FTSE 100 edges up 0.1% to 10,729.78 as Nasdaq plunges 2.7% on AI spending fears

The FTSE 100 managed a marginal gain on Friday, finishing up 7.71 points, or 0.1%, at 10,729.78. The result looked calm next to the sell-off in New York, where worries about the cost of the artificial intelligence boom dragged technology shares sharply lower.

FTSE 100 holds steady while smaller indices slip

London’s blue-chip index drifted in and out of positive territory through the afternoon before ending in the black. Beneath the surface, the picture was weaker. The FTSE 250 lost 220.80 points, or 0.9%, to close at 24,453.36, and the AIM all-share fell 1.4% to 753.08. Over the full week, the FTSE 100 gained 0.4%, while the FTSE 250 and AIM both rose 0.9%.

Sterling had a good day. It topped 1.20 euros for the first time since April 2025 and was last quoted at 1.1996 euros. Against the dollar it rose to 1.3396 from 1.3369 at Thursday’s London close.

Wall Street takes the brunt of the AI reality check

Around the London close, the Dow Jones Industrial Average was down 0.8% and the S&P 500 was 1.6% lower. The tech-heavy Nasdaq Composite plunged 2.7%. Earnings reports from big names fuelled the sell-off. Alphabet fell 12% on Thursday, and on Friday Intel slumped 30% and Amazon lost 1.6%, with investors unsettled by their results.

AJ Bell analyst Dan Coatsworth called it an “AI reality check”. He argued that investors who had long treated tech as a “golden ticket to wealth creation” now appear to want off the treadmill rather than to slow it down.

SPI Asset Management’s Stephen Innes offered a sharper diagnosis. In his view, AI spending creates demand, demand creates scarcity, and scarcity creates pricing power, which pushes the cost of the buildout still higher. “Then Wall Street turns around and asks the hyperscalers why the buildout has become so expensive,” he said. Hyperscalers are the large cloud providers, including Microsoft, Amazon Web Services and Oracle.

Europe feels the data centre drag

The nervousness crossed the Atlantic. Frankfurt’s DAX 40 fell 0.9%, weighed down by Siemens Energy, Infineon Technologies and Hochtief, all of which have sizeable data centre exposure. Paris’s CAC 40 ended flat, though Schneider Electric, which also serves data centres, finished lower.

In London, the damage was concentrated in AI-linked names rather than the wider index. Polar Capital Technology, an investment trust holding many of the US tech giants that fell, shed 6.0%. Computacenter, an Nvidia partner and reseller of IT infrastructure, dropped by the same amount.

NatWest sinks, AstraZeneca soars

The biggest mover on the downside in the FTSE 100 was not a tech firm. NatWest fell 8.8% after giving guidance on net interest margin that unsettled the market, even though its third-quarter results were broadly in line. Operating pretax profit rose 1.9% to £2.23 billion, just ahead of the £2.20 billion consensus. Lower costs offset higher impairments and a slight miss on net interest income. Chief financial officer Katie Murray said the bank expects its margin to remain “broadly stable through 2027”.

AstraZeneca went the other way, rising 7.0%. The drugmaker reported pretax profit up 22% to $3.96 billion, from $3.24 billion a year earlier. Revenue climbed 6.7% to $16.21 billion. It maintained its full-year guidance for revenue growth in the mid-to-high single digits.

Oil jumps, gold slides, Treasury yields ease

Elsewhere, Brent crude rose to $117.61 a barrel from $113.75 on Thursday, touching around $118, its highest level since April. Investors continued to watch the Middle East conflict and the war between Russia and Ukraine. Gold moved in the opposite direction, falling to $3,898.22 an ounce from $4,012.39. It dipped as low as about $3,891, its weakest in more than a year.

US government borrowing costs eased slightly. The 10-year Treasury yield narrowed to 4.94% from 5.00%, and the 30-year yield to 5.31% from 5.33%.

Friday’s session suggests the FTSE 100 is somewhat insulated from the AI trade, given its lighter tech weighting than Wall Street. But the losses at Polar Capital Technology and Computacenter, along with the weakness in Frankfurt, show how far the mood around AI spending can reach.

Explore more on this topic with Vexel Search.