FTSE 100 edges higher but US tech stocks wobble

The FTSE 100 nudged higher on Tuesday as investors weighed the Middle East crisis and reports that OpenAI has missed internal targets for users and revenue.

The FTSE 100 closed up 11.70 points, 0.1%, at 10,332.79. The FTSE 250 ended down 180.01 points, 0.8%, at 22,399.42, and the AIM All-Share fell 8.28 points, 1.0%, at 786.90.

Oil prices climbed once more with Qatar warning of the possibility of a “frozen conflict” in the Gulf, as talks between the US and Iran for a peace deal appeared to be at a stalemate.

Brent oil traded at 111.77 US dollars a barrel on Tuesday afternoon, higher compared to 108.92 dollars at the time of the equities close in London on Monday.

Aside from the Iran war, analysts reacted to news that the United Arab Emirates is quitting the Opec and Opec+ groups of major oil-producing nations next month after nearly 60 years of membership.

The UAE said its decision would help it meet growing global energy demand in the long-term after recent investments to boost its production capacity.

Michael Brown at Pepperstone said the main surprise is in “its timing, as opposed to its substance”.

While this is undoubtedly a “pivotal” event for the global energy market, Mr Brown said, the near-term implications of the move are likely to be “relatively limited”.

“Though the UAE have pledged to ‘gradually’ increase production after their departure, it goes without saying that actually doing so at present is somewhere between difficult, and impossible.

“As the US-Iran conflict continues, and the Strait of Hormuz remains impassable, the most significant issue for the crude market is not production, but actually shipping product to where it is needed. Today’s announcement does not change anything on that front,” he said.

Mr Brown noted the UAE’s dissatisfaction with Opec has been “clear for some time, with the country of the belief that Opec quotas are an unfair limit, constraining the nation’s major infrastructure investment projects”.

Saul Kavonic, head of energy research at MST Financial, told the BBC it was “the beginning of the end of Opec”.

“With the UAE leaving, Opec loses about 15% of its capacity and one of its most compliant members,” Mr Kavonic said.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.5%, and DAX 40 in Frankfurt fell 0.3%.

In New York, the Dow Jones Industrial Average was up 0.2%, the S&P 500 was 0.8% lower, and the Nasdaq Composite declined 1.4%.

Tech stocks bore the brunt of Tuesday’s falls in the US, after a Wall Street Journal (WSJ) report said OpenAI had missed internal targets for users and revenue, stoking fresh fears about whether massive spending on AI infrastructure can be sustained.

The WSJ said that OpenAI had missed its own goal of reaching one billion weekly active users for ChatGPT by the end of 2025 and fell short of multiple monthly revenue targets this year.

According to the report, OpenAI chief financial officer Sarah Friar has privately warned company leaders that the firm might be unable to meet future computing contract obligations if revenue growth does not accelerate.

Oracle fell 3.6%, Advanced Micro Devices by 3.5%, and Nvidia by 2.1% as the report caused a ripple effect across technology stocks.

But Wedbush Securities pushed back against the report.

“Overall, we believe OpenAI has been tracking very high demand on both the consumer and enterprise front and we strongly disagree with the notion that growth is weakening. We would be buyers of AI-driven tech stocks this morning and in particular Oracle on this way overreaction to this WSJ report in our view,” the broker said.

The yield on the US 10-year Treasury was 4.36% on Tuesday, widening from 4.32% on Monday. The yield on the US 30-year Treasury stretched to 4.96% from 4.93%.

The pound eased to 1.3505 US dollars on Tuesday afternoon from 1.3549 dollars on Monday. Against the euro, sterling ebbed to 1.1534 euros from 1.1543 euros.

The euro traded lower against the US dollar, falling to 1.1709 dollars on Tuesday from 1.1733 dollars on Monday. Against the yen, the dollar was trading at 159.61 yen, higher from 159.27 yen.

On the FTSE 100, BP rose 1.1% after better-than-expected first-quarter results, which benefited from the surge in oil prices.

The London-based oil major said underlying replacement cost profit ballooned to 3.20 billion dollars in the first quarter of 2026 from 1.38 billion dollars the year prior, well ahead of 2.67 billion dollars expected by the company-compiled market consensus.

Barclays eased 0.2% as in-line results failed to energise its share price.

The London-based lender said pre-tax profit rose 3.3% to £2.81 billion in the first quarter of 2026 from £2.72 billion a year before, just shy of the company-compiled consensus of £2.83 billion.

Jefferies analyst Jonathan Pierce said the results were “solid enough” with “no fireworks”.

A weaker gold price hit Fresnillo, down 2.0%, and Endeavour Mining, down 4.5%. The yellow metal traded down at 4,579.32 dollars an ounce on Tuesday, from 4,677.74 dollars at the same time on Monday.

On the FTSE 250, Telecom Plus tumbled 17% as it guided to low-end full-year profit, while SSP fell 5.5% as UBS downgraded to “neutral” from “buy”, noting risks to volumes in the travel retail industry linked to the Middle East conflict are increasing.

Elsewhere, building materials firm Travis Perkins and house builder Taylor Wimpey slid 4.0% and 5.3%, respectively, as investors weighed trading updates.

The biggest risers on the FTSE 100 were DCC, up 145.00p at 5,380.00p, Airtel Africa, up 8.20p at 355.40p, Centrica, up 4.10p at 211.20p, Coca-Cola Europacific Partners, up 135.00p at 7,260.00p, and British American Tobacco, up 76.00p at 4,312.00p.

The biggest fallers on the FTSE 100 were Endeavour Mining, down 195.00p at 4,191.00p, Antofagasta, down 122.00p at 3,488.00p, Anglo American, down 111.50p at 3,520.00p, Compass Group, down 0.80p at 28.52p and Experian, down 74.00p at 2,824.00p.

Wednesday’s global economic calendar has interest rate decisions in the US and Canada, German inflation data and US durable goods figures.

Wednesday’s local corporate calendar has first-quarter results from pharmaceutical firms AstraZeneca and GSK, lender Lloyds Banking Group and consumer products firm Haleon.

Contributed by Alliance News