London markets closed higher on Tuesday as the FTSE 100 moved closer to another record high, shrugging off recent tech sector turbulence following the arrival of China’s DeepSeek.
The UK’s leading index finished up 30.16 points, or 0.35 per cent, to end at 8,533.87, benefitting from defensive trading in consumer and property stocks.
Stock markets saw a positive performance despite continued uncertainty in technology stocks, mainly due to news about Chinese AI company DeepSeek. Energy companies in Britain and Europe also made gains as prices stabilised during the trading session.
On Tuesday, tech stocks rebounded, with Nvidia, a leader in AI chips, recovering over six per cent after heavy losses the day before.
On Monday, Nvidia lost around $593 billion in market value, contributing to a $1trillion drop across AI-related companies.
The selloff was triggered by DeepSeek, a Chinese startup, who came up with AI chatbots using just a fraction of the cost of the major players in the industry.
European markets demonstrated resilience, particularly benefiting from their lower exposure to major technology companies
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Cody Acree, chip industry analyst at Benchmark Company, said: “Today’s recovery is to be anticipated given the magnitude of yesterday’s selloff.
“DeepSeek represents an increase in competition. Never have we seen an industry where an increase in competition leads to lower spending.”
Other tech firms also bounced back, with Oracle rising 3.3 per cent and Marvell Technology gaining 2.7 per cent.
European markets demonstrated resilience, particularly benefiting from their lower exposure to major technology companies.
Germany’s DAX index reached a fresh record high, climbing 0.74 per cent as Siemens Energy shares rebounded.
The FTSE 100’s strong performance highlighted how European markets were largely insulated from the tech sector turbulence.
Joshua Mahoney, chief market analyst at Scope Markets, said: “The FTSE 100 continues to sail through choppy water with relative ease, as European traders enjoy a brief period of outperformance built around the general lack of big tech companies this side of the Atlantic.”
France’s Cac 40 showed a slight decline, ending 0.12 per cent lower for the day.
Chinese stocks continued to gain ground as investors evaluated valuation differences with US markets in the AI space.
Mahoney added: “Chinese stocks continue to rise as people seek the weigh up the validity of the valuation disparity compared with the US in a world where AI isn’t just a US-centric affair.”
The emergence of DeepSeek has challenged industry perceptions about China’s AI capabilities, with even OpenAI’s CEO Sam Altman calling it an “impressive model”.
US President Donald Trump described the development as “a wakeup call for our industries”.
US President Donald Trump described the development as “a wakeup call for our industries.”
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Sterling weakened against a strengthening dollar during Tuesday’s trading session.
The pound dropped 0.52 per cent to $1.243 against the US dollar, which gained support from speculation about upcoming tariffs.
Against the euro, sterling showed modest gains, rising 0.13 per cent to 1.192 euros at the London market close.
The currency movements came as US markets showed signs of recovery, with the S&P 500 and Nasdaq both rebounding from early losses to make cautious gains.