UK markets break losing streak as Nvidia earnings fuel global rally

​​​FTSE 100 ends five-day decline on tech relief

​The FTSE 100 finally broke its longest losing streak since March, rallying 0.7% as relief swept through global markets. The UK benchmark had shed roughly 4% over the previous five sessions, mirroring losses across European and US indices as AI valuation concerns mounted.

​That sell-off now looks overdone. Nvidia's blockbuster earnings have provided the catalyst markets needed to shake off recent jitters. The FTSE 250 climbed 0.5%, while European shares outperformed with the STOXX Europe 600 jumping 1%.

​The British pound strengthened slightly to just below $1.31, gaining 0.1% on the day. UK gilt yields rose across the curve, underperforming European bonds as investors await next week's budget announcement. This remains the major domestic risk event on the horizon.

​The recent pullback shouldn't surprise anyone. The FTSE hit record highs not long ago, and some consolidation was inevitable. Stretched US tech valuations, uncertainty over Federal Reserve (Fed) rate cuts, and a vacuum of economic data all contributed to market nervousness.

​Nvidia results spark global market rebound

​Nvidia delivered exactly what anxious markets needed – better-than-expected revenue forecasts and CEO Jensen Huang dismissing bubble talk outright. The AI chip giant sees the $500 billion sales bonanza potentially growing even larger as demand from cloud computing companies remains robust.

​The shares surged nearly 5% in after-hours trading, lifting the entire cohort of AI-related stocks. S&P 500 futures climbed 1.3% as investors who'd been fretting about concentration risk suddenly rediscovered their appetite for tech exposure.

​From Nvidia's vantage point, the AI story is far from played out. Huang's confidence in sustained demand provides reassurance that the massive capital expenditure by hyperscalers isn't about to evaporate. This matters for the broader market narrative around AI investment.

​But scepticism remains warranted. Nvidia cannot carry the entire stock market forever. Concerns about narrow market breadth and concentration risk won't disappear just because one earnings report beat expectations. The rally's sustainability depends on broader participation across sectors and geographies.

​Financials and commodities drive UK gains

​The sectors leading the FTSE 100 higher mirror strength elsewhere, with financials and commodity-linked stocks providing the bulk of the lift. HSBC, Shell, Rio Tinto and Barclays all contributed meaningfully to the index's recovery this morning.

​The glaring absence is technology – the best performing sector on the Stoxx 600 but one where the FTSE 100 remains chronically underweight. This structural deficit continues to hamper the UK benchmark's ability to keep pace during tech-driven rallies.

​Meanwhile, typically defensive sectors are weighing on performance. Utilities and telecoms tend to lose favour when risk appetite improves, and that pattern held true today. National Grid and Vodafone emerged as the two biggest drags on the FTSE 100.

​This sector rotation makes sense given the shift in sentiment. Investors moving back into cyclical and growth-oriented areas naturally reduce exposure to bond proxies and defensive names. Those looking to trade shares should watch for whether this rotation proves durable or merely a temporary relief bounce.

​Company updates: JD Sports cuts profit outlook

​JD Sports dampened the morning's optimism by guiding full-year profit toward the lower end of expectations. The sportswear retailer's like-for-like sales fell 3.3% in the UK during the third quarter (Q3), though this represented an improvement on prior periods.

​The consumer backdrop in Britain remains tough, according to JD Sports, with unseasonably warm September weather hitting clothing and outdoor gear sales. In North America, its largest market, footwear sales suffered as product cycles from major trainer brands came to an end.

​Elsewhere, CMC Markets upgraded profit guidance after first-half performance topped expectations. The online trading platform reported record client cash balances growing exponentially, with particular strength in Australian stockbroking. Market volatility during the period boosted activity in commodity and index-related products.

Halma raised guidance citing strong first-half growth, particularly in photonics. The safety equipment firm now expects mid-teens organic revenue growth. Dr. Martens met analyst estimates thanks to a 33% surge in shoe volumes, though boot sales through direct channels fell 17%.

​Asian markets lead tech-fuelled rally

​Asian markets delivered the strongest performance, with tech-heavy bourses celebrating Nvidia's results. Tokyo's Nikkei 225 surged 2.6%, South Korean stocks jumped 2.3%, and Taiwan rallied 3.2% as semiconductor manufacturers made substantial gains.

​Taiwan Semiconductor Manufacturing Co (TSMC) rose 4.3%, Samsung Electronics advanced 5.3%, and Tokyo Electron surged 5.4%. These moves reflect optimism about sustained demand across the AI supply chain. MSCI's Asia-Pacific index outside Japan climbed 1.1%, rebounding from a one-month low.

​Chinese markets bucked the trend, with Hong Kong's Hang Seng slipping 0.3% and mainland stocks erasing earlier gains to decline 0.5%. This divergence suggests investors remain cautious about Chinese growth prospects despite the global tech enthusiasm.

​The US dollar index advanced 0.2% to 100.25, hovering near a two-week high. Traders await delayed September jobs data for clues about the Fed's next move. Fed funds futures now price just 33% probability of a December rate cut, down from 50% a day earlier.

​Market outlook: budget concerns remain

​The FTSE 100's recovery looks encouraging in the near term, but structural concerns persist. Next week's UK budget remains a significant risk event that could easily unsettle recent gains. Investors will scrutinise tax changes and spending plans for implications on corporate profitability.

​The index's lack of technology exposure continues to limit upside during tech-driven rallies. While financials and commodities can provide support, the absence of large-cap tech names means the FTSE struggles to match gains in US and European peers during periods of tech strength.

​Valuation remains supportive, however. The FTSE 100 trades at roughly 10 times forward earnings – undemanding by historical standards. This provides a buffer against disappointment, though it also reflects persistent concerns about UK economic growth and political uncertainty.

​For traders considering positions, the technical picture has improved with the five-day losing streak broken. But confirmation requires follow-through in coming sessions. Spread betting and CFD trading offer ways to take advantage of both upside and downside scenarios.