The FTSE 100 closes lower Tuesday, shedding 30.68 points, or 0.3%, to finish at 10,708.33, as falling oil prices and cautious sentiment around US-Iran diplomacy tempered any enthusiasm from a record-breaking run on Wall Street the night before.
The FTSE 250 bucked the trend, rising 35.08 points, 0.1%, to 24,526.45, and the AIM All-Share edged up 0.44 of a point, also 0.1%, to 795.84. In European equity markets, both the Cac 40 in Paris and the Dax 40 in Frankfurt closed modestly higher.
Meta’s Muse drives Wall Street mood despite measured London session
The backdrop to Tuesday’s trading was Monday’s surge on the Nasdaq Composite, which reached a record high after enthusiasm around Meta Platforms’ new personal AI (artificial intelligence) agent, Muse, gathered pace. An AI agent is software that can take actions on a user’s behalf, rather than simply answering questions.
Susannah Streeter, chief investment strategist at Wealth Club, said the arrival of Muse in an accessible app format had set ‘pulses racing’ about how widely it might be adopted. ‘Meta’s agent interacts with a user’s digital experience, linking diaries and mail, and can shop and make bookings. With expectations that the social network will integrate even further into the lives of billions around the world, and demand huge amounts of supporting infrastructure to do so, Meta’s shares have rocketed,’ she said.
Meta traded 1.1% higher on Tuesday after soaring 11% on Monday, and has now risen 33% in the past month. The Nasdaq firmed a further 0.4% on Tuesday, while the Dow Jones Industrial Average was down 0.5% and the S&P 500 was flat at the time of the London close.
The scale of Muse’s early uptake helps explain the market reaction. According to CNBC, the app had logged over 2.5 million downloads since its debut as of Monday. Yahoo Finance reports that Muse reached No. 1 on the App Store within 12 days, accumulating 1.8 million downloads in that window and surpassing ChatGPT’s comparable figure of 1.3 million.
That growth has not come without scrutiny, however. Research by Surfshark found that Meta collects 33 data types across its AI chatbot apps, which amounts to nearly 95% of all the data categories listed in the Apple App Store. That is a level of data collection that sets it apart from rival chatbot applications, and is likely to draw attention from regulators and privacy advocates as adoption grows.
Russ Mould, investment director at AJ Bell, described Tuesday’s mood as ‘more measured’ following Monday’s risk-on session, noting that ‘after the return for risk appetite which saw the Nasdaq advance to a new record last night, there was a more measured feel to proceedings in Asia and Europe on Tuesday.’
Oil prices and Iran diplomacy keep FTSE 100 lower
Brent crude was quoted at $99.39 a barrel at the London equity market close, down from $100.28 late on Monday. Reports suggested Iran would consider reopening the Strait of Hormuz within seven days should the US take steps to ease military pressure on Tehran. The initial report came from Japan’s Kyoto News, which said this would be a precursor to renewed talks aimed at agreeing a permanent end to hostilities.
Iran’s President Masoud Pezeshkian is travelling to New York to attend the UN General Assembly, with investors hopeful a meeting with US President Donald Trump could follow. David Morrison, senior market analyst at Trade Nation, said the situation suggested ‘the US blockade has been successful in crippling Iran economically’, adding that it could give President Trump ‘a window of opportunity to boast of victory, just ahead of the mid-term elections in November.’ Morrison also noted this ‘could improve the Republicans’ chances, even after the Federal Reserve hiked borrowing costs at last week’s meeting.’
Mr Mould cautioned that for oil to fall further, tangible diplomatic progress would need to come ‘sooner rather than later.’ Defence contractors BAE Systems and Babcock International fell 2.8% and 2.1% respectively, as hopes for diplomatic progress in the Middle East and Ukraine weighed on the sector.
On the data front, the Office for National Statistics said UK public sector net borrowing reached £18.27 billion in August, up from £15.35 billion a year before. The reading came in above the consensus pencilled in by FXStreet-cited analysts of £15.7 billion. The pound was quoted at $1.3342, down from $1.3372 at the same time on Monday.
Among individual stocks, Kingfisher led the FTSE 100 risers, gaining 12% after a stronger-than-expected performance from Screwfix prompted the company to raise its full-year adjusted pre-tax profit guidance to a range of £595 million to £635 million, up from the previous range of £565 million to £625 million. Smiths Group advanced 7.5% after announcing a new share buyback, and JD Sports Fashion rose 6.4% ahead of its half-year results. Standard Chartered fell 2.3% after a Financial Times investigation reported that the bank, alongside other global lenders, had processed billions of dollars for A7, a Kremlin-backed fintech network that allegedly used forged documents to bypass western sanctions.
