The FTSE 100 fell 105 points to close at 10,772.98 on Thursday, leaving London sharply out of step with a Wall Street session that opened firmly higher.
The primary cause of the decline was largely mechanical, driven by several major constituents trading without entitlement to their latest dividends.
Glencore, LondonMetric Property, and Croda International all traded ex-dividend and each fell around 2%, automatically subtracting points from the index.
The remainder of the decline stemmed from corporate updates and a broader unease about the interest rate outlook in the United States.
July personal consumption expenditures data, the Federal Reserve’s preferred inflation gauge, showed prices up 3.7% on a year earlier, above the 3.6% economists had forecast.
That reading was enough to revive concerns that American rates will stay higher for longer, a worry that weighs heavily on London’s rate-sensitive property and consumer names.
The US 2-year Treasury yield moved towards 4.22%, strengthening expectations of another Federal Reserve rate increase before the end of the year.
American investors appeared far less troubled, with the S&P 500 rising around 0.4% and the Nasdaq Composite gaining approximately 1% in early New York trading.
Nvidia (NASDAQ:NVDA) climbed 6% after reporting second-quarter revenue of $96.2 billion, up 106% on the year, and guiding to $108 billion for the current quarter.
The chipmaker reportedly also agreed to buy Hugging Face, a repository for open-source AI models, for $12.9 billion, adding further momentum to technology sentiment.
Salesforce and CrowdStrike added to the upbeat technology mood with their own results, while weekly US jobless claims fell to 203,000.
Fawad Razaqzada, market analyst at FOREX.com, said: “Much of this week’s attention has been on Nvidia’s earnings, and the chipmaker delivered the sort of numbers investors had been hoping for.”
“Some investors had begun to question whether the AI trade was running out of steam, but for now at least Nvidia’s results has offered some welcome reassurance,” Razaqzada added.
London did receive some halo effect from Nvidia’s results, with technology the strongest sector in the UK, up around 1% on the day.
Computacenter (LON:CCC) was the standout blue-chip performer, jumping more than 4% to reach a record high of 5,500p during the session before settling at 5,455p.
Prudential (LON:PRU) was the largest results-driven faller despite reporting first-half adjusted operating profit rising 9% at constant exchange rates to $1.81 billion, with new business profit up 8% to $1.38 billion.
The insurer increased its interim dividend by 15% to 8.88 US cents per share and added around $300 million to its existing $1.2 billion share buyback programme.
Halfords (LON:HFD) led the FTSE 250 risers, surging as much as 13.9% to an intraday high of 274.5p after upgrading its underlying pre-tax profit guidance to between £55 million and £65 million, ahead of the prior market consensus of £52.6 million.
On AIM, Aminex jumped as high as 51% intraday after confirming discussions with Tanzania’s Ministry of Energy, Tanzania Petroleum Development Corporation, and other parties over the Ntorya gas development.
Thruvision surged 28.57% to 1.58p after receiving an order from its first Canadian government customer for an 8108 WalkTHRU security-screening system, marking its first deployment in Canada’s building-entrance security market.
Attention now turns to the Federal Reserve’s Jackson Hole symposium, where Fed chairman Kevin Warsh is due to speak on Friday.