- FTSE 100 up 87 points at 10,402
- Index hit new intraday highs earlier
- UK services PMI at strongest level for five months
- Beazley agrees takeover by Zurich
5.12pm: Another record-breaking day
Wednesday marked another record-breaking day for the FTSE 100, with the index crossing 10,400 to finish the day at 10,402, up 87 points.
“It has been a little over 24 hours since the FTSE 100 last hit a record high, so we must be due another one,” IG chief market analyst Chris Beauchamp said in a statement.
“The ‘sell tech’ trade seems to be in full swing across the globe, save for some gains in Apple and Microsoft, following AMD’s results last night and a better US ISM PMI today has provided a further boost to other sectors, helping the Dow towards the cusp of a new record high as well.”
4.01pm: Cycle turning?
AI concerns, such as those that have hit RELX, LSEG, Informa, WWP and others in the past couple of days and weeks, create new opportunities, says Stuart Widdowson, managing partner of Odyssean Capital and manager of the Odyssean Investment Trust PLC.
"While some businesses will successfully adapt and enhance their competitive positioning through the adoption of AI, others will struggle," he says.
"Our broader concern is that AI is likely to prove structurally deflationary for pricing in sectors that have historically enjoyed inflation-plus pricing and reliable organic volume growth."
Widdowson feels this long-standing pricing power was reflected in some valuations that had become excessive.
"During periods of market stress, however, investors rarely discriminate between prospective winners and losers, and valuations across the sector have compressed indiscriminately."
He highlights that there are some good investments within the Odyssean portfolio whose valuations remained depressed, but feels that as end-markets recover and capital expenditure resumes, "capital is beginning to rotate towards these underappreciated asset-backed businesses, as well as the companies which supply them".
"We believe this shift has further to run and expect strong performance as earnings recover and valuations re-rate from levels that continue to underestimate long-term returns on capital and the scope for recovery."
3.37pm: FTSE gives back some gains
The FTSE has not been able to keep up the pace, giving up some of its gains as some investors take profits.
Industrial metals miners are dragging a little too, with Antofagasta and Anglo American down 4% and 2.6% respectively.
2.46pm: Wall Street mixed at open, FTSE soaring
Wall Street has got off to a mixed start, but the bigger news for UK investors is that the FTSE 100 is absolutely flying.
Bookmaker Entain is the top riser now, up 10.3% after it said that its BetMGM joint venture performed ahead of expectations.
It is followed by energy services group DCC, up 9.4%, under-offer insurer Beazley, up 8.2%, and drugmaker GSK, up 7.1%.
Across the pond, the Dow Jones has opened up 0.7%, while the S&P 500 has climbed 0.2%, but the Nasdaq has slipped 0.1%.
Nvidia, Amazon, Meta, Tesla and Broadcom are all in the red in early trade.
2.23pm: Bank of England meeting tomorrow previewed
This week won't see a Bank of England cut, following the reduction in December, but don't rule out one as soon as next month's meeting, says Julien Lafargue, chief market strategist at Barclays Private Bank.
Others say it could be May before we see the next cut.
Members of the BoE's monetary policy committee are widely expected to keep interest rates unchanged at 3.75% at tomorrow's meeting.
"On the back of the Budget, we could see a more benign outlook on the inflation front, at least in the short-term," says Lafargue.
"When it comes to forward guidance, the BoE is likely to remain noncommittal about the timing of any future interest rate cuts.
"That said, the combination of lower inflation ahead and continued softening of the UK labour market should reinforce the central bank’s view that the path for monetary policy is towards a lower Bank rate, potentially as early as next month.”
Elsewhere, Simon French at Panmure Liberum says the MPC and most economists agree that policy is restrictive, beyond that point, consensus quickly breaks down.
He envisions only two further cuts this year, bringing down the base rate to 3.25%, with one in May and another in August.
Anna Titareva at UBS expects two cuts this year, in March and June, the same as James Smith at ING.
Based on market rates, there will be just one rate cut, in April at the earliest, and that may be it for this year, says Laith Khalaf, head of investment analysis at AJ Bell.
"April will be a key month because the government’s energy price subsidy will kick in, and inflation should fall back substantially. While the Bank of England is more focused on medium-term inflation expectations, it is inevitably easier to be a bit more dovish when inflation begins with a two rather than a three," Khalaf says.
"It’s not a good idea to peer too far into the future when it comes to interest rates, especially in such an erratic global economic environment. But as things stand 2026 looks like it could be a year of prosaic inaction for monetary policy, with a scant number of clips to populate a highlight reel."
1.58pm: Starling wants more London reforms to attract IPOs
It's remained all quiet on the London IPO front, and some hopes were dashed today as Starling Bank’s largest investor has apparently "gone cold" on the idea of a London listing, according to City AM, reigniting speculation the neobank may take its float stateside.
Harald McPike, the Bahamas-based investor who holds roughly a third of Starling’s shares after backing the digital lender since 2016, is said to have become frustrated with the pace of reform in the UK’s capital markets and regulatory regime.
The report says Swiss-born McPike had formerly favoured a London float but now sees the bank as increasingly open to listing in New York.
“Things will have to move a lot faster or it is out the door sharply,” a person familiar with his thinking told the paper.
Policymaking to try and shore up London’s appeal to high-growth tech and fintech firms has included the Bank of England recently raising the 'MREL' capital buffer for mid-sized banks, but McPike reportedly wants more.
The Innovate Finance lobbying group has previously raised concerns that some existing rules create an uneven playing field and has regulator proposed further changes.
1.31pm: Cracking day for London stocks
It's been a "cracking day" for UK shares, as "risk sentiment seems to be blowing our way", says Saxo's Neil Wilson.
As well as the big gains, there are also gains for big names, with Lloyds picking up more steam post-earnings, with a report in the FT about a corporate and institutional push.
Oil majors Shell and BP are doing a "lot of the serious lifting" for the index too, with gains of 2%, while also in the top 10, HSBC, Unilver and GSK are all strongly bid.
Miners are mixed, with Endeavour Mining and Fresnillo firmer after gold and silver prices looked "more orderly", though gold eased off its highs back below $5,000.
Antofagasta was 2% lower as copper prices fell.
The FTSE 250 is in on the action with a rally of 0.6%.
1.04pm: Up and downgrades
Berkeley Group has been given a lift today by a JP Morgan upgrade, citing signs of recovery in London’s housing market and a favourable setup in the rental sector that plays to the group’s strengths.
Analyst Zaim Beekawa said the combination of potential policy support, easing affordability pressures and a structural supply-demand imbalance in the capital’s rental market offered a turning point for the high-end housebuilder, which has been hit harder than others affected by London’s post-pandemic housing downturn.
Elsewhere, Deutsche Bank has slapped a 'sell' on SIG, seeing the building materials distributor as unlikely to generate free cash flow over the coming years, even in a more favourable trading environment.
Despite SIG’s recent trading update guiding to full-year 2025 EBIT broadly in line with consensus, analyst Christen Hjorth said deteriorating conditions warrant a more cautious stance.
12.19pm: FTSE flying ever higher
The FTSE is having its best day for a while, up almost 140 points. The index gained almost 118 points on Monday, with an almost exact gain at the start of January.
There were 100-point gains in December and October too.
Among the index's top 20 largest stocks, there are some big gains, with Shell, Rio Tinto, Rolls-Royce, BP, National Grid and Glencore all up over 2%, while GSK is up almost 5%.
There are only 16 fallers, led by Rightmove, down 5%, followed by Sage and RELX, both down 2.6%, and LSEG down 2%.
US futures are pointing to slight gains, with Dow Jones futures up 0.4%, with the S&P 500 indicated 0.2% higher and the Nasdaq just above flat.
11.41am: Beazley offer is around a fair price, say analysts
Zuich's sweetened offer values for Beazley of 1,335p per share in cash, is up from the 1,280p offered in January and up from the 1,315p reportedly offered behind closed doors last summer.
It's about a fair level, analysts say.
Analyst Abid Hussain at Panmure Liberum said the revised offer is 2.4 times trailing tangible net asset value, "which is towards the upper end" that speciality insurers have been acquired for in the past.
"Our maths suggested that a price closer to 1,400p would be a fair price and affordable for Zurich. Either way, this is a good offer and classic of this point in the underwriting cycle, when pricing starts coming off peaks."
Prior to the offer, analysts noted, Beazley was trading on only 1.3x TNAV, Hussain notes, having put out "confusing messaging" at its interims and a capital markets day.
Fellow analysts at Peel Hunt said the offer is "just under the 1,340p per share we considered fair".
11.05am: Is London Stock Exchange an AI loser?
LSEG's shares are down almost 16% over the past two days due to concerns around a recent Anthropic AI tool launch, and down 34% since the end of 2024 on broader market rotation and fears of artificial intelligence-driven disruption.
Analyst Michael Werner at UBS has dismissed these concerns as overblown.
"We remind investors we do not expect LSEG to be at risk to AI disruption. Even though its data is not 100% proprietary, it has the deepest and most complete data set of security prices in the industry and we expect the proliferation of AI models will drive data usage higher, leading to better pricing opportunities for LSEG."
He notes that the group partners with major AI platforms, including OpenAI, Databricks and Snowflake, and its MCP server already feeds financial data into AI models.
LSEG’s data & analytics division is now being valued by the market at just 7x 2026 earnings, roughly a 50% discount to comparable peer FactSet, with the stock trading on a 2027 P/E of 14x and offering a free cash flow yield of 7.9%.
10.22am: PMI improvement could mean later rate cut
Thomas Pugh, chief economist at RSM UK, says the rise in the final composite PMI to 53.7 in January from 51.4 in December "suggests a decent post-budget bounce in activity is occurring as budget uncertainty dissipates".
"Signs of a rebound in growth in Q1, a now familiar pattern in the UK economy, are another reason to suspect that the MPC will wait until April before cutting interest rates again."
The jump in the PMI is consistent with first-quarter GDP growth of around 0.4%, Pugh says, though he sees economic uncertainty as having "further to fall", so is expecting growth of 0.5%.
"A rebound of close to that rate aligns with our estimate of trend growth and would mean there is little space for the MPC to cut rates in Q1."
Despite the recovery in services and manufacturing activity, employment prospects remain depressed, with the composite employment balance dropping to 45.8 and companies saying the high cost of labour is holding back employment.
With the input prices balance ticking down, this suggests this factor may be starting to ease, Pugh says.
"Overall, today’s PMI report is largely positive and raises hopes that much of the recent economic downturn was due to temporary budget worries. However, we are still anticipating subdued growth of just 1.2% in 2026 as a weaker labour market and structural issues drag."
9.59am: FTSE takes another leg higher
The FTSE has taken another leg higher, up almost 0.8% this morning.
Beazley, DCC and Hiscox are top of the leaderboard, with a mix of cyclical and defensive names backing them up such as BT, Tesco, Berkeley and JD Sports.
GSK and SSE, which both announced trading updates, are up 3.4% and 2.2%.
They were the first set of results for new GSK boss Luke Miels.
While they "can hardly be said to have made much of a splash", says market analyst Dan Coatsworth at AJ Bell, "that may be no bad thing as far as he’s concerned".
The numbers are "solid enough", with "no alarms" on the outlook to give Miels "space to chart out a course through what could be some choppy waters ahead as GSK faces the task of delivering commercially successful new drugs to make up for impending patent expiries, all while delivering on demanding growth targets", says Coatsworth.
As for SSE, he says the market wasn’t troubled by guidance for a dip in annual earnings at SSE, "instead focusing on the more significant news that its massive multi-year investment programme is on track".
"Delivering on this programme and its associated growth potential is far more relevant than a single year’s earnings per share."
Despite a blip in November, SSE shares are up a third in the last six months, surging to another in a series of all-time highs this morning.
As for Beazley, once Zurich makes a formal offer "it looks the deal could be sewn up in a jiffy", he adds.
"The downside for the UK stock market is the potential loss of another major financials business, and one that has generated significant returns for investors over the years."
9.45am: UK services sector mood at five-month high
The UK services purchasing managers' index for last month came in slightly below the 'flash' reading but up from the end of last year to a five-month high.
January's UK services PMI from S&P Global reached 54.0, up from 51.4 in December, but not quite as good as the 54.3 expected.
This measure of activity and mood in the UK's services sector was above the 50.0 mark for the ninth consecutive month.
Tim Moore, economics director at S&P Global, said: "The latest survey revealed an encouraging start to 2026 for the UK service sector, following a sluggish end to last year.
"Output growth was the fastest for five months, supported by an uplift in investment sentiment and greater new order intakes."
Risk aversion in response to geopolitical tensions was cited by some companies as a factor holding back business spending, he added.
But services companies appear "cautiously optimistic" about growth prospects for the next 12 months, with confidence the highest seen since October 2024.
"However, there were again gloomy signals for the UK labour market outlook as staff hiring decreased at a steeper pace in January as firms looked to offset rising payroll costs. Another sharp increase in overall input prices contributed to the fastest rate of output charge inflation for five months."
8.56am: Investors 'don't know how to price for AI impact'
London Stock Exchange Group, Sage Group, RELX and Informa are all falling again this morning.
Online names Rightmove and Autotrader are also in the red.
"AI is killing software," says Neil Wilson at Saxo, after Anthropic's release of a legal plug-in for its Claude AI service triggered a selloff yesterday in some "adjacent data analytics software names".
As the tool can automate a lot of legal work, it is "another example of how AI is disrupting software and data analytics, and how we will see winners and losers", he says.
Nvidia boss Jensen Huang, meanwhile, has said the "notion that the tool in the software industry is in decline, and will be replaced by AI ... It is the most illogical thing in the world, and time will prove itself".
Nevertheless, the FTSE 100 has cracked a fresh record high of 10,383.4 this morning, with miners, oilers and insurers leading gains.
The "sell software" trade still dominates the narrative, with Wilson saying it is mainly caution from investors about the impact of AI.
"We don’t know who’s going to win or lose, and we don't yet know really how useful some of these tools are, but we reckon a lot of these firms are going to struggle to generate margin as AI will compress and compete away competitive advantage.
"To make a general point, there are clearly bargains with some of these names as some will be winners, but investors are turning backs because they are saying 'we don't know how to price these stocks'."
He says another blow to the AI trade arrived after the closing bell with AMD warning of weaker first-quarter sales, sending shares down 8% after-hours.
"Is the house of cards about to fall?"
Crypto treasury stocks were hammered as bitcoin fell below $73K, the lowest since November 2024, though is back up above $76K now.
With treasury stocks like Strategy feeling the pain, Wilson says this is "another sector that investors are turning their backs on because they don't know how to price it".
8.32am: GSK gains
Shares in GSK are up 2% after the drugmaker reported earnings slightly below consensus, but announced that 350 research and development roles will be axed.
A 7% rise in sales for 2025 to £32.7 billion was reported, with revenues from HIV, oncology and the respiratory, immunology & inflammation arm all making double-digit gains.
Total operating profit more than doubled to £7.9 billion, helped by reduced legal and intangible costs, and core earnings per share were up 12% to 172p.
Guidance for 2026 remained unchanged, with revenue expected to grow 3–5% and core profit and earnings forecast to rise 7–9%.
8.15am: FTSE hurries higher
Forget the quiet start, the FTSE 100 has hurried 54 points higher to 10,368.5.
Beazley is up 8.6% to lead the pack after its board agreed to the terms of a possible £8 billion offer from Zurich Insurance.
Sector peer Hiscox is up 3.3%.
Other gainers include precious metals miners Fresnillo and Endeavour, housebuilder Berkeley Group, and oil produders BP and Shell.
7.49am: Watches of Switzerland raises outlook
Watches of Switzerland has wound its full-year sales guidance higher following better trading during the festive quarter, driven by buoyant demand from both its US and UK businesses.
The FTSE 250 group expects sales for the 2026 financial year to rise between 9% and 11% in constant currency, compared with previous guidance of 6-10%.
However, it trimmed its profit margin forecast slightly, citing brand margin changes, product mix and one-off costs tied to ecommerce, debtor provisions and the acquisition of four showrooms in Texas.
7.24am: Yesterday was 'brutal' for many
Deutsche Bank's macro strategy team called yesterday "a pretty brutal day in markets... that wouldn’t be obvious with a quick glance of the screens, as a majority of the S&P 500’s constituents rose on the day".
"The reason was that Anthropic launched a new AI automation tool servicing legal work, which was perceived as a big threat to software firms and related stocks."
The initial falls in Europe of RELX, Wolters Kluwer, Experian, Thomson Reuters, and the LSE of 10-15%, were followed in turn, by the overall US software index dropping 4.6%, with 104 decliners and only 9 risers, and its sixth successive decline to put the index back to levels seen last April, with Microsoft down 2.9% and is now down -24% from its peak on October 28 last year.
"So yesterday marked a dramatic acceleration of the trend we’d seen of late, and it means the 9 worst-performing companies in the S&P 500 YTD are all in the software and related services sectors, having now seen declines of 25% or more.
"While the question over the end-winners from AI is unlikely to be answered in 2026, recent months have seen a clear shift in markets from AI euphoria towards more differentiation between companies, and growing concern about its disruption to existing business models."
7.16am: FTSE 100 to regain poise after AI scare
The FTSE 100 has been called modestly higher on Wednesday, after the previous session was marked by somewhat panicked selling on both sides of the Atlantic.
London's premier stock index is predicted to rise 16 points, according to the futures market, having dropped almost 27 points to close at 10,314.59 the previous day.
Overnight, the tech-heavy Nasdaq dropped 1.4% and the S&P 500 fell 0.8% as most of the 'Mag 7' tech giants lost ground, with the Dow Jones losing 0.3%.
Asian stocks are mixed this morning, with Japan's Nikkei retreating from its high, but Chinese and Hong Kong stocks up.
Summing up yesterdsay, market analyst Ipek Ozkardeskaya at Swissquote Bank says: "The relief that came with the easing selloff across the metals space lasted until news broke that Anthropic, an AI startup backed by Amazon and Google, had rolled out a new AI tool designed to handle legal and research work traditionally done using paid databases.
"The announcement spooked markets, triggering a sharp selloff in software companies that sell data analytics and decision-making tools to lawyers, banks and corporates, on fears that AI and new players are coming for their lunch — and at an accelerated pace."
She says the day was therefore marked by a fresh wave of selling, particularly among software companies, led in Europe, by RELX and London Stock Exchange Group, which plunged 14% and 12%, while Thomson Reuters lost 15%, and Experian, Pearson and Sage saw their shares caught up in the move, before FactSet, Salesforce and Adobe sold off in the US.
"Adobe, for example, fell to its lowest levels in around six years, as the arrival of AI raised competition to a level that threatens parts of its core business severely. Bigger names were hit too: Microsoft lost 2.87% and is now down roughly 25% from its November peak. Broader tech also suffered. VanEck’s Semiconductor ETF fell 2.5%. Even Google, one of the rising AI stars of the moment, slipped 1.22% after hitting a fresh record high."
Up next, Google and Qualcomm report after the New York closing bell, before Amazon releases results on Thursday.
"By the end of the week," says Ozkardeskaya, "we should have a clearer sense of where the AI hype is heading. So far, markets have barely cheered good results — even Meta, despite delivering revenue growth tied to its AI investments, failed to hold on to its post-earnings gains."