London’s stock market is heading into Tuesday with a familiar late‑year mix of macro nerves and rate-cut hope. FTSE 100 futures pointed lower in early indications (down around 0.4%), with London shares also called roughly 30 points weaker at the open after fresh UK labour-market data showed unemployment rising again and wage growth cooling—an important setup ahead of the Bank of England’s policy decision on Thursday. [1]
The pre-market mood comes after a strong Monday rebound in London, when the FTSE 100 climbed 1.06% to 9,751.31 and the FTSE 250 added 0.8% to 22,049.16, as investors leaned into expectations of a December Bank of England rate cut. [2]
UK labour market data sets the tone for UK shares
The key domestic catalyst today is the UK labour report. Official figures showed the unemployment rate rising to 5.1% in the three months to October (from 5.0%), the highest since early 2021. Regular wage growth slowed to 4.6%, while private-sector pay growth (excluding bonuses) eased to 3.9%, its weakest pace since 2020—evidence, markets argue, that wage-driven inflation pressure may be easing. [3]
Other details reinforced the “softening jobs market” narrative. Payrolls data linked to the tax office showed a monthly fall of 38,000 in November, and the previously reported October drop was revised to 22,000. Reuters also noted that the pound briefly rose after the data before easing back—suggesting traders are balancing the idea of “slower jobs = easier policy” against the reality of a weakening economy. [4]
From a UK equities perspective, this is the classic “bad news is good news” dynamic: weaker labour momentum can increase conviction that interest rates are headed lower, which tends to support valuations—especially for rate-sensitive sectors such as housebuilders, retailers, and domestically focused midcaps—because future cash flows are discounted at a lower rate. The catch, of course, is that too much weakening can hit earnings expectations and consumer demand.
Bank of England outlook: a cut is expected, but the vote could be tight
Markets are laser-focused on Thursday’s Bank of England decision, and today’s data did little to shake the prevailing view that a cut is coming. Reuters reporting this week has pointed to a potentially knife-edge 5–4 vote to lower Bank Rate to 3.75% from 4.0%, with Governor Andrew Bailey seen as pivotal. If delivered, it would be the first reduction since August and would take borrowing costs to a three-year low. [5]
Inflation is the second critical input to that decision. UK CPI data due Wednesday is expected to show headline inflation easing to 3.5% in November from 3.6% in October—still well above the BoE’s 2% target, but moving in the right direction for doves on the committee. [6]
A Reuters poll of economists published last week showed all 64 surveyed expecting a quarter-point cut on 18 December, and around two‑thirds anticipating a follow-up cut to 3.50% by end‑March. Beyond that, the path looks much less certain: the poll’s median forecast had Bank Rate bottoming at 3.25% in Q3 2026, but without a clear majority for further cuts after March. [7]
Market strategists are also watching the BoE’s language. Reuters noted expectations that policymakers could tweak guidance (for example, giving themselves more flexibility around the pace of easing) as they look into 2026. [8]
Broker analysis has echoed the same theme: a cut may be widely priced, but the messaging matters. IG wrote that markets were pricing an 85–90% probability of a 25bp cut to 3.75% and argued that forward guidance could matter more than the cut itself. [9]
FTSE 100 vs FTSE 250: a booming headline index, a tougher domestic picture
One of the defining stories of 2025 in UK equities has been the widening gap between large global earners and more domestically exposed companies.
Bloomberg reported that the FTSE 100 is up about 19% in 2025, outperforming major peers, while the FTSE 250 is up about 6.5%, weighed down by high rates, weak growth and a heavier domestic policy burden. [10]
That divergence has shaped how investors interpret days like today. Softer labour data and rising rate-cut conviction can be supportive for UK-focused shares—but it doesn’t automatically solve the underlying growth problem that has kept many smaller and mid-sized UK names from matching the blue-chip index’s run.
Corporate and index headlines in focus on 16 December
While macro is steering the ship, a cluster of corporate and market-structure stories are also in play today.
Unilever’s post-spinoff ice cream headlines: Ben & Jerry’s governance shake-up
Refinitiv’s “factors to watch” highlighted that Ben & Jerry’s ousted the chair of its independent board as part of new governance practices. The brand is now owned by The Magnum Ice Cream Company after a spin-off from Unilever last week—keeping Unilever-linked headlines on traders’ screens even after the separation. [11]
Buybacks remain a key theme across UK plc
Several UK-listed firms published capital-return updates today:
- Rolls-Royce announced an interim irrevocable share buyback programme of up to £200 million, expected to begin 2 January 2026 and conclude by 24 February 2026, following completion of a £1 billion buyback in November 2025. [12]
- Barclays disclosed the purchase of 2,644,676 shares for cancellation (VWAP 453.6861p) as part of its buyback announced 23 October 2025. [13]
- Hunting said it intends to extend its buyback programme by up to $20 million, taking the total programme size to up to $60 million. [14]
For investors, buybacks can be a meaningful tailwind into year-end: they reduce share count, can lift earnings per share mechanically, and often signal board confidence—though the market still judges them against cash flow and balance-sheet priorities.
AIM and smaller-cap flow: suspension, admissions and block listings
Today’s tape also includes notable small‑cap plumbing:
- Cornish Metals saw its shares temporarily suspended on AIM from 7:30am at the company’s request, pending an announcement. [15]
- Pathos Communications began dealings on AIM after completing a fundraising (as detailed in its admission announcement). [16]
- Hill & Smith announced a block listing application for employee share schemes, with admission expected 18 December 2025. [17]
Regulation watch: FCA consults on capital rules for big electronic trading firms
A less “headline index” but highly consequential story for the UK’s market ecosystem landed today: Reuters reported that the Financial Conduct Authority is considering a significant revamp of capital requirements for specialist trading firms such as Citadel Securities, Jane Street and London-based XTX, with the regulator describing an opportunity to make rules more proportionate and boost UK competitiveness. Options discussed include aligning more closely to US-style “net risk rules” or allowing internal models for minimum requirements. [18]
If reforms ultimately reduce capital friction (without increasing systemic risk), it could influence the attractiveness of London as a trading hub—and by extension the outlook for parts of the UK financial sector tied to market activity.
Global backdrop: risk appetite wobbles ahead of delayed US jobs data and central bank meetings
UK stocks aren’t trading in a vacuum. Reuters described a risk‑off tone across global markets early Tuesday, with Asian equities falling and investors positioning ahead of major US economic releases and a “central bank bonanza” that includes the BoE, ECB and Bank of Japan. Nasdaq futures were down 0.8% and European futures were down around 0.5% in early moves, reflecting caution ahead of potentially market-moving data. [19]
The same report highlighted the unusual US calendar: combined US employment reports for October and November are due later Tuesday, and an inflation report follows Thursday—though some details may be missing after the longest US government shutdown disrupted data collection. [20]
In currencies, Reuters put sterling slightly weaker around $1.3368 early Tuesday, while the broader focus remains how diverging central-bank paths (BoE expected to cut, BOJ expected to hike, ECB expected to hold) shape global capital flows into year-end. [21]
What to watch next today for UK markets
With London set up for a data-and-central-bank driven week, UK investors will likely keep three near-term catalysts front and centre:
- UK inflation (Wednesday, 17 December): Markets are braced for CPI around 3.5% for November (vs 3.6% in October). [22]
- Bank of England decision (Thursday, 18 December): Economists and markets largely expect a cut to 3.75%, but the vote split and guidance could set the tone for 2026. [23]
- Business surveys and global data: Reuters flagged that S&P Global’s PMI survey offers an early read on how firms are responding to late‑November fiscal changes, while global traders are also watching delayed US jobs data closely. [24]
Bottom line: The UK stock market today is trading the tension between a cooling labour market (supportive for rate cuts) and a slowing economy (risk to earnings), with Thursday’s Bank of England decision now the main event that could decide whether the FTSE’s year-end momentum extends—or stalls.
References
1. www.tradingview.com, 2. uk.finance.yahoo.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.ig.com, 10. www.bloomberg.com, 11. www.tradingview.com, 12. www.investegate.co.uk, 13. www.investegate.co.uk, 14. www.tradingview.com, 15. www.investegate.co.uk, 16. www.investegate.co.uk, 17. www.investegate.co.uk, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com
