UK Stock Market Today, 4 December 2025: FTSE 100 Edges Higher as Luxury and Defence Stocks Lift a Cautious London

London – Thursday 4 December 2025

Key points

FTSE 100 closed around 9,711, up about 0.2%, while the FTSE 250 gained roughly 0.3%, as investors weighed soft UK data against upbeat corporate news. ^[1]
Construction activity slumped and job cuts accelerated, deepening worries about UK growth but reinforcing expectations for interest‑rate cuts. ^[2]
Burberry, Rolls‑Royce and BAE Systems advanced, while utilities, precious‑metal miners and AJ Bell lagged, highlighting sharp sector rotation. ^[3]
FTSE Russell’s December index review will move British Land into the FTSE 100 and WPP into the FTSE 250, with several new mid‑cap entrants. ^[4]
Fresh research from Goldman Sachs, Citi, BlackRock, Morningstar and others points to rate cuts, earnings recovery and undervalued UK small/mid‑caps as key 2026 themes. ^[5]

How the UK stock market traded today

The UK stock market today (4 December 2025) delivered modest gains after a choppy start to December.

Based on end‑of‑day data, the FTSE 100 closed around 9,710.6, up about 0.19% from Wednesday’s 9,692.1 finish, keeping the blue‑chip index within sight of the psychologically important 10,000 level. ^[6]

Earlier in the session, Reuters reported the FTSE 100 up 0.1% by 11:15 GMT, with the more domestically focused FTSE 250 up around 0.3% as traders digested a cluster of earnings updates and macroeconomic releases. ^[7]

ShareCast’s intraday reports showed London stocks opening slightly lower, then “edging into the black” by midday as expectations of a US Federal Reserve rate cut next week helped offset worries about the UK economy. ^[8]

In other words, today’s move was small but symbolically important:

The FTSE 100 built on this year’s strong run and stayed close to record territory. ^[9]
The FTSE 250 outperformed slightly, echoing strategists’ growing preference for mid‑caps as interest‑rate expectations soften. ^[10]

Macro backdrop: construction slump, job cuts and rate‑cut hopes

Weak UK construction and rising job losses

The calm headline move in the FTSE 100 masked some unsettling economic news.

The S&P Global/CIPS construction PMI showed that UK construction activity contracted at its fastest pace since May 2020, with the survey’s employment index indicating the sharpest job‑shedding since August 2020 and business optimism dropping to a near three‑year low. ^[11]

For equity markets, this mix of slowing activity and rising cost pressures does two things at once:

Reinforces fears about near‑term domestic growth.
Strengthens the case for the Bank of England to cut rates, which can support interest‑sensitive sectors such as real estate, utilities and mid‑caps over time.

What big houses expect from the Bank of England

Just two days ago, Goldman Sachs repeated its view that the BoE is likely to cut rates in December, followed by three more cuts in the first half of 2026, taking Bank Rate to about 3% by summer 2026. ^[12]

Their economists expect:

UK GDP growth of around 1.1% in 2026,
Inflation easing to 3.4% in 2025 and 2.3% in 2026,
And 10‑year gilt yields drifting down towards 4% by the end of 2026. ^[13]

That backdrop helps explain why UK stocks have rallied since the Autumn Budget, even though the growth impulse from fiscal policy itself is modest. ^[14]

Global cues: Wall Street strength, Europe ahead of London

Overnight and regional signals remained broadly risk‑on:

US indices are trading near record highs on Fed‑cut optimism after a weaker‑than‑expected US jobs report. TechStock²+1
Asia‑Pacific markets mostly rose as investors priced in easier US policy. ^[15]
European shares also advanced, with auto makers in focus after the US announced looser emissions rules, but the FTSE 100 again lagged continental peers. ^[16]

Put together, London is participating in the global equity rally, but only cautiously. The UK’s heavy exposure to energy, miners and financials, plus lingering domestic pessimism, continues to dampen the index relative to faster‑growing US and European markets.

Sector and stock movers on the FTSE 100 and FTSE 250

Luxury and consumer stocks: Burberry and Frasers in the spotlight

Luxury goods and retail names were among the day’s brighter spots:

Burberry climbed about 3.5% after HSBC raised its price target, helping the personal goods sector to a gain of nearly 2.8% – one of the strongest areas of the market. ^[17]
Frasers Group, owner of Sports Direct and Flannels, held its full‑year profit guidance despite reporting slightly weaker half‑year profits, citing intense discounting and fragile consumer confidence but reaffirming a target of £550m–£600m in adjusted pretax profit. ^[18]

The message from today’s trading: luxury and higher‑end brands are still finding support, even while mid‑market retailers remain under pressure from cost‑of‑living realities and post‑budget uncertainty.

Defence and aerospace: Rolls‑Royce and BAE extend their run

Defence and aerospace stocks continued their winning streak:

The FTSE aerospace & defence index was set for a third consecutive daily gain.
Rolls‑Royce and BAE Systems both rose by more than 1%, helped by ongoing geopolitical tensions and stalled peace talks in the Russia‑Ukraine conflict. ^[19]

These moves fit with a broader 2025 trend in which defence has been a structural winner, although BlackRock flagged this week that its enthusiasm for the sector has cooled somewhat after a strong run and recent pull‑back in European defence shares. ^[20]

Miners: industrial strength vs. precious‑metal weakness

Mining shares were mixed:

Industrial and base‑metal miners have benefited from record copper prices and steady demand from infrastructure and data‑centre investment. TechStock²+1
In contrast, precious‑metal miners fell around 1.4%, tracking a pull‑back in gold prices, with Fresnillo and Endeavour Mining both down more than 1.4%. ^[21]

Retail trading data from interactive investor showed Glencore, Metals One and iShares Physical Silver (SSLN) among the most‑traded names this morning, highlighting ongoing retail interest in commodities and mining themes. ^[22]

Utilities under pressure despite £28bn grid upgrade plan

One of the more striking disconnects today was in UK utilities:

Energy regulator Ofgem approved about £28 billion of investment to upgrade Britain’s grid capacity. ^[23]
Yet utilities stocks fell overall, with SSE down roughly 2.1% and peers such as United Utilities, National Grid and Severn Trent also weaker. ^[24]

Investors appear worried that regulatory and political risk may cap allowed returns just as companies are being asked to fund a major energy transition—echoing concerns raised by the financial struggles of privately owned Thames Water and wider scrutiny of regulated monopolies. TechStock²+1

Financials, platforms and market infrastructure: AJ Bell, LSEG and others

Within financials, performance diverged sharply:

Barclays gained around 1.2%, continuing a recent rebound as falling bond yields and rate‑cut hopes support bank valuations. ^[25]
Investment platform AJ Bell slumped about 6.7% despite reporting record full‑year results and a £50m buyback, after warning that new budget‑driven ISA rules would add complexity and costs. ^[26]
LSEG (London Stock Exchange Group) remained in focus as analysts digested its expanding cloud‑and‑AI partnership with Microsoft and new tie‑ups with OpenAI. Recent commentary highlights mid‑single‑digit revenue growth, margin upgrades and a multi‑billion‑pound buyback, with some research houses forecasting around 10% annual EPS growth into 2026 as data and analytics become more “AI‑ready”. TechStock²

Where retail traders were most active

Interactive investor’s “Daily Trading Flash” showed that Rolls‑Royce, BAE Systems, ITM Power, Ceres Power, Trustpilot and Legal & General featured among the 10 most‑traded stocks on its platform this morning, alongside metals and silver‑linked names. ^[27]

The mix suggests retail investors are leaning into higher‑beta themes – defence, energy transition, green hydrogen and speculative AIM stocks – even as institutional flows remain net negative for UK equities overall.

Index reshuffle: FTSE Russell’s December 2025 review

Separate from today’s price action, FTSE Russell confirmed the results of its December 2025 quarterly review of the FTSE UK index series, effective from 22 December 2025. Key moves include: ^[28]

British Land will join the FTSE 100,
WPP will leave the FTSE 100 and enter the FTSE 250,
And there will be multiple additions to the FTSE 250, including Shawbrook Group, Princes Group and RTW Biotech Opportunities, among others.

Such index changes can trigger meaningful buying and selling from passive funds and benchmark‑constrained investors in the weeks around the effective date, adding another technical layer to UK stock flows this month.

Flows and sentiment: investors still pulling money out of UK shares

Despite the index approaching record highs, money is still leaving UK equities:

Reuters cites Calastone data showing UK investors sold around £3 billion of equities in November, the sixth consecutive month of net outflows. ^[29]
Asset managers like Royal London and commentators cited by City A.M. note that four years of persistent UK equity outflows have left small and mid‑cap valuations looking unusually depressed relative to global peers. ^[30]

Paradoxically, these outflows are part of the bull case: some strategists argue that “unloved and under‑owned” UK stocks now offer significant catch‑up potential if sentiment turns and domestic inflows resume.

Today’s news in the context of the 2026 outlook

While the 4 December move was modest, it sits against a backdrop of increasingly constructive 2026 outlooks for UK equities.

Valuations and earnings growth

A recent Citi note highlighted by Investing.com projects that, after broadly flat earnings in 2025, UK stocks could deliver around 12% EPS growth in 2026, with all sectors contributing positively, helped by stabilising inflation and supportive commodity prices (oil forecast near $60 a barrel in early 2026). ^[31]
UBS has published a FTSE 100 target of 9,600 for December 2025 and 9,800 by June 2026; with the index already trading around 9,700, the year‑end target has effectively been met early, suggesting scope for target upgrades if earnings keep improving. ^[32]

Domestic vs global UK stocks

Goldman Sachs points out that UK domestic stocks have underperformed the largely multinational FTSE 100 by about 11% since July, leaving domestic mid‑caps offering roughly 1 percentage point more dividend yield than the main index. ^[33]

That valuation gap, combined with falling gilt yields, is why Goldman and others see UK‑facing sectors like real estate and utilities as potentially strong beneficiaries of lower rates, even though utilities had a difficult session today. ^[34]

BlackRock: AI and infrastructure still in the driving seat

In a separate interview published today, BlackRock’s Helen Jewell argued that AI will remain a dominant market theme into 2026, but warned that high leverage and crowded trades could make the journey volatile. ^[35]

BlackRock says it is increasing exposure to European energy and infrastructure names – segments where the UK market is particularly strong – as new data centres and electrification projects drive demand for power equipment and grid upgrades. ^[36]

For UK investors, that reinforces the idea that today’s Ofgem grid‑investment news is part of a much bigger multi‑year capital‑expenditure cycle, even if utilities’ share prices didn’t celebrate the announcement.

Don’t overlook UK stocks in 2026

A City A.M. piece drawing on Morningstar’s 2026 outlook argues that, after being shunned by many retail investors in recent years, UK equities are becoming an increasingly “attractive destination”, especially given: ^[37]

The diversified global revenue mix of many FTSE 100 heavyweights (roughly three‑quarters of index revenue comes from overseas),
New stamp‑duty holidays for IPOs, aimed at revitalising London listings,
And a growing perception that UK small caps offer “hidden gem” value, with private‑equity interest and share‑buyback programmes hinting at underlying opportunity.

What today’s market action means for investors

This section is for general information only and is not personal investment advice.

From an investor’s perspective, 4 December 2025 in the UK stock market can be read as a microcosm of the broader narrative:

Macro data are softening, especially in construction and employment, reinforcing the case for rate cuts but keeping recession worries alive. ^[38]
Quality global franchises (Burberry, BAE, Rolls‑Royce) and structural themes like AI‑driven infrastructure and energy transition continue to attract capital. ^[39]
Rate‑sensitive domestic plays and utilities remain in the penalty box for now, even though many strategists see them as potential medium‑term winners if borrowing costs fall. ^[40]
Index reshuffles and ongoing outflows are adding technical noise, but also helping to create pricing anomalies in small and mid‑caps that long‑term investors may eventually exploit. ^[41]

For anyone following UK stocks, FTSE 100 and FTSE 250 today, the key takeaway is that London remains cautious but not broken: the market is grinding higher, selectively rewarding companies with resilient earnings, strong balance sheets and credible growth stories, even as investors continue to pull money out of UK funds as a whole.

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