FTSE 100 hits record high despite AI sell-off

Strong corporate results buoy market as investors move money away from tech and semiconductor stocks

London’s FTSE 100 stock index has touched a fresh high, driven by strong corporate results as investors moved money away from tech and semiconductor stocks amid the global tech stock sell-off .

The UK’s blue chip index rose as high as 10,951 points on Wednesday morning before falling back slightly, its best level since 27 February, the day before the US and Israel began attacks on Iran and sparked stock market volatility.

On a day of fresh losses for the tech-heavy Nasdaq index, the FTSE 100 closed up 0.3% at 10,908, marginally below its record closing value of 10,910 in February.

The FTSE 100 is heavily weighted towards the finance and energy sectors, meaning it has been largely shielded from the sell-off in tech stocks that has rattled other global markets, particularly in Asia and New York.

The Asia-focused bank Standard Chartered and the miner Rio Tinto both announced a rise in shareholder payouts on Wednesday.

The FTSE 100’s climb came as shares in companies linked to AI plunged for the second day in a row over concerns about spending on the technology, sending stock markets in South Korea and Japan tumbling.

The oil price continued to climb after the US military said it had knocked down an Iranian missile barrage and worked with Saudi Arabia’s forces to strike sites in Iraq that Tehran-backed militias had recently used to launch attacks.

Brent crude, the international benchmark, rose above $90 a barrel by late afternoon in London, a rise of more than 7%.

Seoul’s Kospi index is dominated by semiconductor manufacturers, and disappointing results from the chipmaker SK Hynix left it down by as much as 12.6% at one point before it rebounded.

The index closed down 6% after falling almost 11% the previous day, reaching its lowest level since early April and marking an almost 40% fall from the peak reached a little over a month ago.

Trading was halted for 20 minutes for the second consecutive session after an 8% plunge triggered a market-wide circuit breaker.

Japan’s Nikkei also closed 1.5% down on Wednesday, a two-month low.

SK Hynix, which produces the chips essential to the expansion of AI datacentres, reported record profits for the second quarter but undershot investors’ expectations.

That prompted a sell-off that drove its shares down by as much as 20% before they recovered to 10% down. Shares in its fellow chipmaker Samsung Electronics also tumbled further, closing 5% lower.

The two companies together account for more than half of the market capitalisation of the Kospi, which has led to them holding sway over the market this year. The companies have brought in cash from investors looking to become involved in the lucrative AI trade amid a global shortage of advanced memory chips .

Analysts said disappointment over SK Hynix’s earnings highlighted investors’ concerns about how long tech companies could continue their spending spree on the technology.

“SK Hynix delivered strong results, but in today’s AI market strong is ‌no longer enough,” said Gary Tan, a portfolio manager at Allspring Global Investments in Singapore.

“Investors were looking for additional catalysts, particularly around long-term agreements and shareholder returns, to support a memory sector that has become the epicentre of the AI trade.”

Apple benefited from the falls as investors losing confidence in AI stocks sought a safe haven. Its shares briefly rose above the $5tn (£3.76tn) valuation mark , only the second company ever to do so.

Analysts said small-time investors had led the charge on buying chipmakers’ stocks, many using borrowed money. While this pushed stocks higher in last month’s rally, it has worsened the sell-off as many have pulled their money out.

South Korea’s finance minister, Koo Yun-cheol, told the national assembly the government was reviewing market stabilisation measures.

The broker AJ Bell’s investment director, Russ Mould, said the FTSE 100 had been “helped by its lack of exposure to technology and AI stocks, and a slew of strong corporate results, with index heavyweights Standard Chartered, Reckitt Benckiser and Rio Tinto all delivering either better-than-expected profits, or bumper cash returns to shareholders, or both”.