Daily market update: FTSE 100 lower, Apple, OpenAI, Heathrow

The FTSE 100 took its cue from wider market weakness to trade lower on Friday morning, although it avoided the scale of losses seen for many of its global counterparts.

If memory chip play Micron helped manufacture some momentum for the market after its bumper results on Wednesday, Apple axed it overnight as it put up prices on a broad range of products.

One follows from the other as Micron is among the companies to enjoy a wave of unprecedented demand thanks to demand for chips for AI data centres, a dynamic which is putting the squeeze on supply for other areas like consumer electronics.

Apple shares slumped overnight to reflect concern that its price hikes will depress demand without going far enough to avoid pressure on margins.

Sentiment in the tech space took a further hit on speculation that OpenAI might postpone its blockbuster IPO until 2027. This move would be heavy with symbolism given the company essentially kicked off the whole AI theme in earnest with the launch of ChatGPT in 2022.

In London, property firms and housebuilders were in demand along with more defensive names as the UK market’s limited weighting in technology was a boon for once. Energy stocks continued to tumble thanks to oil prices remaining rooted below $74 per barrel.

Although a vessel being struck by Iran off the coast of Oman offered a reminder to take nothing for granted despite the increase in shipping flows through the Strait of Hormuz.

Aviation sector

The cuts to passenger forecasts from the UK’s largest airport Heathrow lay bare the impact on the travel sector from the Iran conflict, even with the recent progress towards a peace agreement in the Middle East.

In the worst-case scenario, passenger numbers could drop as much as 5% year-on-year. This illustrates the pressures facing global airlines – a tricky backdrop which has helped make EasyJet vulnerable to Castlelake’s current takeover pursuit.

Holidaymakers are being put off thanks to squeezed household budgets, increased prices and concern about their trips being disrupted by geopolitical turmoil. A new biometric border system in the EU, affected by faults which have resulted in lengthy queues, only adds to this unhealthy cocktail. 

On the cusp of the summer season, travel operators will be crossing their fingers that the fragile ceasefire between Tehran and Washington holds and that there is not a renewed escalation which could dampen demand yet further.

Beleaguered airport and railway retailer WH Smith and food concessions operator SSPG will also be hoping for a sunnier outlook for global travel to emerge too.