London close: FTSE falls amid higher oil prices, AI spending worries

(Sharecast News) - London stocks fell on Thursday - albeit less than their European peers - as rising oil prices and concerns about the sustainability of artificial intelligence spending subdued stocks worldwide. The FTSE 100 ended down 0.3% at 10,725.03. Brent crude was up 2.2% at $111.18 a barrel and West Texas Intermediate was 1.3% stronger at $98.37, after Houthi attacks in Saudi Arabia heightened fears that the conflict in the Middle East was intensifying.

Danni Hewson, head of financial analysis at AJ Bell, said: "The FTSE 100 was a bastion of stability on Thursday as US and European stocks chalked up significant losses.

"The UK market's relatively modest exposure to the technology sector in general and the AI theme specifically, plus a healthy smattering of energy stocks and defensive names, helped it to avoid the scale of losses seen elsewhere.

"The British political backdrop also currently compares relatively favourably to that across the Channel, where French stocks and government bonds are selling off thanks to the ongoing unrest in the country.

"Tellingly, the positive early reaction to Meta's quarterly earnings didn't stand the test of time, with concerns about the sustainability of AI spending rearing their head once again. Once people got their heads around the fact Meta needs to raise large sums to sustain its participation in the AI arms race, they lost their initial enthusiasm for the better-than-expected revenue posted by the company and the rapid take-up of its Muse AI agent.

"Further escalation in the Middle East helped Brent crude oil top $113 per barrel. It is now at levels which are uncomfortably close to the highs seen in the early stages of the Iran conflict."

Investors were mulling a survey from the Confederation of British Industry which revealed that the manufacturing sector showed signs of stabilising in October, although high costs continued to weigh heavily.

According to the latest industrial trends survey, output volumes fell in the three months to October, with the weighted balance sliding to -10 from -4. The decline was broad based, but primarily driven by food, drinks and tobacco, chemicals and metal products.

However, the fall in output was slower than the average seen over the year to date, and manufacturers now expect output to be broadly flat in the three months to January. At -1, the forward-looking balance of is the strongest since February 2025.

Total new orders also fell in the quarter, with a balance of -16. But that was a notable improvement on July's -24, and the slowest pace of decline since April 2025.

However, overall sentiment remained depressed - at -27 - while average costs rose at a rapid pace, at 60, well above the long-run average of 20.

Cameron Martin, senior economist at the CBI, said: "There are growing signs of stabilisation for manufacturers, with firms expecting a prolonged period of falling output to come to an end in the coming months and anticipating their first increase in headcount in two years.

"But with orders still falling and labour shortages picking up, significant challenges remain. Stubbornly high costs are also squeezing profitability, while deteriorating competitiveness and fragile business confidence continue to weigh on investment decisions.

"Without an improvement in the underlying business environment, these tentative signs of stabilisation will struggle to translate into sustained growth."

In equity markets, Rentokil Initial surged after a third-quarter update, as investors welcomed signs of stabilisation in the business after it said it expects to meet full-year expectations and posted third-quarter organic revenue growth of 3.4%.

LSEG gained as it announced the acquisition of credit specialist Octus for Permira for $3.5bn and lifted its full-year guidance.

Rathbones advanced as it reported a rise in third-quarter funds under management and administration as its wealth management arm generated net inflows for the second consecutive quarter.

AJ Bell was up as it reported record platform assets under administration amid record growth in customer numbers.

RS Group was boosted by an upgrade to 'buy' from 'hold' at Berenberg, which hiked the price target to 900p from 650p ahead of the company's first-half results on 5 November.

Renishaw rose as the engineer said strong demand from semiconductor and defence customers had fuelled a surge in first-quarter sales.

On the downside, miners were under cosh as copper prices fell, with Anglo American, Antofagasta, Rio Tinto and Glencore all weaker. Precious metals miner Fresnillo also lost its shine as gold prices fell.

Barclays was little changed as it reported a slightly lower-than-expected third-quarter profit following a strong performance in equities but weakness in fixed income, announced a £500m share buyback and confirmed plans to cut around 5,000 jobs this year in an AI push.

Sainsbury's was weaker despite the supermarket giant posting improved interim sales and profits and lifting annual guidance.

Inchcape was under the cosh after the automotive distributor cut its full-year operating margin guidance, citing underperformance in Australia.



Market Movers

FTSE 100 (UKX) 10,725.03 -0.26% FTSE 250 (MCX) 24,211.71 -0.93% techMARK (TASX) 6,244.02 0.43%

FTSE 100 - Risers

Rentokil Initial (RTO) 341.80p 8.61% London Stock Exchange Group (LSEG) 9,466.00p 8.03% Smith & Nephew (SN.) 1,134.00p 4.08% IG Group Holdings (IGG) 964.50p 3.60% Experian (EXPN) 3,084.00p 3.28% Unilever (ULVR) 4,975.50p 3.23% The Sage Group (SGE) 1,190.50p 3.03% AstraZeneca (AZN) 12,980.00p 2.90% Diageo (DGE) 1,789.50p 2.82% Admiral Group (ADM) 3,876.00p 2.59%

FTSE 100 - Fallers

Fresnillo (FRES) 2,462.00p -6.46% Antofagasta (ANTO) 3,025.00p -6.17% Computacenter (CCC) 4,830.00p -5.66% Anglo American (AAL) 3,625.00p -5.60% Rolls-Royce Holdings (RR.) 1,259.60p -5.11% Lion Finance Group (BGEO) 12,150.00p -4.33% Standard Chartered (STAN) 1,981.00p -4.02% IMI (IMI) 2,820.00p -3.89% Weir (WEIR) 2,470.00p -3.59% Rio Tinto (RIO) 6,260.00p -3.42%

FTSE 250 - Risers

Rathbones Group (RAT) 1,668.00p 4.77% HGCapital Trust (HGT) 383.50p 4.21% Rightmove (RMV) 559.60p 3.02% Finsbury Growth & Income Trust (FGT) 861.00p 2.50% Hays (HAS) 58.85p 2.35% RS Group (RS1) 781.50p 2.09% AJ Bell (AJB) 597.50p 1.88% Worldwide Healthcare Trust (WWH) 386.00p 1.71% Plus500 Ltd (DI) (PLUS) 3,352.00p 1.70% Vistry Group (VTY) 248.40p 1.64%

FTSE 250 - Fallers

Ceres Power Holdings (CWR) 257.00p -11.38% Inchcape (INCH) 626.00p -8.81% Hochschild Mining (HOC) 448.60p -8.45% Domino's Pizza Group (DOM) 216.60p -5.91% Morgan Advanced Materials (MGAM) 249.50p -5.85% Volex (VLX) 532.00p -5.84% TBC Bank Group (TBCG) 4,728.00p -5.44% RHI Magnesita N.V. (DI) (RHIM) 2,530.00p -5.42% Pan African Resources (PAF) 111.30p -5.28% Ocado Group (OCDO) 329.00p -5.24%