The FTSE 100 closed 1.1% higher on Thursday, outperforming major global markets as stronger-than-expected UK economic growth and falling bond yields supported London equities while technology stocks remained under pressure.
London’s blue-chip index gained 115.49 points to finish at 10,840.35, while the FTSE 250 advanced 0.3% to 24,424.77. The AIM All-Share slipped 0.4% to 765.09.
The rally came as investors continued to reduce exposure to artificial intelligence-related stocks amid concerns over rising investment costs, increasing Chinese competition and uncertainty surrounding future returns from AI infrastructure spending.
London’s relatively limited exposure to major technology companies helped shield the FTSE 100 from the global sell-off, with investors favouring established businesses outside the semiconductor and data centre sectors.
XTB research director Kathleen Brooks described the AI trade as undergoing a major reassessment, with investors increasingly questioning valuations despite strong corporate earnings.
Wall Street remained mixed, with the Dow Jones Industrial Average gaining 1% around London’s close, while the S&P 500 edged 0.1% higher and the Nasdaq Composite declined 0.4%.
US semiconductor shares continued to struggle, with Nvidia falling 2.2%, Advanced Micro Devices declining 4.4% and Broadcom losing 1.9%.
Investor concerns intensified following reports that Anthropic’s third-quarter revenue growth had slowed. According to the Financial Times, revenue increased nearly 50% to $16.8 billion, compared with $11.5 billion in the previous quarter, when growth had exceeded 100%.
The slowdown added to questions over whether the rapid expansion of artificial intelligence businesses can justify the substantial investment being committed across the technology industry.
Meanwhile, US Treasury yields retreated despite Wednesday’s stronger-than-expected inflation figures, providing support for equity markets.
The benchmark 10-year Treasury yield fell to 5.10% from 5.26%, while the 30-year yield declined to 5.42% from 5.57%.
Comments from Federal Reserve policymakers suggesting there was no immediate need to increase interest rates again helped ease concerns over further monetary tightening.
Back in the UK, official figures showed the economy expanded by 0.1% in August, beating forecasts of a 0.1% contraction.
Growth followed July’s 0.4% increase, while June’s expansion was revised higher to 0.4%, suggesting the economy remains more resilient than previously expected.
Pantheon Macroeconomics economist Rob Wood said third-quarter GDP growth could reach 0.7%, comfortably above the Bank of England’s 0.4% forecast.
However, higher energy prices and uncertainty surrounding the forthcoming October Budget remain potential risks to economic growth.
Among London’s biggest gainers, Experian surged 5.9%, Sage Group climbed 5.6% and BT Group advanced 4.3%.
JD Sports Fashion also rose 4.3% as management outlined its strategy to improve growth and profitability in the US sporting goods market during an analyst event in Orlando.
Technology-related investments moved in the opposite direction, with Computacenter falling 5.6% and Polar Capital Technology Trust declining 4.7%, while Scottish Mortgage Investment Trust lost 1.2%.
Mining group Antofagasta dropped 4.1% after issuing weaker-than-expected copper production guidance for 2027.
The company expects output of between 630,000 and 690,000 tonnes next year, below analyst consensus of approximately 692,000 tonnes.
JPMorgan warned that the lower guidance could prompt mid-single-digit reductions to market expectations for 2027 EBITDA, while strike action involving two unions at Antofagasta’s Centinela mine added further uncertainty.
On the FTSE 250, THG jumped 16% after raising its 2026 earnings guidance, with easing whey prices expected to support profitability at its Myprotein business.
Homewares retailer Dunelm gained 7.9% after maintaining its full-year guidance and reporting an improvement in sales following a slower start to the September quarter.
XPS Pensions advanced 7.7% after indicating that full-year results should come in slightly ahead of market expectations, supported by strong first-half revenue growth.
Packaging group Mondi fell 8.1%, warning that rising energy and wood costs were placing greater pressure on operations than previously anticipated.
In currency markets, sterling strengthened to $1.3254 against the dollar, compared with $1.3152 on Wednesday, while the euro traded at $1.1204.
Gold increased to $4,152.39 an ounce, supported by lower bond yields, while Brent crude climbed to $106.33 a barrel.
The FTSE 100’s strong performance highlights investors’ willingness to favour UK equities during periods of volatility in technology markets, with lower bond yields and stronger domestic economic data providing additional support.
Attention now turns to Friday’s eurozone inflation figures, US industrial production data and a scheduled speech by Bank of England Governor Andrew Bailey, which could provide further direction for interest rate expectations.
