London midday: FTSE down but off lows as AI bubble fears persist
By Michele Maatouk
Date: Friday 21 Nov 2025
(Sharecast News) - London stocks were well off earlier lows but still in the red by midday on Friday as worries about AI valuations and US growth rattled markets yet again.
The FTSE 100 was down 0.3% at 9,496.77, having hit a one-month low earlier.
Dan Coatsworth, head of markets at AJ Bell, said: "Relief around Nvidia's results didn't last long as investors couldn't shake their fears that the AI boom might have got ahead of itself.
"There is a lingering concern that the AI revolution might take longer than expected to truly transform the way companies do business. People in the late 1990s were right to predict the internet would change the world, they just had to wait a bit longer than initially thought, and that resetting of expectations was central to the bursting of the dotcom bubble.
"Importantly, there are many differences between now and the dotcom boom and bust. That offers a glimmer of hope we're simply seeing a perfectly common market pullback after a fruitful period rather than a full-blown correction.
"Companies leading the AI craze are in a strong financial position. There aren't signs of excess on the market such as back-to-back IPOs, and most of the big names splashing out on tech infrastructure aren't binary bets on AI as they have solid business operations that already support strong earnings. They're very much jam today rather than jam tomorrow.
"There is a clear shift in risk appetite evident today, with tech stocks weaker and defensive-style companies such as utilities and consumer healthcare product providers in vogue as people seek to hide in traditionally safer parts of the market.
"When markets remain on a knife edge, it's inevitable that some people will want to protect any profits by trimming positions. That selling behaviour is likely to be what's dragging down markets.
"It also didn't help that investors are struggling to predict what the Federal Reserve will do next with interest rates. Conflicting messages from central policymakers have left investors scratching their heads over whether rates will be cut next month or not. Markets are now expecting a 67% chance of no change at December's meeting, whereas a month ago there was a 98% chance of a quarter percentage point cut."
On home shores, uninspiring data releases did nothing to lift the mood.
A survey showed that private sector growth eased in November as decisions were put on hold in the run-up to the Budget.
The S&P Global flash UK PMI composite output index fell to 50.5 from 52.2 in October, coming in below expectations for a reading of 51.8.
A reading above 50 indicates expansion, while a reading below signals contraction.
The services PMI fell to 50.5 in November from 52.3 in October, while the manufacturing PMI ticked up to 50.2 from 49.7.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "November's flash PMI surveys brought disappointing news on the UK economy. Economic growth has stalled, job losses have accelerated, and business confidence has deteriorated.
"The PMI is broadly consistent with no change in GDP in November and a meagre 0.1% quarterly pace of growth so far in the fourth quarter.
"Some of this malaise has been blamed on paused spending decisions ahead of the Autumn Budget, but there's a real chance this pause may turn into a downturn. The drop in confidence about the year ahead reflects growing concerns that business conditions will remain tough in the coming months, largely linked to speculation that further demand-dampening measures will be introduced in the Budget."
Elsewhere, figures from the Office for National Statistics showed the government borrowed more than expected in October.
Borrowing came in at £17.4bn, down £1.8bn on October 2024 but above expectations of £15bn. It was also slightly higher than the Office for Budget Responsibility's forecast of £14.4bn and marked the third-highest October borrowing since monthly records began in 1993, after those of 2024 and 2020.
ONS chief economist Grant Fitzner said: "Borrowing this October was down on the same month last year, although it was still the third-highest October figure on record in cash terms.
"While spending on public services and benefits were both up on October last year, this was more than offset by increased receipts from taxes and National Insurance contributions."
Total borrowing in the year so far was £116.8bn, up £9bn on the same period a year earlier and the second-highest figure for April to October on record after that of 2020.
Separate data from the ONS showed that retail sales unexpectedly fell in October, as consumers held back on spending ahead of the Black Friday sales.
In equity markets, reports of a potential peace plan to end the Ukraine war dented defence names, with Melrose, Rolls-Royce, Babcock and BAE Systems all down.
Babcock was also in focus after it delivered a big jump in profits over the first half ended 30 September, driven by double-digit organic growth in its nuclear division and an improvement in group margins. The company, which provides engineering support to defence markets along with products like naval ship and weapons handling systems, said it remains on track to achieve its expectations for the full year.
Miners were also under the cosh, with Antofagasta, Glencore and Rio Tinto all down.
Tullow Oil tanked after saying it is engaging in refinancing talks in an attempt to put the business on a "long-term sustainable financial footing", as it revealed that full-year output would be at the low end of guidance and production would fall further next year.
Ithaca Energy tumbled after a downgrade to 'sell' at Goldman Sachs.
On the upside, Hammerson gained as it completed the £104.5m purchase of the remaining 50% stake in The Oracle, located in Reading, and lifted its EPRA guidance.
Frasers Group also rallied after announcing late on Thursday that it had bought the Braehead Shopping Centre in Glasgow, Scotland's largest retail and leisure destination.
Market Movers
FTSE 100 (UKX) 9,496.77 -0.32%
FTSE 250 (MCX) 21,290.64 -0.44%
techMARK (TASX) 5,487.95 -0.16%
FTSE 100 - Risers
London Stock Exchange Group (LSEG) 8,630.00p 3.60%
Persimmon (PSN) 1,240.50p 3.25%
Diageo (DGE) 1,751.00p 2.76%
Experian (EXPN) 3,324.00p 2.62%
Relx plc (REL) 3,097.00p 2.28%
Haleon (HLN) 377.60p 2.16%
Barratt Redrow (BTRW) 373.40p 2.16%
Bunzl (BNZL) 2,132.00p 2.01%
Berkeley Group Holdings (The) (BKG) 3,782.00p 1.78%
Games Workshop Group (GAW) 18,580.00p 1.75%
FTSE 100 - Fallers
Antofagasta (ANTO) 2,525.00p -4.61%
Melrose Industries (MRO) 580.60p -4.35%
Fresnillo (FRES) 2,252.00p -3.68%
Rolls-Royce Holdings (RR.) 1,041.50p -3.48%
JD Sports Fashion (JD.) 74.70p -3.34%
Glencore (GLEN) 337.55p -3.29%
Pershing Square Holdings Ltd NPV (PSH) 4,678.00p -2.74%
Scottish Mortgage Inv Trust (SMT) 1,033.00p -2.68%
BAE Systems (BA.) 1,719.50p -2.02%
CRH (CDI) (CRH) 8,234.00p -1.95%
FTSE 250 - Risers
Hammerson (HMSO) 303.60p 5.20%
Frasers Group (FRAS) 711.50p 3.87%
Oxford Nanopore Technologies (ONT) 128.60p 3.63%
CMC Markets (CMCX) 277.00p 3.55%
XPS Pensions Group (XPS) 323.50p 3.03%
B&M European Value Retail S.A. (DI) (BME) 169.90p 2.97%
Telecom Plus (TEP) 1,734.00p 2.85%
SSP Group (SSPG) 146.70p 2.80%
Me Group International (MEGP) 154.40p 2.80%
Trainline (TRN) 259.60p 2.77%
FTSE 250 - Fallers
Ithaca Energy (ITH) 204.50p -12.42%
Ceres Power Holdings (CWR) 342.80p -6.85%
Harbour Energy (HBR) 218.00p -5.63%
Hochschild Mining (HOC) 346.00p -5.21%
Polar Capital Technology Trust (PCT) 434.00p -5.03%
IntegraFin Holding (IHP) 319.00p -4.92%
Allianz Technology Trust (ATT) 494.50p -4.54%
Energean (ENOG) 920.00p -4.17%
Diversified Energy Company (DEC) 1,084.00p -4.16%
BlackRock World Mining Trust (BRWM) 652.00p -4.12%
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