13th Oct 2026 17:06
(Alliance News) - The FTSE 100 gave back early gains to end slightly lower on Tuesday amid concerns over technology valuations.
"There are growing fears that companies are investing so much money into AI without a clear idea of the timing or scale of financial payback," commented Dan Coatsworth, head of markets at AJ Bell.
In London, the FTSE 100 index ended down 5.95 points, 0.1%, at 10,650.33. It had earlier traded as high as 10,762.01.
The FTSE 250 climbed slightly to 24,339.19, and the AIM all-share fell 3.75 points, 0.5%, to 771.16.
The Cboe UK 100 ended up 0.1% at 1,057.27, the Cboe UK 250 closed 0.1% higher at 21,214.39, and the Cboe small companies fell 0.4% to 18,843.66.
In European equity markets on Tuesday, the CAC 40 in Paris ended down 0.1%, as did the DAX 40 in Frankfurt.
European technology stocks were on the back foot after a heavy sell-off in Asian semiconductor shares, including SK Hynix and Samsung Electronics, which declined 4.4% and 3.6% respectively.
The fresh tech weakness followed reports of advances in memory-chip technology by China's ChangXin Memory Technologies, raising concerns about established manufacturers' competitive positions.
David Morrison, senior market analyst at FCA, said the weakness in semiconductors could set the stage for investors to shift funds to other sectors that haven't performed as well in 2026.
"Maybe it's time for some rotation," Morrison said. "If so, let's hope it's for all the 'right' reasons."
In Europe, ASML, which reports third-quarter results on Wednesday, fell 4.2%. On Wall Street, Micron Technology fell a further 5.1%.
XTB analyst Kathleen Brooks said concerns about the cost of the AI infrastructure and remarks from the boss of Broadcom also contributed to the sell-off.
"The CEO of Broadcom, a major chip producer and semiconductor design house, said that trading action is becoming speculative, hinting that the AI trade is a bubble," Brooks added.
Broadcom's CEO Hock Tan reportedly compared investing in AI to a casino.
"He reportedly said that investors don't really know what they are investing in and have 'very extreme' expectations," noted AJ Bell's Coatsworth. "The semiconductor industry is known for being highly cyclical, and there is a fear that certain investors have forgotten this important point.
"Many people think demand will stay strong forever, and they run the risk of being caught out if they are heavily exposed to semiconductor stocks in their portfolio and there is a tech-led market correction," Coatsworth added.
In New York, markets were lower. The Dow Jones Industrial Average was down 0.2% at the time of the closing bell in London on Tuesday, as were the S&P 500 and Nasdaq Composite.
US banks kicked off the third-quarter earnings season with Goldman Sachs, up 1.3%, JPMorgan Chase, up 1.0%, and Citigroup down 1.7%.
JPMorgan said investment banking conditions have slowed slightly recently but that the overall environment remains robust.
"There's a lot of business that wants to get done and needs to get done," commented Chief Financial Officer Jeremy Barnum.
XTB's Brooks said: "Overall, bank earnings suggest that the US economy is in good health and is generally riding the surge in bond yields, and the increase in US interest rates well."
The yield on the US 10-year Treasury was quoted at 5.22% on Tuesday, narrowed from 5.28% at the same time on Friday. The yield on the US 30-year Treasury was quoted at 5.56%, trimmed from 5.62%. US bond markets were closed on Monday for Columbus Day.
The pound was quoted at USD1.3249, up from USD1.3211. Against the euro, sterling firmed to EUR1.1834 from EUR1.1829.
The euro advanced to USD1.1194 from USD1.1169. Against the yen, the dollar was trading at JPY158.42, down from JPY158.74.
On the FTSE 100, Melrose Industries rose 3.5%.
It said that US authorities had begun the process of winding up their investigation into one of the company's sites in California, after a major safety incident in May.
The Birmingham, England-based aerospace and defence company had been subject to a civil investigation by the Orange County District Attorney's Office, which closed its criminal investigation in August without bringing charges.
The incident in question took place at the Garden Grove facility, operated by Melrose subsidiary GKN Aerospace Transparency Systems.
NatWest rose 2.1% as Barclays Capital upgraded its rating to 'overweight' from 'equal weight'.
Barclays analyst Aman Rakkar sees scope for earnings per share upside from higher interest rates, continued growth, and from the acquisition of Evelyn Partners.
"NatWest's leading rates gearing leaves it best placed among UK peers to monetise a steeper curve, in our view, while we see funding cost pressures as manageable and concerns around bank tax as a potential buying opportunity," the analyst wrote in a research note.
Elsewhere, WPP advanced 4.2% after slightly better-than-expected results from French peer Publicis, which added 2.2%.
But London Stock Exchange Group fell 4.7% after confirming it is in talks to buy financial data firm Octus for USD3.5 billion from private equity firm Permira.
However, LSEG said that it and Permira have not reached any final agreement, and that no transaction is guaranteed.
On the FTSE 250, Entain rose 4.7% as its joint venture BetMGM reiterated full-year guidance after a "strong" third quarter.
New Jersey-based sports betting and online gaming firm BetMGM is a joint venture between MGM Resorts International and Entain.
On Tuesday, it said it remains on track to deliver toward the lower end of its guidance ranges, which forecast net revenue of USD2.9 billion to USD3.1 billion and adjusted earnings before interest, tax, depreciation and amortisation of USD300 million to USD350 million.
Entain, which also owns the Ladbrokes and Coral brands, reports third-quarter results on Thursday.
Elsewhere, Greencore rose 2.4% as it raised guidance for the second time in three months, but half-year earnings failed to boost Bytes Technology, which saw shares drop 5.0%.
Michael Page dropped 0.9% as its boss warned there remains a "significant degree of uncertainty," despite continued improvement in a number of its markets.
Chief Executive Nicholas Kirk said: "Whilst we continued to see improvement and normalisation in trading in a number of our markets, there remains a significant degree of uncertainty."
The comments came as the Weybridge, Surrey-based recruiter said gross profit rose 1.4% to GBP190.5 million in the third quarter of 2026 from GBP187.8 million a year prior.
YouGov was in the winners' enclosure, jumping 14%, as it said it is confident of meeting market expectations for future growth.
The London-based market research company said revenue rose 2.0% to GBP396.6 million for the 12 months ended July 31, from GBP388.9 million the year prior.
YouGov said the full-year results "demonstrate a good performance, in line with the group's guidance, following notable growth in the second half of the year."
Brent oil was quoted at USD105.83 a barrel on Tuesday, down from USD106.60 late on Monday.
Gold was quoted at USD4,163.06 an ounce, down from USD4,167.84.
The biggest risers on the FTSE 100 were WPP, up 15.80p at 394.40p, BP, up 22.00p at 610.00p, Autotrader, up 17.90p at 513.20p, Melrose Industries, up 15.60p at 465.40p and Croda International, up 100.00p at 3,517.00p.
The biggest fallers on the FTSE 100 were Antofagasta, down 212.00p at 3,588.00p, London Stock Exchange Group, down 410.00p at 8,350.00p, Balfour Beatty, down 32.00p at 849.00p, Rolls Royce Holdings, down 50.00p at 1,345.60p and IMI, down 84.00p at 3,026.00p.
Wednesday's local corporate calendar has trading statements from miner Rio Tinto, asset manager Ashmore and recruiter Robert Walters.
Wednesday's global economic calendar has inflation figures in China overnight. US CPI data comes later in the day, followed by publication of the Federal Reserve's Beige Book.
By Jeremy Cutler, Alliance News reporter
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