FTSE 100 Modestly Higher Open as AI Stocks Sell-Off Hits Asia; Middle East Tensions Persist
London stocks are set for a modestly higher Friday open at around 10,365 as European markets open mixed following an AI stocks sell-off in Asia — South Korea’s KOSPI dropped 5% as the AI rally faded. The Middle East tensions persist with the Hezbollah rejection of the Lebanon truce Thursday. Brent crude eases slightly to $96.80 a barrel. UK 10-year gilt yields slip to 5.02%; sterling firms to $1.3405. The VIX is up nearly 2% on the persistent war-risk premium. Defence stocks BAE Systems, Babcock and Melrose are likely to extend Thursday’s gains.
The Friday open reflects a mixed risk picture: Middle East war-risk persisting on the Hezbollah truce rejection, plus fresh tech-sector pressure on the Broadcom-led AI-bubble doubts. The 5.02% gilt yield holds just above the 5% line that has been the binding macro-political resistance level for the Reeves Treasury through May. The Bank of England MPC’s rate-cut path remains uncertain. The Ofgem October price-cap reset depends on Brent staying in the $88-95 range through mid-summer; the current $96.80 trajectory points to a price-cap rise rather than a roll-back. The AI-stocks sell-off adds a sectoral overlay to the existing macro picture — if it deepens through the European session, it could pull European technology indices materially lower.