FTSE 100 nears record as global AI sell-off spares European markets
London’s blue-chip index has brushed past previous records as investors rotate capital away from overheated Asian semiconductor stocks and into traditional European energy and finance heavyweights.
The FTSE 100 closed 0.3 per cent higher at 10,908 points on Wednesday, narrowly missing its February record of 10,910. The index briefly touched 10,951 in morning trading, demonstrating resilience while global technology stocks suffered severe losses.
This divergence highlights a sharp rotation in global capital. Investors are increasingly moving money away from artificial intelligence and semiconductor stocks, a trend that has sent markets in South Korea and Japan tumbling.
London’s market remains heavily weighted toward finance and energy, insulating it from the tech rout. Index heavyweights such as Standard Chartered, Rio Tinto and Reckitt Benckiser bolstered the index by announcing strong corporate results and increased shareholder payouts.
The contrast was starkest in South Korea, where the semiconductor-dominated Kospi index closed 6 per cent lower. Trading was halted for 20 minutes after an 8 per cent plunge triggered a market-wide circuit breaker for the second consecutive session.
The sell-off accelerated after chipmaker SK Hynix reported second-quarter record profits that still fell short of investor expectations. Its shares dropped as much as 20 per cent before recovering slightly, while fellow giant Samsung Electronics closed 5 per cent lower.
Gary Tan, a portfolio manager at Allspring Global Investments in Singapore, observed that strong financial delivery is no longer sufficient. "SK Hynix delivered strong results, but in today’s AI market strong is no longer enough," he said, noting investors seek "additional catalysts, particularly around long-term agreements and shareholder returns."
The downturn has been exacerbated by small-scale investors exiting positions they previously financed through borrowed money. In response to the volatility, South Korea’s finance minister, Koo Yun-cheol, informed the national assembly that the government is reviewing market stabilisation measures.
Compounding the pressure on growth stocks, geopolitical tensions have driven energy prices higher. Brent crude rose more than 7 per cent to exceed $90 a barrel after the US military intercepted an Iranian missile barrage and coordinated strikes in Iraq with Saudi forces.
As confidence in the broader AI trade wavers, capital has sought safer ground. Apple briefly surpassed a $5tn (£3.76tn) valuation, becoming only the second company in history to reach that milestone as investors fled the semiconductor slump.
