London, 20 December 2025 — The London Stock Exchange (LSE) heads into the final full trading week before Christmas with a rare combination of momentum and uncertainty: the FTSE 100 is pressing toward the 10,000 milestone, helped by heavyweight miners, defence names and globally diversified earnings — even as the UK economy looks soft, consumer data stays choppy, and policymakers signal that future rate cuts won’t be a straight line. [1]
Because today is a Saturday, the “live” story for the London market is really Friday’s close — but the themes investors are carrying into Monday (22 December) are very much still in motion: the Bank of England’s cautious easing, fiscal nerves, structural reforms meant to make London listings more attractive, and the LSE operator’s own push deeper into data, AI and market infrastructure. Bottom line: London’s market is acting stronger than its domestic economy, and that contrast is now the plot. [2]
Market snapshot: FTSE 100 holds the wheel while the domestic UK picture wobbles
The FTSE 100 ended Friday at 9,897.42 (+0.61%), with 1.61 billion shares traded, leaving the benchmark just below its recent highs (52-week range: 7,544.83–9,930.09). [3]
On a weekly basis, Reuters reported the FTSE 100 delivered its strongest weekly gain since mid-October, rising 2.6% over the week. That move came in a data-heavy stretch that included a Bank of England rate cut and fresh signs of a weakening jobs backdrop. [4]
A key detail (and one investors keep relearning): London’s blue-chip index is not a pure UK economic proxy. It’s packed with firms whose revenues are earned globally, which can make the FTSE 100 behave more like an international value-and-dividend index than a domestic growth gauge. Reuters noted the FTSE 100 has climbed about 21.1% year-to-date, outperforming the S&P 500’s gain over the same period — helped notably by banks and insurers. [5]
The more UK-sensitive FTSE 250 was comparatively subdued at the end of the week, reflecting the tug-of-war between cheaper money and weaker domestic demand. [6]
The central bank pivot: Bank Rate falls to 3.75%, but the BoE stresses “gradual” from here
The Bank of England cut Bank Rate by 0.25 percentage points to 3.75% in its December decision, stating that inflation has fallen significantly from its peak and that future reductions are likely to be “gradual,” depending on pay growth and services inflation trends. [7]
The vote was close: the MPC decided by 5–4 to cut, underscoring that the easing cycle is not a one-way conveyor belt. [8]
From a London Stock Exchange perspective, this matters in three ways:
- Equity valuations: lower rates tend to support multiples, but only if growth doesn’t deteriorate faster than discount rates fall.
- Currency effects: a softer pound can lift reported earnings for global earners (a big FTSE 100 feature).
- IPO and fundraising conditions: rate stability is oxygen for new listings, rights issues, and secondary placings.
The BoE itself highlighted that inflation is 3.2% in the latest reading (still above target), and it frames its mission in classic BoE fashion: keep inflation returning to 2% and staying there. [9]
UK data pulse: retail sales slip, borrowing stays uncomfortable
Fresh official data continued to paint a cautious picture for the consumer and the public finances:
- Retail sales volumes fell 0.1% in November 2025 (after a 0.9% fall in October), even though the three-month trend was modestly positive. [10]
- Public sector borrowing in the financial year to November 2025 was £132.3 billion, with public sector net debt estimated at 95.6% of GDP at end-November. [11]
For market mood, this is the awkward combo: rate cuts are supportive, but they’re arriving because growth looks fragile and fiscal headroom is limited.
Meanwhile, retailers are explicitly hoping for a late surge into Christmas — a “panic weekend” narrative that speaks to consumer caution more than consumer confidence. [12]
What moved London-listed shares this week: miners, defence, and selective single-stock shocks
Sector leadership has been telling. Reuters highlighted precious metals and mining as weekly leaders, helped by a surge in silver, while aerospace and defence also pushed higher. [13]
At the single-stock level, the week also showed how quickly sentiment can flip on company-specific news:
- WH Smith slid sharply after forecasting next-year profit roughly flat and amid an investigation by the UK regulator into the business following accounting failures in its US operations, according to Reuters. [14]
- MarketScreener reported Carnival surged on earnings, citing record annual numbers and the reinstatement of dividends — a reminder that London’s tape still reacts strongly to global consumer and travel demand when the figures land cleanly. [15]
For the “London Stock Exchange” story, this matters because it highlights the LSE’s core strength: deep liquidity for established issuers — and the challenge: translating that trading power into a stronger pipeline of new, high-quality listings.
LSE index mechanics: key FTSE UK index review changes kick in Monday (22 December)
The FTSE ecosystem is one of London’s most globally influential exports. In the December 2025 quarterly review, FTSE Russell confirmed:
- British Land will join the FTSE 100
- WPP will leave the FTSE 100 and enter the FTSE 250
- Changes are implemented after the close on Friday, 19 December 2025 and take effect from the start of trading Monday, 22 December 2025 [16]
Index inclusions and deletions can drive real flows because so much capital tracks these benchmarks via passive funds and derivatives.
Capital markets reforms: London tries to make listings less painful and more rewarding
The London Stock Exchange has been fighting a multi-year narrative: that London is losing IPO gravity to New York and private markets. The late-2025 policy and rulework is clearly aimed at changing the incentives.
1) Stamp duty holiday for newly listed shares
In the Autumn Budget, the UK government announced a three-year exemption from stamp duty on newly London-listed shares — a targeted attempt to increase the attractiveness of listing and early aftermarket trading. London Stock Exchange CEO Julia Hoggett welcomed the move as an “important first step,” Reuters reported. [17]
This is significant because the UK’s 0.5% stamp duty charge has long been criticised as a friction cost that can lower turnover and reduce the appeal of listing in London compared with venues where transaction taxes are lower or absent.
2) AIM reforms: lighter rules, more founder-friendly tools
For growth companies, AIM is the LSE’s key bridge between private capital and the Main Market. In late 2025, the LSE published its Feedback Statement: “Shaping the Future of AIM”, setting out a roadmap intended to make AIM more competitive, reduce burdens, and modernise how capital is raised and how deals are executed. [18]
A parallel legal-market summary from Skadden notes that reforms include steps such as accepting dual class share structures aligned with Main Market standards, rethinking treatment of reverse takeovers, and lifting certain disclosure thresholds (with some measures effective immediately via derogations before a full rulebook rewrite in 2026). [19]
The strategic intention is clear: keep AIM distinct and useful — a growth market that doesn’t drown smaller issuers in process while still protecting investors.
3) Updated rights issue guidance: plumbing still matters
The LSE also issued Market Notice N12/25 (11 December 2025) updating guidance on the trading and settlement of securities subject to renounceable rights issues, including updated rule references for firms executing Exchange transactions. [20]
This isn’t as headline-grabbing as stamp duty, but it’s part of the same broader theme: improving the operational experience of raising capital in London.
4) Benchmark regulation overhaul: narrower scope, fewer administrators regulated
London’s market influence is inseparable from benchmarks — and the UK government is now proposing to narrow which benchmarks are regulated, focusing on those posing systemic risk. Reuters reported the plan could reduce the number of benchmark administrators in scope by 80% to 90%, with industry feedback requested by 11 March 2026. [21]
Because the FTSE 100 is explicitly name-checked in the benchmark discussion, this lands directly in the London Stock Exchange universe — especially given LSEG’s index arm, FTSE Russell. [22]
IPO pipeline: subdued reality in 2025, but 2026 expectations are improving
Here’s the reality check London keeps confronting: secondary trading is strong; new issuance has been weak.
EY-Parthenon reported that IPO activity on the London Stock Exchange remained subdued in Q3 2025, with three new AIM listings in the quarter, and 12 listings across the main market and AIM year-to-date, raising almost £200 million — down sharply versus 2024. But EY also said a stronger pipeline for early 2026 suggests confidence is returning. [23]
Legal and advisory commentary is converging around a similar forecast: modest improvement in 2026, but likely still below historical norms, with the AIM reforms designed to help founder-led growth companies and reduce listing friction. [24]
In other words: London’s IPO revival thesis is becoming more plausible — but it still has to survive the real world of valuation negotiations, liquidity expectations, and global competition.
LSEG (the operator) in 2025: AI distribution, market infrastructure, and regulatory pressure
“London Stock Exchange” news in 2025 is increasingly inseparable from London Stock Exchange Group (LSEG) — because the group is much more than an equities venue. It’s a data and analytics company, an index provider, and a market infrastructure operator.
AI and data: LSEG’s information is moving closer to where decisions are made
In early December, Reuters reported LSEG will integrate its financial data and analytics into ChatGPT, enabling credentialed users to access LSEG data and news content through the ChatGPT app in a phased rollout beginning the week of 8 December. [25]
That move is strategically important for two reasons:
- It positions LSEG’s licensed data closer to the workflows where analysts and traders increasingly spend time (AI interfaces).
- It’s a competitive play in the “terminal wars,” where distribution and user experience can matter as much as raw datasets.
Infrastructure and regulation: fair access to fast connectivity
In September, Reuters reported that LSEG agreed to share connectivity space at its data centre following an FCA probe into whether an arrangement restricted competition for high-speed trading services. [26]
This is the less glamorous side of modern exchanges: speed, connectivity, and market access are now regulatory and competitive battlegrounds.
Financial performance and capital returns
In October, Reuters reported LSEG’s quarterly income and recurring revenue beat expectations and that the company raised 2025 margin forecasts; Reuters also noted LSEG unveiled a deal involving a stake sale in post-trade services and announced a share buyback in that context. [27]
Meanwhile, on LSEG’s investor relations page, the company’s analyst consensus (as of 12 November 2025) showed 17 Buy, 1 Hold, 0 Sell ratings and a consensus target price of 12,244 pence, versus a referenced closing share price of 9,186 pence at that time. [28]
2026 forecasts: where analysts think the LSE’s flagship index goes next — and why
The most “searchable” London Stock Exchange question right now is simple: Can the FTSE 100 break 10,000 — and stay there — in 2026?
Several mainstream outlooks say the bias remains upward, but with meaningful caveats.
The bullish case: earnings resilience + easing BoE + valuation gap
IG’s December outlook argued the FTSE 100’s 2026 case rests on earnings resilience and a more supportive Bank of England backdrop, while also highlighting that the index continues to trade at a valuation discount to US equities. IG noted the FTSE 100 was up around 18% year-to-date at the time of publication, and discussed the 10,000 level as a psychologically important milestone. [29]
LSEG’s own market insights for December also flagged a theme that fits the FTSE’s sector mix: value re-emerging and low volatility outperforming broadly — conditions that often favour the UK market’s traditional composition (banks, energy, defensives). [30]
UBS, as summarised by Investing.com, projected the FTSE 100 at 10,000 by end-2026 in its base case, with an upside scenario of 10,800 if conditions improve (easier financial conditions, stronger global growth, firmer commodities, weaker sterling). UBS also highlighted that 75–80% of FTSE 100 revenues come from outside the UK — reinforcing the currency translation tailwind if sterling weakens. [31]
The cautious case: “higher-for-longer” risks, commodity dependence, and domestic fragility
The same UBS framing included a downside scenario around 7,200, tied to risks such as a global downturn, sticky inflation keeping rates elevated, weaker commodities, and a stronger pound — all of which would hit key FTSE earnings engines. [32]
And the macro reality remains uneven: the BoE is cutting, but it is also signalling caution, and UK fiscal optics are still sensitive. The ONS borrowing figures and the government’s own medium-term fiscal outlook underline why markets keep one eye on gilt yields even while equities rally. [33]
What to watch on Monday and into year-end
When London opens on Monday, 22 December, several near-term catalysts converge:
- FTSE index changes take effect at the start of trading (including British Land and WPP moves). [34]
- The market will keep repricing the “how many cuts in 2026?” question after the BoE’s narrow vote and guidance. [35]
- Year-end positioning (“Santa rally” effects) often amplifies moves, especially in liquid benchmarks like the FTSE 100. [36]
- The continuing policy agenda — stamp duty relief, benchmark rule changes, AIM reforms — will keep shaping issuer decisions about where (and whether) to list in 2026. [37]
The big picture: London’s equities market is ending 2025 looking surprisingly strong on performance, while London’s listing market is still fighting for volume and prestige. If 2026 really becomes “the year of the London IPO comeback,” it will likely be because the reforms reduce friction and because global investors decide the UK’s valuation discount and dividend profile are a feature, not a bug.
References
1. www.reuters.com, 2. www.reuters.com, 3. markets.ft.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.bankofengland.co.uk, 8. www.bankofengland.co.uk, 9. www.bankofengland.co.uk, 10. www.ons.gov.uk, 11. www.ons.gov.uk, 12. www.theguardian.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.marketscreener.com, 16. www.lseg.com, 17. www.reuters.com, 18. www.skadden.com, 19. www.skadden.com, 20. docs.londonstockexchange.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.ey.com, 24. www.reedsmith.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.reuters.com, 28. www.lseg.com, 29. www.ig.com, 30. www.lseg.com, 31. www.investing.com, 32. www.investing.com, 33. www.ons.gov.uk, 34. www.lseg.com, 35. www.bankofengland.co.uk, 36. www.reuters.com, 37. www.reuters.com
