London’s FTSE 100 climbs to a four-month high as AI selloff continues

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 since the level hit on 27 February, the day before the US and Israel began attacks on Iran and sparked stock market volatility.

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.

Asia-focused bank Standard Chartered and miner Rio Tinto both announced a hike 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, amid concerns over AI spending, sending stock markets in South Korea and Japan tumbling.

Meanwhile, 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, moved closer to $90 a barrel, reaching $89.47 during afternoon trading in London, a rise of over 6%.

Seoul’s Kospi index is dominated by semiconductor manufacturers and disappointing results from chipmaker SK Hynix saw the Kospi plunge by as much as 12.6% at one point, before rebounding slightly. It closed 6% down, following on from a near 11% slump 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. Japan’s Nikkei also closed 1.5% down on Wednesday, marking a two-month low.

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

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 closed 10% down. Shares in its fellow chipmaker Samsung Electronics also tumbled further, and closed 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 the 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.”

Shares in US chip companies fell on Wall Street on Tuesday, with Intel, Advanced Micro Devices, Sandisk, Western Digital Corp and Seagate Technology all sliding.

Apple benefited from these falls, as investors losing confidence in AI stocks sought out a safe haven. The iPhone maker briefly rose above the $5tn (£3.76tn) valuation mark, the second ever company to achieve this.

Shares in Taiwan’s TSMC, the world’s largest contract chipmaker, fell by 3% on Wednesday in Taipei.

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 London index was “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,” said Russ Mould, investment director at broker AJ Bell.