Image source: Getty Images
Demand for FTSE 100 shares is heating up right now. The UK’s premier share index rose 3.1% over the last week as other major indices like the S&P 500 and Nasdaq (down 2% and 4.4%, respectively) and Nikkei 225 (down 4.8%) slumped.
The reason? Investors are rushing out of volatile tech shares and into the arms of defensive Footsie companies. It’s a trend I think could continue in the coming days, and here’s why.
AI worries
The US and Asian stock markets are dominated by technology companies. And so they are extremely vulnerable to growing fears of a bubble involving artificial intelligence (AI) stocks.
Key factors battering AI stocks right now include:
- Fears over runaway spending as firms build out their infrastructure.
- Uncertainty over when AI investments will become profitable.
- Growing competition from Chinese companies.
So what happened last week to spur this latest sell-off? The biggest contributor was US inflation numbers that were higher than forecast. Annual CPI rose to 3.7% in September; PPI, meanwhile, leapt to a jaw-dropping 6.3%.
This not only raised worries over interest rates, a classic headwind for technology companies’ share prices. It’s increased specific worries over the huge debts AI firms are taking on to fund their spending plans, and the prospect of their borrowing costs rocketing as rates rise.
However…
But here’s the thing. News flow from the AI industry’s major players remains extremely positive as the use of AI agents takes off.
Taiwan Semiconductor Manufacturing Company (TSMC) last week raised its 2026 forecasts after recording brilliant net profit growth for Q3 (up 69%). But even blowout results like these aren’t enough to steady investor nerves (TSMC’s share price dropped 3.6% last week).
Several major AI including Meta Platforms, Tesla, IBM and Lam Research are due to update the market soon. In the current febrile climate, even the slightest sign of weakness could worsen the tech sector rout.
Another FTSE surge?
There’s no guarantee of further share price drops, of course. AI stocks are notoriously volatile, and recent weakness could prompt massive dip buying that drives prices skywards. Sentiment may also improve if those aforementioned tech giants put out strong Q3 trading numbers.
But a fresh collapse is possible that could supercharge the FTSE 100 again. Defensive stocks took off last week as investors sought safe havens, including consumer goods producer Reckitt (up 6.3%), medical products manufacturer ConvaTec (up 7.6%) and tobacco stock Imperial Brands (up 6.4%).
I think National Grid (LSE:NG.) is another FTSE share that could benefit further from safe-haven buying. It rose 3.5% last week. And I’m considering it now for my own portfolio.
A top UK share
National Grid could be considered one of the most defensive shares out there. It maintains the UK power grid, an essential service that households and businesses rely on every day. And the FTSE 100 firm operates a monopoly in this area, giving the company even more predictable income streams.
It could continue rising in value as investors seek safe-haven stocks. But this isn’t the sole reason I’m considering it. Over the long haul, I’m expecting strong returns as it expands its asset base by 10% a year.
It’s also well placed to capitalise on the UK’s energy transition, even though rising investment costs pose a risk. It’s a top FTSE safe haven in my view, though it’s not the only one investors should consider…
What income stock do we like better than National Grid Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Royston Wild does not hold any positions in the companies mentioned.
Image source: Getty Images
Demand for FTSE 100 shares is heating up right now. The UK’s premier share index rose 3.1% over the last week as other major indices like the S&P 500 and Nasdaq (down 2% and 4.4%, respectively) and Nikkei 225 (down 4.8%) slumped.
The reason? Investors are rushing out of volatile tech shares and into the arms of defensive Footsie companies. It’s a trend I think could continue in the coming days, and here’s why.
AI worries
The US and Asian stock markets are dominated by technology companies. And so they are extremely vulnerable to growing fears of a bubble involving artificial intelligence (AI) stocks.
Key factors battering AI stocks right now include:
- Fears over runaway spending as firms build out their infrastructure.
- Uncertainty over when AI investments will become profitable.
- Growing competition from Chinese companies.
So what happened last week to spur this latest sell-off? The biggest contributor was US inflation numbers that were higher than forecast. Annual CPI rose to 3.7% in September; PPI, meanwhile, leapt to a jaw-dropping 6.3%.
This not only raised worries over interest rates, a classic headwind for technology companies’ share prices. It’s increased specific worries over the huge debts AI firms are taking on to fund their spending plans, and the prospect of their borrowing costs rocketing as rates rise.
However…
But here’s the thing. News flow from the AI industry’s major players remains extremely positive as the use of AI agents takes off.
Taiwan Semiconductor Manufacturing Company (TSMC) last week raised its 2026 forecasts after recording brilliant net profit growth for Q3 (up 69%). But even blowout results like these aren’t enough to steady investor nerves (TSMC’s share price dropped 3.6% last week).
Several major AI including Meta Platforms, Tesla, IBM and Lam Research are due to update the market soon. In the current febrile climate, even the slightest sign of weakness could worsen the tech sector rout.
Another FTSE surge?
There’s no guarantee of further share price drops, of course. AI stocks are notoriously volatile, and recent weakness could prompt massive dip buying that drives prices skywards. Sentiment may also improve if those aforementioned tech giants put out strong Q3 trading numbers.
But a fresh collapse is possible that could supercharge the FTSE 100 again. Defensive stocks took off last week as investors sought safe havens, including consumer goods producer Reckitt (up 6.3%), medical products manufacturer ConvaTec (up 7.6%) and tobacco stock Imperial Brands (up 6.4%).
I think National Grid (LSE:NG.) is another FTSE share that could benefit further from safe-haven buying. It rose 3.5% last week. And I’m considering it now for my own portfolio.
A top UK share
National Grid could be considered one of the most defensive shares out there. It maintains the UK power grid, an essential service that households and businesses rely on every day. And the FTSE 100 firm operates a monopoly in this area, giving the company even more predictable income streams.
It could continue rising in value as investors seek safe-haven stocks. But this isn’t the sole reason I’m considering it. Over the long haul, I’m expecting strong returns as it expands its asset base by 10% a year.
It’s also well placed to capitalise on the UK’s energy transition, even though rising investment costs pose a risk. It’s a top FTSE safe haven in my view, though it’s not the only one investors should consider…
What income stock do we like better than National Grid Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Royston Wild does not hold any positions in the companies mentioned.
