UK's FTSE 100 rises as financials rebound, Middle East and AI spending worries cap gains
FTSE 100 Performance and Key Market Drivers
June 11 (Reuters) - London's FTSE 100 index climbed on Thursday, supported by a recovery in financials stocks, though concerns lingered over the Iran war and surging corporate spending on artificial intelligence.
The blue-chip FTSE 100 closed 0.5% higher at 10,303.9 points, while the midcap FTSE 250 added 0.1%.
Financials Lead the Recovery
• HSBC and Standard Chartered added 2.2% and 3.4%, respectively, while Prudential rose 2.5%.
Hong Kong-Exposed Stocks Bounce Back
• Hong Kong-exposed stocks were bouncing back from sharp declines over the past week after China tightened rules for cross-border investments — a lucrative business for UK companies.
Sector Performance Highlights
Industrial Metal Miners
• Industrial metal miners gained 1.8%, with heavyweights Rio Tinto and Glencore up around 2% each.
Software and Technology Stocks
• Software stocks Relx and Sage Group were down 3.4% and 5.3%, respectively, tracking losses in euro zone companies such as SAP and Capgemini.
AI Spending and IT Sector Concerns
• Oracle unveiled new debt-backed AI spending plans. UBS downgraded the broader European IT sector, as investors worry that enterprise clients may pivot from traditional software companies to newer AI models.
Retail and Aviation
• Frasers Group inched up 1% after the retailer controlled by British billionaire Mike Ashley launched a €2 billion ($2.31 billion) takeover offer for struggling German fashion brand Hugo Boss.
• Wizz Air gained 6% after its operating profit beat analysts' expectations. The carrier, however, forecast lower revenue per available seat kilometre for the first quarter, citing Iran war disruptions.
Health and Safety Devices
• British health and safety device maker Halma slid 15.4% after it forecast organic constant-currency revenue for fiscal 2027 to grow at a slower pace.
Macroeconomic and Political Developments
Central Bank Actions
• The European Central Bank raised interest rates for the first time in nearly three years, against the backdrop of escalating Middle East tensions.
• Traders expect the Bank of England to raise borrowing costs by 25 basis points in September, according to data compiled by LSEG, to combat price pressures.
Political Focus
• Local politics was also in focus as Britain's defence minister, John Healey, resigned over a disagreement about defence spending.
(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar and Andrew Heavens)
