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Stocks fell on Tuesday as risk-off sentiment intensified amid technical valuation concerns and interest rate uncertainty.
“Investors around the world are attracted to US technology, amid concerns that the sector could become overvalued if future investment returns do not match current expectations,” said David Morrison, senior markets analyst at Trade Nation.
The FTSE 100 index fell 123.13 points, 1.3%, to 9,552.30.
The FTSE 250 fell 263.09 points, 1.2%, to 21,424.81, and the AIM All-Share fell 9.98 points, 1.3%, to 734.47.
On the FTSE 100, the decline was widespread, with banks a key weak feature, as the Daily Telegraph newspaper reported the sector could be hit by tax rises in next week’s Budget.
HSBC, Barclays, natwest And lloyds Fell by 3.4%, 2.7%, 2.3% and 1.9% respectively.
ICG led the way, rising 4.5% after it said European asset manager Amundi would take a nearly 10% stake in the firm, and it reported better-than-expected half-year results.
The London-based, private equity, investment firm said pre-tax profit at its fund management company business rose 65% to £324.6 million in the six months to September 30 from £196.4 million a year earlier, ahead of the £263 million consensus reported by Panmure Liberum.
Management fee income increased 16% to £333.6 million from £286.6 million. Assets under management rose 14% to $124.3 billion (£94.6 billion) from $106.3 billion (£80.9 billion).
Additionally, ICG said that Amundi will take a 9.9% stake in ICG as part of a long-term strategic partnership.
Established in 2010, Amundi is the result of a merger between the asset management activities of Crédit Agricole and Societe Generale.
Deutsche Bank believes the deal signals “ICG’s ambition to become a true global top-tier player in the industry in the long run”.
“Although there is no financial target outlined, we would view it as ICG has gained access to a potentially very valuable option through its ability to raise funds in a new channel at scale, while requiring limited incremental resources/investment,” the broker said.
In European equities on Tuesday, the CAC 40 in Paris fell 1.9%, while the DAX 40 in Frankfurt fell 1.7%.
In New York, the markets were at a low level at that time London Equity markets closed.
The Dow Jones Industrial Average was down 1.1%, the S&P 500 index was 0.9% lower, and the Nasdaq Composite fell 1.3%.
This week the focus will be on Wall Street NVIDIA Earnings on Wednesday and non-farm payrolls a day later.
Joshua Mahoney, chief market analyst at Scope Markets, believes this week looks to be “crucial” for financial markets, adding, “Recent concerns over the potential end of the AI business mean we’re expecting big volatility in the lead-up to and reaction to tomorrow’s Nvidia earnings”.
“After the close, this report will represent one of the biggest moments for the markets in months. Anything other than a perfect scorecard will exacerbate the existing weakness evident in the sector, undermining domestic concerns that the AI boom has been artificially created through a series of inter-company deals rather than delivering significant revenues from the end user,” he suggested.
Nvidia was down 2.6% at the London close on Tuesday, while Microsoft fell 3.4%, Amazon 3.1% and Alphabet fell 2.7%.
Alphabet Chief Executive Sundar Pichai said the surge of artificial intelligence investment was an “extraordinary moment”, but that there was some “irrationality” in the current AI boom.
Speaking to BBC, he said that if the AI bubble bursts, every company would be affected.
The yield on US 10-year Treasuries was 4.12%, down from 4.13% on Monday. The yield on the US 30-year Treasury was 4.74%, up from 4.73%.
Wall Street’s troubles were compounded by weak earnings from retailer Home Depot, which lowered its full-year guidance after reporting worse-than-expected third-quarter earnings.
Home Depot shares fell 3.6%, while Walmart shares fell 0.7% following their results Thursday.
Sterling was priced at $1.3141 at the close of the London Stock Exchange on Tuesday, down from $1.3169 on Monday.
The euro stood at $1.1576, down from $1.1598. Against the Japanese yen, the dollar was trading at 155.44 JPY compared with 155.12 yen.
In London, Crest Nicholson fell 13% after warning that annual profits would fall below guidance, as the housing market grapples with UK government budget uncertainty.
The housebuilder said adjusted pre-tax profit for the year ended October 31 is expected to be “at the bottom, or slightly below” its guidance range of £28 million to £38 million.
This “reflects the housing market which has remained sluggish over the summer, and continued uncertainty over government tax policy ahead of the upcoming Budget,” the firm said.
Ocado It dropped 16% after it said the closure of three, robotic, customer fulfillment centers by trading partner Kroger would reduce fee revenue by about $50 million (£38 million) in fiscal 2026.
Hatfield, England-based online grocery retailer launched a partnership with Kroger, one of the largest US supermarket chains, in 2018.
The two companies agreed to build the equivalent of 20 customer fulfillment centers. But Kroger announced Tuesday it will close three CFCs in Frederick, Pleasant Prairie and Groveland.
Ocado said it expected to receive compensation of more than $250 million (£190 million) for fees related to the early closure of the three sites.
At the time of closing of the stock market in London on Tuesday, the price of Brent oil was $ 64.10 per barrel, which was $ 64.46 on Monday.
Gold was trading at $ 4,060.07 an ounce on Tuesday, down from $ 4,071.30 on Monday.
The biggest risers on the FTSE 100 were: ICG, up 84.0 pence at 1,973.0p; Imperial Brands, up 76.0p to 3,229.0p; Tesco, up 3.6p at 441.1p; Diploma, from 30.0p to 5,290.0p; and Centrica, up 0.85p at 167.1p.
The biggest fallers on the FTSE 100 were: Melrose Industries, down 24.4p at 602.0p; Antofagasta, down 101.0p at 2,637.0p; 3I, up 123.0p to 3,276.0p; Convetec, down 8.6p at 230.6p; and HSBC, down 37.4p at 1,056.0p.
Rounding out Wednesday’s global economic calendar are UK and eurozone inflation data and minutes from the October Federal Reserve meeting.
Wednesday’s UK corporate calendar features half-year results from real estate investor British Land and full-year earnings from accountancy software provider Sage.
Contributed by Alliance News