London stocks ended at a record high on Wednesday, underpinned by strong performances from the likes of Entain and Beazley, although the selloff in software names continued.

The FTSE 100 closed up 0.9% 10,402.34, having breached the 10,400 mark for the first time.

The record high came despite weakness in software stocks, which saw a resumption of Tuesday's selloff on the back of worries about the impact of AI after Google-backed Anthropic launched a new AI tool.

Danni Hewson, head of financial analysis at AJ Bell, said: "It's been another record-breaking day for the FTSE 100.

"Overall London's blue-chip index is firmly in positive territory, with some companies seeing high single digit returns in one day, or more.

"However, some stocks continue to be rattled by Anthropic's latest AI plug-ins, which the market is worried might be a sign that disruption is knocking on the door of some of the world's biggest software services companies. This feels like a DeepSeek moment for non-AI stocks, and reflects the huge uncertainty this evolving technology is injecting across stock markets.

"Much emphasis has been placed on the frothy sums of money being circulated in the AI industry and the high valuations placed on companies within it. Perhaps less attention has been paid to which companies might find their business models under threat from AI, partly because it's such a new and evolving technology with little visibility about the eventual winners and losers.

"There had been a working theory that software services companies would be beneficiaries of AI rather than competitors, because they are deeply embedded in their customers' businesses and possess huge chunks of data which can be optimised by AI applications. Anthropic's latest developments challenge that narrative, and suggest large AI companies may leap over software services firms to eat their lunch, rather than providing them with a knife, fork and napkin."

On the macro front, a survey showed that activity in the UK services sector grew in January at the fastest pace since last August, but job losses continued.

The S&P Global UK services PMI business activity index rose to 54.0 from 51.4 in December, coming in above the 50.0 mark that separates contraction from expansion for the ninth month in a row. However, the survey also showed that hiring remained a weak spot for the services sector despite signs of a recovery in business activity and incoming new work.

S&P noted that employment numbers have fallen in each month since October 2024, which represents the longest period of job shedding for 16 years.

The latest survey indicated a faster decline in workforce levels than in December, with anecdotal evidence highlighting squeezed margins, fragile market conditions and efforts to boost productivity through automation.

Tim Moore, economics director at S&P Global Market Intelligence, said: "The latest survey revealed an encouraging start to 2026 for the UK service sector, following a sluggish end to last year. Output growth was the fastest for five months, supported by an uplift in investment sentiment and greater new order intakes. A number of firms suggested that post-Budget clarity had contributed to a broader improvement in client confidence, while some also cited rising export sales.

"Despite a recovery in total new work, service providers still reported that consumer demand was constrained by squeezed disposable incomes, while risk aversion in response to geopolitical tensions was a factor holding back business spending."

In equity markets, Entain shares sparked after it said that BetMGM, its joint venture with MGM Resorts, performed ahead of expectations in 2025.

Energy sales, marketing and support services business DCC surged as it backed its full-year guidance and said third‑quarter adjusted operating profits had grown strongly, supported by solid organic growth and a first‑time contribution from recently acquired Austrian LPG business, FLAGA.

GSK rose even as it said turnover growth would slow this financial year as it looked to counter the expiry of an HIV drug patent and a deal with the Trump administration to lower product prices in the US. The company expects sales to grow 3% to 5% this year, on a constant currency basis compared to 7% in 2025.

Beazley shot higher after it and Zurich Insurance said they had reached an agreement in principle on the terms of an £8bn takeover of the Lloyd's of London insurer.

Hikma Pharmaceuticals ended sharply higher. After the close of markets, Brookfield responded to recent press speculation and confirmed that it does not plan on making an offer for the company.

Housebuilder Berkeley Group was boosted by an upgrade to 'overweight' from 'neutral' at JPMorgan, which also hiked the price target to 5,000p from 4,700p.

SSE rose despite forecasting a dip in annual earnings as mixed weather conditions offset an otherwise robust operational performance.

On the downside, Rightmove, Sage Group, LSEG, Relx, Softcat, Trustpilot, Computacenter and Kainos all slumped as the AI-fuelled selloff continued.

HG Capital was also hit by the selloff, having recently agreed the $6.4bn acquisition of US financial software firm OneStream.

Watches of Switzerland fell as it lifted its full-year sales outlook following strong trading in the third quarter but reduced its profit margin forecast.

Market Movers

FTSE 100 (UKX) 10,402.34 0.85%
FTSE 250 (MCX) 23,333.15 0.18%
techMARK (TASX) 5,940.03 0.87%

FTSE 100 - Risers

Entain (ENT) 648.00p 10.47%
DCC (CDI) (DCC) 5,010.00p 7.97%
GSK (GSK) 2,080.00p 6.91%
Beazley (BEZ) 1,240.00p 6.90%
BT Group (BT.A) 205.00p 5.67%
Croda International (CRDA) 2,862.00p 5.49%
Smurfit Westrock (DI) (SWR) 3,186.00p 5.15%
Hikma Pharmaceuticals (HIK) 1,632.00p 5.02%
InterContinental Hotels Group (IHG) 142.50p 4.66%
Bunzl (BNZL) 2,144.00p 4.59%

FTSE 100 - Fallers

Antofagasta (ANTO) 3,627.00p -6.23%
Rightmove (RMV) 452.80p -3.97%
Anglo American (AAL) 3,560.00p -3.78%
Barclays (BARC) 483.25p -3.66%
Fresnillo (FRES) 3,776.00p -3.23%
Babcock International Group (BAB) 1,423.00p -3.07%
CRH (CDI) (CRH) 8,942.00p -3.02%
BAE Systems (BA.) 1,874.50p -2.95%
The Sage Group (SGE) 845.40p -2.94%
St James's Place (STJ) 1,516.50p -2.35%

FTSE 250 - Risers

Victrex plc (VCT) 703.00p 5.56%
Greggs (GRG) 1,705.00p 5.18%
Domino's Pizza Group (DOM) 189.80p 5.09%
B&M European Value Retail S.A. (DI) (BME) 183.10p 4.63%
Tate & Lyle (TATE) 395.00p 4.50%
Pets at Home Group (PETS) 220.60p 4.06%
Marshalls (MSLH) 166.40p 4.00%
Mitchells & Butlers (MAB) 274.00p 3.98%
Hilton Food Group (HFG) 508.00p 3.89%
Lancashire Holdings Limited (LRE) 643.00p 3.88%

FTSE 250 - Fallers

Softcat (SCT) 1,248.00p -9.17%
Trustpilot Group (TRST) 164.00p -6.87%
HGCapital Trust (HGT) 380.00p -6.17%
Mony Group (MONY) 169.20p -5.84%
Computacenter (CCC) 3,122.00p -5.05%
Kainos Group (KNOS) 803.00p -4.29%
Hochschild Mining (HOC) 664.50p -3.97%
Oakley Capital Investments Limited (DI) (OCI) 511.00p -3.76%
WPP (WPP) 260.40p -3.67%
Ceres Power Holdings (CWR) 285.00p -3.52%