Software selloff deepens amid AI fears, in ‘echoes of dot-com crash’ – business live

2 hours ago 5

Deutsche Bank: rotation out of software has echoes of dot-com crash

Despite today’s drop in software and data companies, the UK’s FTSE 100 share index is down just 0.07% this session as investors rotate into other sectors.

Worryingly, that pattern “echoes what we saw in 2000 as the dot-com bubble started to burst”, analysts at Deutsche Bank warn.

They reminded clients this morning:

Equities started to fall from the March 2000 as tech stocks saw significant declines. However, consumer staples, utilities and healthcare rallied significantly over the months ahead, and in September the S&P 500 actually came within a percentage point of its record high from six months earlier.

So it shows that a market can absorb a prolonged rotation without obvious index-level stress for some time. But the longer and deeper the sell-off in a dominant sector becomes, the harder it is for the broader index to withstand the drag, and the continued losses for tech in 2000 ultimately meant the S&P 500 ended that year over -10% lower.

Deutsche Bank also report that “risk assets came under mounting pressure over the last 24 hours”, as concerns around AI and a weak batch of US data led to growing questions about the near-term outlook.

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The iShares Expanded Tech-Software Sector ETF, which tracks the sector, has tumbled by around 25% so far this year, highlighting the scale of the selloff in the last few weeks.

Bloomberg reported on Wednesday that almost $1tn had been wiped off the sector over the previous seven days.

Most investors 'likely nursing losses' as popular trades unwind

Data yesterday showing a surge in US company layoffs in January (see yesterday’s blog) is also being blamed for the slide in riskier assets.

Neil Wilson, investor strategist at Saxo UK, explains:

Most investors are likely nursing losses by Friday morning as we see a sharp unwind in some of the most popular trades. Hard to believe the equal weighted S&P 500 posted an all-time high on Wednesday as tech and momentum stocks faded and investors rotated into other corners of the market...yesterday the rest of the market caught up in a broad retreat from risk assets.

Crypto is looking particularly weak, gold and silver are fading again...it’s looking increasingly challenging for bulls to be constructive right now so they are circling the wagons. The US Challenger job cuts rose to more than 108,000, a sudden spike that spooked the market.

“It’s been a week from hell for tech stocks as AI spending plans caused upset across global markets and pushed investors to unplug hyperscalers from their portfolios,” says Russ Mould, investment director at AJ Bell.

Mould adds:

“Amazon has followed its peers by turning up the dial to max on AI spending, leaving investors with their jaws to the floor.

The hyperscalers are so confident that AI will change the world, they’re spending big bucks to have the foundations to serve what they predict will be sky-high demand. Investors are becoming increasingly dubious about the level of spending, fearing these companies are wasting their money.

Deutsche Bank: rotation out of software has echoes of dot-com crash

Despite today’s drop in software and data companies, the UK’s FTSE 100 share index is down just 0.07% this session as investors rotate into other sectors.

Worryingly, that pattern “echoes what we saw in 2000 as the dot-com bubble started to burst”, analysts at Deutsche Bank warn.

They reminded clients this morning:

Wild swings in the silver price

Silver is also looking very volatile.

The spot price of silver tumbled by 19% yesterday, hot on the heels of its 27% plunge on 30 January.

That wiped out all silver’s remarkable gains in January, as it hit its lowest level since mid-December this morning, at $64 an ounce.

It’s now risen back to $73/oz, up 3.8% today.

Bitcoin loses half its value in three months amid crypto crunch

Overnight, Bitcoin fell to just half its record high set just three months ago.

Bitcoin’s price sank to $63,000 on Thursday, its lowest level in more than a year, and half its all-time peak of $126,000, reached in October 2025.

A months-long dip in cryptocurrency prices has tanked shares of companies that have increasingly invested in bitcoin, exacerbating broader stock market jitters.

It’s now struggled back to $64,700.

Chris Beauchamp, chief market analyst at IG, says:

“An uneasy calm prevails in cryptocurrencies this morning. Beleaguered investors will be asking if that was it, after a plunge that has seen the price of bitcoin halve since the October highs.

There were growing signs yesterday that the selloff had dragged indices lower as well, but with some stabilisation there too. Risk appetite generally still feels skittish given the risk of US-Iran talks going nowhere, and the ongoing carnage in software stocks.”

Data and analystics company shares falling again

Elsewhere in the markets, shares in data and analytics companies are falling again, after almost a week of AI-driven losses.

RELX (-4%), the information and analytics company behind Elsevier and LexisNexis, are the top faller on the FTSE 100.

The London Stock Exchange Group (-1.5%) and accountancy firm Sage (-3.9%) are also under more pressure.

They all tumbled earlier this week after artificial intelligence startup Anthropic launched a plug-in for its Claude service for use by companies’ legal departments.

Now overnight, Anthropic has announced a new model – Claude Opus 4.6 – which it says has improved coding skills can operate more reliably in larger codebases, and is better at catching and fixing its on mistakes….

Stellantis’s shares aren’t stopping either!

Reuters is reporting that Milan-listed shares in Stellantis have been automatically halted from trading after falling 18.65%, and hitting their lowest since June 2020.

Stellantis shares fall 12%

After that stalled start, Stellantis shares have tumbled 12% at the start of trading in Milan after announcing a €22bn charge as it scales back its electric car ambitions.

Stellantis taking €22bn charge as it scales back electric car push

European carmaker Stellantis is taking a €22bn charge, and admitted it overestimated the speed of the transition to electric cars.

Stellantis, whose brands include Vauxhall, Opel, Citroën, Chrysler and Fiat, is scaling back its push into electric vehicles as it aligns with “the real-world preferences of its customers”.

The huge charge reflects the heavy costs for writing off electric car projects. And investors aren’t impressed – Stellantis’s shares failed to start trading in Milan a moment ago, but are expected to fall 15% once trading begins….

It includes a €14.7bn charge for “re-aligning product plans with customer preferences and new emission regulations in the US”, where Donald Trump has been rolling back Biden-era emission regulations and incentives to encourage electric vehicle take-up.

Stellantis insists it will be at “the forefront” of elecric car development, but argues that it must be “governed by demand rather than command”.

Stellantis CEO Antonio Filosa says:

“The reset we have announced today is part of the decisive process we started in 2025, to once again make our customers and their preferences our guiding star.

The charges announced today largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires. They also reflect the impact of previous poor operational execution, the effects of which are being progressively addressed by our new Team.”

There’s little reason to expect of either a renewed house price boom or a sharp correction in 2026, argues Martin Beck, chief economist at WPI Strategy, said:

Beck says the housing market is finely balanced, adding:

“Mortgage rates should continue to edge lower as the impact of past Bank of England rate cuts feeds through, with further reductions increasingly likely.

After a notably dovish February statement from the BoE [yesterday], the next cut could come as soon as next month. At the same time, easing inflation is supporting real wage growth, even as pay rises cool in cash terms.

That widening gap between regions of the UK is likely to continue, predicts Emeritus Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA.

London and much of the South East continue to underperform, with price growth constrained by stretched affordability and a larger exposure to higher-value transactions.

In contrast, several parts of the Midlands, the North of England, Scotland and Northern Ireland are showing greater growth. Lower average prices, stronger rental demand and relative affordability are supporting firmer price growth in these areas, a trend that is likely to persist in the months ahead.

Prices falling in southern England

Halifax also report that the regional differences in house price changes have become more pronounced, with prices falling in the south of England.

There is “a clear divide” between the northern and southern parts of the UK, they report, with positive momentum carrying over in the North.

Today’s house price data shows:

Northern Ireland continues to lead the UK, with average prices rising +5.9% annually to £217,206.

Scotland follows closely, recording annual growth of +5.4%, taking the average property price to £221,711.

Wales saw a modest rise of +0.5% over the year, with the average home now costing £228,415.

Within England, the strongest growth remains concentrated in the north, with prices softening in the south.

The North West saw prices increase +2.1% to £244,328, while the North East recorded +1.2% annual growth.

The South East, South West, London and Eastern England all saw annual declines of more than 1%.

Introduction: Fastest jump in UK house prices in over a year

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK house prices have risen at their fastest monthly pace in over a year in January as the housing market steadied, lender Halifax has reported.

Halifax’s latest house price index shows that the average UK house price increased by 0.7% in January, more than wiping out December’s 0.5% fall.

That’s the fastest monthly increase since November 2024, and this lifts the average property price, on Halifax’s index, to a new all-time high of £300,077.

[that’s higher than the Office for National Statistics’ data, which pegs the average home at £271,000].

On an annual basis, prices were 1% higher than in January 2025.

Although the Bank of England left interest rates on hold yesterday, it is expected to cut borrowing costs perhaps twice this year, which could help borrowers.

Amanda Bryden, head of mortgages at Halifax, said:

“The housing market entered 2026 on a steady footing, with average prices rising by +0.7% in January, more than reversing the -0.5% fall seen December. Annual growth also edged higher to +1.0%, pushing the cost of the typical UK home above £300,000 for the first time. “While that’s undoubtedly a milestone figure, and activity levels show a resilient market, affordability remains a challenge for many would-be buyers.

“Broader economic conditions continue to provide some support. Wage growth has been outpacing property price inflation since late 2022, steadily improving underlying affordability. That’s a positive trend for buyers, and the long-term health of the market.

“And we’re now seeing more mortgage deals below 4%. If inflation continues to ease, there should be further gradual reductions as the year goes on. “All in all, we still think house prices are likely to edge up between 1% and 3% this year.”