UK Stock Market Today: FTSE 100 Slips as Risk-Off Mood Starts December in London

London, Monday 1 December 2025 – The UK stock market opened the final month of 2025 on a cautious note, with the FTSE 100 edging lower and domestically focused mid‑caps underperforming as global “risk‑off” sentiment, soft UK services data and shifting interest‑rate expectations weighed on investor confidence. ^[1]

UK stock market today: key numbers for 1 December 2025

By late morning to early afternoon trading in London, the picture across UK indices looked like this:

FTSE 100 today was hovering around the 9,700 level, down roughly 0.1–0.2% on the day as investors took profits after a strong year and braced for a packed month of central‑bank decisions and economic data. ^[2]
The FTSE 250 – more geared to the domestic economy – fell about 0.8%, heading for its sharpest one‑day drop in two weeks as financial and industrial names led the declines. ^[3]

That relatively modest index move comes after a powerful rally. The FTSE 100 has repeatedly hit record highs this year, with its all‑time closing high of 9,911.42 set on 12 November 2025, roughly 50% above its level five years ago. ^[4]

FTSE 100 vs FTSE 250: sectors driving today’s moves

Blue‑chip FTSE 100: modest drift lower

Large‑cap UK shares started December on the back foot but avoided the steeper losses seen in some global markets:

The FTSE 100 was broadly flat to slightly negative around midday, as gains in defensive consumer and mining names helped offset weakness in cyclicals and financials. ^[5]
Mining heavyweights such as Hochschild Mining and Fresnillo jumped more than 5% as gold and silver prices surged, supported by rising expectations for interest‑rate cuts and robust haven demand. ^[6]
Consumer staples including Unilever and Reckitt traded higher, while Glencore and Anglo American also advanced, reflecting renewed appetite for high‑quality global earners with pricing power. ^[7]

On the downside:

Aerospace and defence stocks led the fallers, with Rolls‑Royce down about 3% and BAE Systems off nearly 3% as investors locked in gains after a stellar multi‑year run driven by increased defence spending. ^[8]
Some major banks and domestic financials also traded lower, mirroring a pickup in gilt yields and a drift higher in global bond yields. ^[9]

FTSE 250: mid‑caps under pressure

The bigger story today has been in the FTSE 250, which fell sharply as traders reassessed the outlook for UK‑centric earnings: ^[10]

The index was down around 0.8%, its worst daily move in about two weeks.
Homebuilders and construction‑linked names – including Balfour Beatty, Bellway and Taylor Wimpey – dropped more than 1.5%, reflecting concerns that higher real borrowing costs and a soft services sector could keep a lid on housing demand. ^[11]
Melrose slid nearly 6% after naming Ross McCluskey as its next CFO from 2026, with investors seemingly using the news as an opportunity to take profits following a strong run. ^[12]
Infrastructure investor HICL rose about 4–5% after scrapping its proposed merger with The Renewables Infrastructure Group (TRIG), which in turn fell roughly 3–4%. The deal would have created the UK’s largest listed infrastructure investment vehicle with net assets above £5.3bn. ^[13]

The split between resilient global blue chips and wobbling mid‑caps underlines how sensitive domestically focused companies remain to the UK growth and interest‑rate outlook.

Economic backdrop: services slowdown vs manufacturing rebound

Fresh data released around today’s session gave a mixed message about the UK economy:

A key survey showed Britain’s services sector contracted at its fastest pace in three years in the three months to November, signalling that higher rates and cost‑of‑living pressures are still biting into consumer and business demand. ^[14]
In contrast, the UK manufacturing PMI climbed back above the 50 threshold to about 50.2 in November, marking the factory sector’s first expansion in over a year despite political and budget uncertainty. ^[15]

Services remain the dominant engine of the UK economy, so the sharp slowdown there is weighing more heavily on sentiment than the tentative manufacturing upturn. For equity investors, today’s data reinforce a familiar narrative:

Cyclical and domestic shares (builders, retailers, smaller banks) are more vulnerable to a prolonged services slowdown.
Global earners and precious‑metal miners look better positioned if weak growth pushes central banks towards further easing, supporting gold and other safe‑haven assets. ^[16]

Interest‑rate expectations: all eyes on the Bank of England

The Bank of England (BoE) remains central to how the UK stock market trades into year‑end.

The BoE held Bank Rate at 4% in November in a tight 5–4 vote, with several policymakers already pushing for another cut. ^[17]
UK inflation slowed to 3.6% in October (down from 3.8% in September), and the BoE now believes price growth has peaked – but still doesn’t expect inflation to hit the 2% target until mid‑2027. ^[18]
Markets are pricing more than a 90% chance of a quarter‑point cut at the 18 December 2025 BoE meeting, with one to two further cuts projected for 2026. ^[19]

Strategists at Goldman Sachs argue that rates could ultimately fall faster and further than markets currently expect, with Bank Rate potentially drifting towards 3% by 2026 as growth stays subdued and labour‑market pressures ease. ^[20]

For UK equities, that tug‑of‑war over the rate path has several implications:

Lower rates support valuations for long‑duration assets (quality growth stocks, infrastructure and utilities).
But they also reflect weaker growth, which can pressure earnings in domestic cyclicals, banks and consumer‑facing businesses.
Rising gilt yields today – the 10‑year yield climbed to around 4.5% – signal that bond markets are demanding a higher risk premium for UK debt amid political pressure on Chancellor Rachel Reeves and concerns over the fiscal outlook. ^[21]

Global risk sentiment: cautious start to December

Today’s softness in UK stocks is part of a wider global pattern:

European and US equity futures turned lower as investors took a breather after a strong late‑November rally, with global indices slipping and US Treasury yields pushing higher. ^[22]
Traders are waiting for a key speech from US Federal Reserve Chair Jerome Powell and a delayed reading of the US PCE inflation index, which could reshape expectations for US rate cuts in 2026. ^[23]
Bitcoin and other cryptocurrencies slid sharply, adding to the risk‑off tone and denting sentiment around speculative assets. ^[24]

For London, all this matters because the FTSE 100 is heavily global: around three‑quarters of revenues come from outside the UK. ^[25] That means:

Weakness in global growth or risk assets can drag on the index even when domestic data surprise positively.
A softer pound can boost reported earnings for FTSE multinationals, while a stronger currency can do the opposite.

How far has the UK stock market come – and is it still cheap?

Despite today’s dip, 2025 has been a breakout year for UK equities:

Commentators note that the FTSE 100 is up roughly mid‑teens to around 20% year‑to‑date, outpacing several developed‑market peers and consistently setting new record highs through autumn. ^[26]
Over the past five years, the UK market has effectively doubled in value, helped by falling inflation, gradual rate cuts, sector rotation into energy and defence, and a re‑rating from previously depressed valuations. ^[27]

Yet many strategists still view UK stocks as modestly undervalued compared with US and European peers, given:

Higher dividend yields,
Heavy exposure to commodities, banks and value sectors, and
Persistent international investor scepticism towards UK assets since Brexit. ^[28]

What the forecasts say: UK stock market outlook for 2026

Institutional strategists

Recent research gives a broadly cautiously optimistic outlook for UK shares into 2026:

UBS expects the FTSE 100 to “grind higher” as earnings recover, projecting the index at 9,800 by June 2026 and around 10,000 by year‑end in its base case (from around 9,700 today). ^[29]
- Its upside scenario sees the FTSE 100 reaching about 10,800 by December 2026 if global growth strengthens, financial conditions ease and sterling weakens. ^[30]
- UBS also flags that 75–80% of FTSE 100 revenues are generated overseas, meaning currency moves and global demand cycles remain crucial. ^[31]

Other analyst surveys and forecast round‑ups published in late 2025 point to:

A broad consensus range of roughly 10,100–10,800 for the FTSE 100 by the end of 2026 – implying potential total returns (including dividends) in the low‑double‑digit percentage range from current levels, if earnings grow as expected. ^[32]
Expectations that earnings per share for UK companies will grow more strongly in 2026 than in 2025, helped by lower interest costs and an improving global backdrop. ^[33]

Model‑driven projections

Quantitative forecast sites offer more mechanical paths for the FTSE:

One widely cited long‑horizon model projects the FTSE 100 averaging about 9,726 in December 2025, finishing the month only slightly below current levels, before gradually trending higher through 2026 and beyond. ^[34]

These forecasts should be treated as scenarios, not certainties. They are highly sensitive to assumptions about inflation, interest rates, commodity prices and global growth.

Santa rally or seasonal slump? December’s track record

The big seasonal question is whether the UK will enjoy a “Santa Rally” this year – the tendency for stocks to rise in the last trading days of December and early January.

New analysis from Fidelity International, highlighted today, shows that over the last 30 years:

The FTSE 100 has delivered a positive December in 24 of 30 years,
While the S&P 500 has risen in 22 of those Decembers. ^[35]

That history explains why many portfolio managers are reluctant to de‑risk too aggressively just as December begins. However, Fidelity also stresses that:

Seasonal patterns are not guarantees,
Macro risks – from central‑bank missteps to geopolitical events – can easily override typical year‑end trends. ^[36]

What today’s moves mean for UK investors

For investors watching the UK stock market today, several themes stand out:

Short‑term caution, long‑term resilience
- The pull‑back in the FTSE 100 and sharper drop in mid‑caps reflect understandable caution after a strong year and ahead of key central‑bank meetings. ^[37]
- Yet the index is still trading near record territory, and longer‑term forecasts remain broadly constructive rather than bearish. ^[38]
Rate cuts help, but growth still matters
- Markets now strongly expect another BoE rate cut on 18 December, followed by a gentle easing cycle into 2026. ^[39]
- That supports valuations but doesn’t eliminate the drag from weak services activity and still‑elevated inflation. Investors are likely to continue favouring companies with robust balance sheets, pricing power and diversified global revenues. ^[40]
Sector dispersion is widening
- Today’s divergence – miners and defensives up, industrials, homebuilders and some financials down – underlines that sector selection matters as much as index level. ^[41]
Volatility can bring opportunity
- With December likely to feature major central‑bank decisions, political drama around the UK budget, and key global data releases, volatility may stay elevated – but that also creates entry points for long‑term investors who can look beyond near‑term noise. ^[42]

As always, any decision to buy or sell UK shares should be based on individual risk tolerance, time horizon and diversification needs, rather than on a single day’s movements – even on a day that kicks off the crucial final month of the year.