(Alliance News) - London's blue-chips closed little changed on Monday amid a heavy sell-off in global technology stocks, including a 17% drop for chip maker Nvidia.
The FTSE 100 index ended up just 1.36 points at 8,503.71. The FTSE 250 lost 148.55 points, 0.7%, at 20,369.50, and the AIM All-Share fell 3.66 points, 0.50%, at 711.39.
The Cboe UK 100 ended up slightly at 852.40 on Monday, the Cboe UK 250 lost 0.5% at 17,811.79, and the Cboe Small Companies rose 0.2% to 16,018.60.
In European equities on Monday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt fell 0.5%.
In New York, the Dow Jones Industrial Average was down 0.2%, the S&P 500 1.9% lower, while the Nasdaq Composite was down 3.3%.
Nvidia tumbled 17%, wiping around USD500 billion off its market value, while Broadcom slumped 16%, on concerns China's Deepseek's artificial intelligence app could threaten the dominance of the US tech giants. In Europe, ASML declined 7.0%.
The Chinese firm's artificial intelligence chatbot soared to the top of the Apple Store's download charts over the weekend, stunning industry insiders and analysts with its ability to match its US competitors.
"The Deepseek R1 large language model, which gained global attention last week, is triggering an existential crisis for US tech," observed Kathleen Brooks at XTB.
"The focus is now on whether China can do it better, quicker and more cost effectively than the US, and if they could win the AI ‘race’."
Brooks said the sharp decline in US AI stocks suggests that the ‘US dominance premium’ will be permanently removed from the US tech giants.
"If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head. It could also have a geopolitical impact since China could be the first superpower to gain super intelligence. Donald Trump’s reaction to today’s stock market sell off could also be a market-moving event."
But Dan Ives at Wedbush Securities called it "another golden buying opportunity and not the time to panic."
A handful of times over the last few years there have been major tech sell-offs that were golden buying opportunities....today is another one of them in our view," he remarked.
"At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia. Launching a competitive LLM model for consumer use cases is one thing.....launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different."
The market weakness comes ahead of central bank meetings in the US, Canada and Europe this week.
The Federal Reserve is expected to leave rates unchanged, while quarter point rate cuts are expected from the Bank of Canada and the European Central Bank.
In the US, Barclays expects the Federal Open Market Committee to hold rates at 4.25% to 4.50%, starting a "potentially extended pause", and to provide little information about future changes, as it awaits more clarity about the economy's evolution.
The bank's baseline case is that the FOMC will cut rates by 25 basis points this year, in June.
The pound was quoted at USD1.2479 late Monday afternoon in London, down from USD1.2490 at the equities close on Friday. The euro stood lower at USD1.0505, against USD1.0510. Against the yen, the dollar was trading lower at JPY154.16 compared to JPY155.70.
On the FTSE 100, BAT was the best performer, up 4.7%.
UBS upgraded the Lucky Strike and Rothmans cigarettes owner to 'buy' from 'neutral' predicting Velo nicotine pouches will help accelerate new categories' sales growth.
It also benefitted from the withdrawal of a proposed ban on menthol cigarettes and flavoured cigars by the Trump administration late on Friday.
GSK climbed 3.4% after a prefilled syringe of Shingrix for the treatment of shingles was accepted for review by the European Medicines Agency.
The European review of the prefilled syringe follows GSK's receipt of approval from the US Food & Drug Administration in January.
Anglo American was the worst FTSE 100 performer, down 6.2%. One-time suitor BHP cooled its pursuit for now, the Financial Times reported.
Citing people close to BHP, a takeover of London-based Anglo American would be too expensive for the Melbourne-headquartered miner, following a rise in the share price of Anglo.
Three people close to the situation are said to have noted that following the share price increase, a fresh takeover bid would be too expensive in the near term.
BHP shares were down 0.5% in London.
It was a generally tough day so far for mining shares. Glencore fell 3.7%, while Antofagasta lost 3.3%.
China's manufacturing activity shrank in January for the first time in four months, official data showed Monday, as Beijing battles to sustain the recovery in the world's second-largest economy.
The purchasing managers' index – a key measure of industrial output – came in at 49.1 in January, according to the National Bureau of Statistics, below the 50-point mark that separates growth and contraction.
Brent oil was quoted lower at USD77.26 a barrel at the time of the equities close in London on Monday, down from USD77.35 on Friday. Gold dropped to USD2,740.66 an ounce against USD2,774.82.
On the FTSE 250, Johnson Matthey rose 2.0% after announcing plans to boost its cash flow after a leading shareholder called for strategic change in December.
Costain was another of the day's winners, leaping 11%.
The construction and engineering firm expects annual profit in line with market expectations but said it had finished 2024 "strongly", hailing awards in the water and rail sectors.
It also flagged a "high-quality forward work position" which stood at GBP5.4 billion at the conclusion of last year, up from GBP3.9 billion 12 months prior.
Tuesday's global economic calendar sees US durable goods orders figures at 1330 GMT and a US consumer confidence print at 1500 GMT.
Tuesday's local corporate calendar sees trading statements from Irn-Bru maker AG Barr, recruiter SThree and computer services provider, Computacenter.
The global calendar has full-year results from aeroplane maker Boeing, luxury goods retailer LVMH, drugs firm Novo Nordisk and software retailer SAP.
By Jeremy Cutler, Alliance News news editor
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