FTSE 100 steadies as Samsung slump rattles AI sentiment

Summary

The FTSE 100 was set for a modestly firmer open even as Samsung's sharp share-price fall weighed on global AI-related sentiment. US stock futures were little changed after a mixed session, while broader Asian markets declined as investors questioned the sustainability of AI-driven valuations. In currency markets, the yen strengthened slightly from its multi-decade lows against the US dollar, with traders remaining alert for possible official intervention.

Equities

The FTSE 100 closed 0.3% lower on Monday at 10,651.8, while the FTSE 250 slipped 0.2%. Precious metal miners weighed on the blue-chip index as gold prices retreated, while pharmaceutical stocks also came under pressure. Travel shares provided some support after takeover activity lifted sentiment in the sector.

EasyJet closed 9.3% higher on Monday after agreeing in principle to a sweetened takeover proposal from US investment firm Castlelake, valuing the airline at up to £5.5 billion. The revised offer made easyJet the strongest performer on the FTSE 250. ITV finished little changed after Sky, owned by Comcast, agreed to acquire its broadcast channels and streaming business for £1.6 billion.

Healthcare stocks were weaker, with AstraZeneca closing 2.5% lower on Monday and GSK falling 1.6% as the sector declined across the UK market. Close Brothers dropped 9.1% after RBC downgraded the lender to "sector perform" from "outperform". Investors also continued to monitor developments in the Middle East, where uninterrupted shipping through the Strait of Hormuz and expectations of higher oil supply helped keep crude prices lower.

US markets finished higher on Monday, with the S&P 500 rising 0.72% to 7,537.43, the Nasdaq gaining 1.12% to 26,121.16 and the Dow Jones Industrial Average adding 0.29% to 53,055.91. Technology shares led the advance as investors continued to favour companies linked to artificial intelligence ahead of the second-quarter earnings season.

Broadcom closed 3.7% higher after extending its agreement with Apple through 2031 to develop and supply custom chips. The announcement also helped lift semiconductor shares, with the Philadelphia Semiconductor Index gaining 2.2% after two consecutive sessions of losses. Apple also benefited from the long-term supply agreement as investors looked ahead to continued investment in custom chip development.

Microsoft closed almost 1% lower after announcing plans to cut around 4,800 jobs, equivalent to roughly 2.1% of its global workforce. O'Reilly Automotive fell 6.7% following reports that it had submitted a cash offer to acquire Genuine Parts' automotive business, while Genuine Parts closed about 3% lower. SpaceX slipped 1% ahead of its inclusion in the Nasdaq 100 on Tuesday despite heavy trading volumes during Monday's session.

Forex & Commodities

The US dollar was broadly steady early on Tuesday after weakening following last week's softer-than-expected US jobs report, which prompted investors to scale back expectations for further Federal Reserve interest rate increases this year. The dollar index traded around 100.9, while sterling briefly climbed to a two-week high near $1.340 before easing slightly. The euro edged lower to around $1.143, while the Japanese yen remained close to a 40-year low against the US dollar at approximately ¥161.8, keeping traders alert for possible intervention from Japanese authorities. Against sterling, the yen also touched its weakest level since 2007 before recovering some ground.

Spot gold eased early on Tuesday to around $4,126 per ounce after reaching a two-week high on Monday, as investors waited for the Fed minutes before taking fresh positions. Markets have moderated expectations for another US rate increase following last week's weaker labour market data, although many investors still expect policy to remain restrictive. Hong Kong also launched a new central gold clearing system and resumed gold futures trading as it seeks to strengthen its position as a regional precious metals hub.

Oil prices were little changed early on Tuesday, with markets awaiting further economic and central bank developments after recent volatility linked to easing geopolitical tensions and changing expectations for US monetary policy. Meanwhile, shares in Synopsys were in focus after reports that the company plans to discontinue part of its semiconductor manufacturing software business to concentrate on higher-margin AI design products.