FTSE 100 shows resilience amid global market turbulence

​​​FTSE 100 outperforms European peers

​The FTSE 100 demonstrated relative strength during the opening hours of trading, briefly moving into positive territory after opening lower. This performance stood out against a backdrop of weakness across European markets, with the STOXX Europe 600 hitting a two-week low.

​Defensive stocks provided the main support for the UK index, as investors rotated away from riskier assets. The shift towards traditionally stable sectors reflects growing caution about the broader economic outlook and concerns about stretched valuations in growth-oriented areas of the market.

​Gilt yields declined as investors sought the safety of government bonds, reinforcing the flight-to-quality theme. The combination of defensive equity positioning and bond market strength suggests traders are hedging against potential volatility ahead, particularly with the upcoming Budget announcement creating uncertainty.

​The relative outperformance of the FTSE 100 may also reflect its heavier weighting towards traditional sectors such as energy, financials and consumer staples. These areas tend to hold up better during periods of market stress compared to the technology-heavy indices that have led recent market weakness.

​Tech selloff ripples across global markets

​A technology-led selloff that began in the US continued to reverberate through Asian and European markets. Artificial intelligence (AI)-related stocks bore the brunt of the selling pressure, with investors questioning whether recent valuations adequately reflect the risks and timeline for returns on AI investments.

​The weakness in tech shares represents a significant shift in sentiment from the optimism that drove strong gains in the sector over the past 18 months. Concerns about the pace of AI adoption, potential regulatory challenges, and the substantial capital expenditure required are all weighing on investor confidence.

​Asian markets experienced particular pressure as technology companies with exposure to AI hardware and software saw sharp declines. The contagion effect spread to European technology stocks, though the impact was somewhat muted given the region's lower weighting in this sector compared to US indices.

​Budget uncertainty clouds UK outlook

​The upcoming Budget has emerged as a significant source of concern for UK markets, with think tanks suggesting Chancellor Rachel Reeves may require a £50 billion fiscal buffer. This substantial figure has fuelled speculation about potential tax rises and spending adjustments that could impact both businesses and consumers.

​Market participants are particularly focused on how any fiscal changes might affect corporate profitability and consumer spending power. The uncertainty is likely to keep a lid on sentiment in the near term, with traders reluctant to take on significant new positions ahead of the Budget announcement.

​The potential for tax increases comes at a challenging time for UK businesses already grappling with elevated costs and subdued economic growth. Sectors particularly vulnerable to fiscal changes, such as retail and hospitality, have shown heightened sensitivity to Budget-related headlines in recent trading sessions.

​Mixed company results highlight sector divergence

​Individual company performance painted a diverse picture of the UK corporate landscape. Marks & Spencer reported a 55% profit plunge following a significant website outage caused by a cyberattack, though the company maintained its guidance and noted continued strength in food sales, demonstrating resilience in its core business.

JD Wetherspoon adopted a more cautious stance despite ongoing sales growth, reflecting broader concerns about consumer spending ahead of the Budget. The pub operator's conservative tone contrasted with some other consumer-facing businesses and may signal growing prudence among retailers heading into an uncertain fiscal environment.

​Metro Bank provided a bright spot, climbing 6% after reporting stronger lending margins and a positive third-quarter update. The bank's performance suggests that higher interest rates continue to benefit some financial institutions, even as concerns about economic growth persist across other sectors.

Barratt Redrow reaffirmed its full-year guidance while noting that home completions remain dependent on demand patterns and Budget outcomes. The housebuilder's cautious optimism reflects the delicate balance facing the property sector between relatively resilient underlying demand and sensitivity to potential policy changes affecting homebuyers.

​Safe-haven assets gain as volatility rises

Gold prices surged towards $4,000.00 per ounce as investors sought traditional safe-haven assets amid the market turbulence. The precious metal's strength reflects not just concerns about equity valuations, but also broader uncertainty about the global economic outlook and geopolitical tensions.

​Haven currencies also strengthened, with the Japanese yen and Swiss franc gaining ground against riskier currencies. This currency market movement reinforces the defensive positioning evident across other asset classes and suggests traders are preparing for potentially prolonged uncertainty.

​The rally in government bonds, particularly UK gilts, provided further evidence of the risk-off sentiment pervading markets. The combination of rising bond prices and falling yields indicates strong demand for assets perceived as safe stores of value during turbulent periods.