The FTSE 100 (^FTSE) and European stocks finished higher for a second day on Tuesday, while Wall Street wavered as anxiety about inflated AI valuations overshadowed signals that the US government shutdown is set to end soon.
SoftBank Group (SFTBY) said on Tuesday it had sold its entire stake in chipmaker Nvidia (NVDA) to fund its own investments in AI development. The move comes at a time when Wall Street is questioning whether the AI spending spree will pay off amid lofty valuations of stocks in the sector. Shares of Nvidia dropped about 2% in early trading.
Elsewhere in tech, CoreWeave (CRWV) fell around 11% after the Nvidia (NVDA)-backed AI infrastructure provider flagged a delay by a data centre partner. The company trimmed its full-year revenue forecast after market close on Monday, taking the shine off its strong quarterly earnings.
On Tuesday morning, UK jobs data pointed to a weakening labour market, prompting an increase in bets on an expedited Bank of England interest rate cut as the need for an economic shot in the arm comes into focus. Polls suggested a 73% chance of a rate cut at the central bank’s meeting in December.
The data comes ahead of chancellor Rachel Reeves’ 26 November budget, where employers will be wondering what the government will choose to do as it tries to balance the books.
Read more: UK unemployment hits four-year high ahead of autumn budget
“A lot of blame will be placed on the chancellor’s decision at the last budget to hike national insurance for businesses whilst simultaneously upping the national living wage,” said Danni Hewson, AJ Bell head of financial analysis.
“That tax on jobs has undoubtedly forced some businesses to pare back their workforce or to reconsider hiring more staff, at least until the dust settles on the upcoming budget.
“Looking at the increase in redundancies over the three months to September tells you a great deal and partly dispels the notion that the jobs rout was stabilising, especially when you factor in falling payroll numbers.”
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London’s premier index was up 1.2% by the end of the session, reaching new record highs. Vodafone (VOD.L) was the top riser, up more than 7.5% following its latest set of financial results.
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The DAX (^GDAXI) in Germany was 0.6% in the green.
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France’s CAC 40 (^FCHI) rose 1.3%.
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The pan-European STOXX 600 (^STOXX) gained 1.3%.
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The pound fell slightly against the dollar (GBPUSD=X), hovering below the $1.32 mark.
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US stocks were mixed, with the S&P 500 (^GSPC) falling 0.2% and the Nasdaq Composite (^IXIC) slipping roughly 0.8%. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, inched up 0.5%. The pullback follows a roaring start to the week for stocks as hopes for the AI trade revived.
