London’s blue-chip index closed sharply lower on Thursday as investor anxiety over inflation and interest rates overshadowed a powerful rally in technology stocks driven by Nvidia.
The FTSE 100 ended the session down 85.58 points, or 0.8%, closing at 10,792.54, while the FTSE 250 edged slightly higher to finish at 24,898.86.
Wall Street told a different story, with the Dow Jones Industrial Average up 0.5%, the S&P 500 gaining 0.7%, and the Nasdaq Composite climbing 1.3% at the time of the London close.
Nvidia shares surged 7.5% after the chipmaker delivered better-than-forecast guidance following bumper second quarter earnings that stunned analysts.
Chief financial officer Colette Kress said Nvidia expects to grow revenue by 70% in financial 2028, running to January of that year, describing it as a “supply constrained outlook.”
Analysts had previously pencilled in growth of just 45%, making the guidance a significant and positive surprise for markets globally.
Chief executive Jensen Huang declared on the earnings call: “We’ve got a huge year coming up next year and it’s going to be pretty extraordinary.”
Kathleen Brooks, research director at XTB, said: “With revenues this big, and demand for its products getting bigger every month, it will be a brave trader who will bet against Nvidia.”
London-listed technology-exposed stocks picked up some of the enthusiasm, with Computacenter rising 7.3%, Polar Capital Technology Trust gaining 1.5%, and Scottish Mortgage Investment Trust up 0.8%.
However, Dan Coatsworth, head of markets at AJ Bell, noted the euphoria over Nvidia’s results “failed to spread across the rest of the market,” with broader sentiment remaining cautious.
Wednesday’s US inflation figures were widely seen as maintaining pressure on the Federal Reserve to keep interest rates elevated, dampening appetite for risk assets.
Susannah Streeter, chief investment strategist at Wealth Club, said sentiment “looks set to become more cautious as investors refocus on worries about inflation proving sticky, huge government debt piles and the prospect of interest rates lingering at elevated levels.”
Cleveland Federal Reserve president Beth Hammack added to the hawkish tone, repeating her call for higher rates after recent inflation data showed the central bank remains far from its goal.
“I don’t want to prejudge anything. But I believe now is the time to act,” she said in a CNBC interview from the Fed’s annual symposium in Jackson Hole.
All eyes are now on Fed chair Kevin Warsh, who is due to address the Jackson Hole conference on Friday, though he has expressed reluctance about providing forward-looking guidance.
In Europe, Paris’s Cac 40 closed down 1.7%, though Frankfurt’s Dax 40 managed a gain of 0.3% as regional markets digested the latest ECB signals.
Minutes from the European Central Bank’s July meeting revealed ongoing internal debate, with ING Global head of macro Carsten Brzeski saying the ECB “is still struggling with how to react to a textbook supply-side shock.”
Brzeski added that the “stage looks increasingly set for another rate hike” when the central bank meets again in two weeks, following signals from July that some members had pushed for tightening.
On the FTSE 100, Prudential fell 2.5% after Citigroup analyst Michelle Ma noted that half-year figures implied second quarter new business profit growth slowed to 7% from 13% in the first quarter of 2026.
Halfords stormed 11% higher on the FTSE 250 after the motoring and cycling retailer raised its full-year profit guidance to between £55 million and £65 million, ahead of market consensus of £52.6 million.