteriorating competitiveness in a rapidly-evolving market.”
As a result, Inchcape now expects a group operating margin for 2026 of around 5.5%, down from 6.0% previously guided, with adjusted earnings per share growth of around 10%, underpinned by continued momentum in the Americas and Europe & Africa.
In July, Inchcape said it expected more than 10% growth in adjusted EPS for the full year from 80.8p posted in 2025.
Also in the red, Ceres Power remained friendless, down a further 11%. The clean energy technology developer, based in Horsham, West Sussex, has seen its share price wane from above 800p since May. It is down 39% in the last month alone.
The biggest risers on the FTSE 100 were: Rentokil Initial, up 27.1, at 341.8p; London Stock Exchange Group, up 676.0p at 9,466.0p; Smith & Nephew, up 45.5p at 1,134.0p; IG Group Holdings, up 33.5p at 964.5p; and Experian, up 98.0p at 3,084.0p.
The biggest fallers on the FTSE 100 were: Fresnillo, down 170.0p at 2,462.0p; Antofagasta, down 199.0p at 3,025.0p; Computacenter, down 290.0p at 4,830.0p; Anglo American, down 215.0p at 3,625.0p; and Rolls Royce Holdings, down 67.8p at 1,259.6p.
Thursday’s local corporate calendar has a trading statement from betting operator Evoke.
Thursday’s global economic calendar has inflation figures from Japan overnight along with a slew of composite PMI readings including the UK at 9.30am. Also in the UK, retail sales figures will be released, while in the US, the Michigan consumer sentiment index is due.
Contributed by Alliance News