FTSE 100 Ends Week in the Red as Global Stocks Diverge: World Indices, Outlook and Forecasts (5

The FTSE 100 has slipped into the second week of December on the back foot, even as major world indices hover near record highs and investors brace for a pivotal US Federal Reserve rate decision.

On Friday 5 December 2025, London’s blue‑chip index fell about 0.5% to around 9,667 points, its lowest level in over a week and closing out a losing week for UK equities. ^[1]

While Wall Street and several Asian markets extended gains, the UK benchmark lagged its global peers – a reminder that 2025’s powerful equity rally is entering a more selective phase across world indices.

Below is a detailed look at what happened between 5 and 7 December 2025, why the FTSE 100 underperformed, how world indices fared, and what current forecasts say about the road ahead.

FTSE 100 Weekly Recap: From Record Territory to a Pause for Breath

A sharp Friday pullback

Friday’s session in London capped a weak week:

FTSE 100: down roughly 0.5% on the day, closing near 9,667, and about 0.55–0.6% lower for the week. ^[2]
FTSE 250: little changed on Friday but also ending the week in the red. ^[3]

Reuters reported that energy and financial stocks led the sell‑off, dragging the index lower despite rising expectations of a US Federal Reserve rate cut at next week’s meeting. ^[4]

TradingEconomics and TradingView echoed the picture: the FTSE 100 “failed to hold early gains,” finishing about 0.5% down at 9,669, underperforming other major European benchmarks. ^[5]

Sector moves: energy, banks and selective winners

According to Reuters’ closing report for 5 December: ^[6]

Oil & gas stocks led declines, tracking softer oil prices.
- BP fell about 2.6% after a downgrade from Bank of America to “underperform”.
- Shell slipped roughly 1.4%.
Banks were also under pressure:
- The bank index dropped around 1.2%, with Standard Chartered, Barclays and HSBC all losing more than 1%.
Defensive and quality names provided some offset:
- Watches of Switzerland gained about 2.6% after several broker price‑target upgrades.
- Burberry rose roughly 1.4%.
- 3i Group advanced about 2.5%, lifting the investment banking and brokerage subsector.

The message: the FTSE 100’s pullback was broad but not indiscriminate, driven chiefly by heavyweight energy and financial stocks.

A strong year, but a softer week

Zooming out, 2025 remains an impressive year for UK large caps:

IG notes that the FTSE 100 is up around 18% year‑to‑date, even outperforming the S&P 500 in 2025, thanks in part to its tilt toward energy, commodities and value stocks. ^[7]
The index reached a record closing high of about 9,787 points on 10 November, with some commentators arguing it could still challenge the 10,000 mark before year‑end. ^[8]

Last week’s decline therefore looks more like a pause for breath than the end of the cycle – but it underscores that UK equities are no longer the obvious laggards they once were, and are now vulnerable to the same “good‑news priced in” jitters affecting other global benchmarks.

Composition Changes: WPP Falls Out of the FTSE 100

Beneath the index level, December’s FTSE Russell quarterly review will reshape the UK blue‑chip universe:

British Land will join the FTSE 100, while advertising giant WPP will be relegated to the FTSE 250, with the changes effective at the close on 19 December 2025 and in force from 22 December. ^[9]

The Guardian notes that WPP’s market value has collapsed from around £24 billion in 2017 to roughly £3.1 billion, with shares down about two‑thirds in 2025, prompting its demotion after almost three decades in the index. ^[10]

This shuffle highlights several themes:

The pressure on legacy advertising groups in a world dominated by data‑driven and AI‑enabled marketing.
The resilience of UK real estate names like British Land as investors look for income and inflation hedges.
How passive flows linked to FTSE 100 trackers can amplify the impact of index additions and deletions on individual stocks around the effective date.

For investors, it’s a reminder that “the FTSE 100” is not static; its sector mix and leadership evolve over time.

World Indices Snapshot: FTSE 100 Lags a Mixed but Bullish Global Picture

Friday 5 December: global closing levels

The BSS/AFP wrap of Friday’s session paints a clear picture of global divergence: ^[11]

United States (close 5 December)

Dow Jones Industrial Average: 47,954.99, +0.2%
S&P 500: 6,870.40, +0.2%
Nasdaq Composite: 23,578.13, +0.3%

Europe

FTSE 100 (London): 9,667.01, –0.5%
CAC 40 (Paris): 8,114.74, –0.1%
DAX (Frankfurt): 24,028.14, +0.6% ^[12]

Asia-Pacific

Nikkei 225 (Tokyo): 50,491.87, –1.1%
Hang Seng (Hong Kong): 26,085.08, +0.6%
Shanghai Composite: 3,902.81, +0.7% ^[13]

At the global level, the FTSE All‑World Index stood at 665.60, up 0.07% on the day and about 16.1% over the past year, according to Financial Times market data as of the close on 5 December. ^[14]

In other words: the world equity benchmark is near record territory, even as the FTSE 100 has just delivered a modest weekly decline.

Weekly performance: UK vs global peers

T. Rowe Price’s Global Markets Weekly Update for the week ending 5 December emphasises that: ^[15]

Major US indices finished the first week of December higher, extending prior gains amid rising expectations for a Fed rate cut.
The Nasdaq led with a weekly gain of about 0.9%, while the S&P 500 posted a smaller but still positive return.
In Europe, the STOXX Europe 600 ended 0.41% higher in local‑currency terms.
The UK’s FTSE 100, by contrast, finished the week about 0.55% lower, underperforming Germany’s DAX (+0.80%) and other key benchmarks.

That pattern matches the live data from LSEG and Reuters’ global market tables, where the FTSE 100 appeared among the few major indices trading lower as of Friday’s close. ^[16]

Macro Drivers: Rates, Inflation and the Netflix–Warner Deal

Fed cut expectations and “sticky” inflation

Global markets remain fixated on central banks.

A Reuters global markets wrap published on 4 December noted that global shares and the US dollar were broadly higher as traders priced in a near‑90% chance of a quarter‑point Fed rate cut at next week’s meeting, based on Fed funds futures. ^[17]
However, fresh data on US private payrolls and services activity reinforced a picture of a cooling but not collapsing economy, leaving investors sensitive to any surprise in the Fed’s guidance. ^[18]

On Friday, attention turned to the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge:

The PCE measure rose 2.8% year‑on‑year in September, up from 2.7% in August. ^[19]
Analysts quoted by BSS/AFP argued that while the reading likely cements a December rate cut, it also underscores a “sticky inflation” backdrop that could limit how aggressively the Fed eases in 2026. ^[20]

That combination – supportive but not ultra‑dovish – has kept world indices firm while making investors more discriminating across regions and sectors.

Netflix–Warner mega‑deal and other global themes

The other big story moving world indices was Netflix’s agreement to acquire Warner Bros. Discovery’s studios and streaming business in a deal valued around $80–83 billion, making it the largest entertainment merger of the decade. ^[21]

Warner Bros. Discovery shares jumped over 6%, while Netflix itself ended lower on the day amid concerns about regulatory pushback and integration risks. ^[22]
Policymakers and industry figures have already signalled they will scrutinise the transaction closely, raising the prospect of a long regulatory battle.

Elsewhere:

India’s central bank delivered a rate cut that boosted Mumbai equities and helped the rupee recover from record lows against the dollar. ^[23]
In China, AI‑linked enthusiasm continued as Moore Threads Technology, a chipmaker focused on artificial intelligence, saw its shares surge more than 500% on debut in Shanghai, symbolising investors’ appetite for next‑generation tech plays despite broader growth concerns. ^[24]

These themes – big tech consolidation, AI, and selective EM rate cuts – are central to how world indices are trading as 2025 draws to a close.

Sterling Strength: A Quiet Headwind for the FTSE 100

One reason the FTSE 100 may be underperforming its global peers lies in the foreign‑exchange market.

Reuters reports that sterling has been rallying, hovering near a five‑week high: ^[25]

On 5 December, the pound rose to about $1.3344 against the dollar, close to the recent high at $1.3385.
It also ticked higher versus the euro, marking a third straight week of gains against the single currency.
The move has been driven by a smooth market reaction to UK finance minister Rachel Reeves’ budget, and an upward revision to the UK composite PMI, signalling better‑than‑feared business activity.

ING economists quoted in the same article see GBP/USD at around $1.34 by year‑end, but expect sterling to underperform the euro as the Bank of England is likely to cut rates by 25 basis points in December. ^[26]

For the FTSE 100, this matters because:

Many constituents – especially in energy, mining, consumer staples and healthcare – earn the bulk of their revenues in dollars or other foreign currencies.
A stronger pound mechanically reduces the sterling value of those overseas earnings, putting pressure on share prices even when underlying businesses are doing well.

In other words, part of the FTSE 100’s underperformance vs global indices is currency translation, not deteriorating fundamentals.

World Indices and the FTSE 100: How They Fit Together

What is the FTSE All‑World index?

To put the UK in context, it helps to look at broad global benchmarks:

The FTSE All‑World Index is a free‑float, market‑capitalisation‑weighted index that captures large and mid‑cap stocks across both developed and emerging markets worldwide. ^[27]
It underpins many global equity ETFs and pension mandates, giving investors “one‑stop” exposure to the world stock market.

Financial Times data show the All‑World index up more than 16% over the past year and modestly higher on 5 December, underscoring just how broad‑based the 2025 equity rally has been. ^[28]

How does the FTSE 100 differ from other world indices?

Compared with other headline benchmarks:

The FTSE 100 is:
- Heavily weighted to energy, materials, financials and global consumer staples, plus a cluster of healthcare and defence names.
- Less exposed to pure‑play mega‑cap tech than the S&P 500 or Nasdaq.
The S&P 500 is dominated by US technology and communication services giants, which have been key drivers of 2025’s global rally.
The STOXX Europe 600 offers a broader regional mix of growth and value, while the Nikkei 225 and Hang Seng reflect Asia‑specific dynamics like Japan’s changing monetary policy and China’s property and tech cycles.

Long‑term investors looking for global exposure often blend:

A world index tracker (such as a FTSE All‑World or MSCI World ETF), and
“Satellite” positions in individual regions like the UK, Europe or emerging markets. ^[29]

For UK‑domiciled investors, the FTSE 100 remains a key income and diversification pillar, but its sector and currency profile mean it can move very differently from broader world indices.

Forecasts and Outlook: What Analysts Are Saying (as of 7 December 2025)

FTSE 100: earnings resilience and a choppier 2026

A recent IG market outlook for 2026 argues that the investment case for the FTSE 100 rests on two main pillars: ^[30]

Earnings resilience across global‑facing sectors such as energy, commodities, pharmaceuticals and branded consumer goods.
A more supportive Bank of England, with rate cuts gradually relieving pressure on the domestic economy and credit conditions.

IG notes that after an approximately 18% year‑to‑date gain, the FTSE 100 has outpaced the S&P 500 in 2025, but warns that 2026 is likely to be choppier than this year’s relatively smooth advance.

Other commentators echo the idea that the current bull run is mature:

An interactive investor “Trading Strategies” piece published on 3 December stresses that no bull market lasts forever, encouraging investors to focus on quality FTSE 100 names and risk management rather than trying to time the exact peak. ^[31]

Europe: Citi sees more upside in STOXX 600

The outlook for European equities more broadly is also constructive:

Citigroup recently raised its 2026 target for the STOXX Europe 600 index to 640 from 570, implying double‑digit upside from current levels. ^[32]
The bank forecasts roughly 12% earnings growth in 2026 and argues that European stocks can keep pace with US peers for the first time in several years, particularly in cyclical and value sectors.

Because the FTSE 100 is a significant component of pan‑European indices, this bullish stance on Europe indirectly supports the UK outlook – although Citi’s preference for certain sectors may favour continental names over London‑listed ones at the margin.

Global context: central banks still in focus

Across world indices, institutional research from firms like T. Rowe Price and BlackRock emphasises a few recurring themes: ^[33]

The Fed looks poised to cut rates again next week, with labour‑market and inflation data supportive of a gradual easing cycle.
The European Central Bank and Bank of England are expected to follow with incremental cuts, though they remain wary of reigniting inflation.
The Bank of Japan is edging toward tighter policy, which has lifted the yen and introduced more volatility into Japanese equities.

Overall, the consensus is that equities can remain supported into 2026 provided:

Inflation continues to trend lower, and
Central banks avoid either over‑tightening or over‑easing.

But with valuations higher and geopolitics unpredictable, analysts stress that returns are likely to be more modest and uneven than in the early phase of the 2025 rally.

Key Takeaways for Investors

Nothing in this article is investment advice; it is a journalistic summary of recent market moves and commentary.

From 5–7 December 2025, several clear messages emerged for anyone watching the FTSE 100 and world indices:

The FTSE 100’s pullback is modest relative to its 2025 gains.
A weekly drop of around 0.5–0.6% comes after an ~18% year‑to‑date rise and record highs in November.
Sector and currency effects matter as much as the headline index level.
Energy and banks dragged the FTSE lower, while a stronger pound quietly weighed on internationally exposed names.
World indices remain broadly bullish but increasingly selective.
Global benchmarks such as the FTSE All‑World and US indices are near records, yet regional and sector divergences are widening.
Central banks and inflation data are still in the driver’s seat.
Expectations for a December Fed cut, a possible BoE cut, and “sticky but falling” inflation are shaping valuations across global equities.
Forecasts point to continued, but bumpier, upside into 2026.
IG’s FTSE 100 outlook, Citi’s STOXX 600 target and global weekly research suggest further gains are possible, but with greater volatility and a stronger premium on stock‑ and sector‑level selection.

For readers following UK and global markets through Google News and Discover, the message is clear: the story of 2025’s equity boom isn’t over – it’s just entering a more complicated chapter.