UK Stock Market Today: FTSE 100 Faces Soft December 1 Open as Budget Fallout and BoE Rate‑Cut Bets Shape Sentiment

The UK stock market is set to open December on a cautious note. As of around 08:00 GMT on Monday, 1 December 2025, FTSE 100 futures point to a slightly weaker start, with calls for a 10–16 point drop toward the 9,705 level, as global risk sentiment sours on weaker Asian data and a sharp overnight slide in Bitcoin. ^[1]

That tentative tone comes despite a powerful rally in recent weeks. The FTSE 100 closed on Friday at 9,720.51, up 0.27% on the day and roughly 17.7% higher year‑to‑date, after setting a series of record highs just below the psychological 10,000 mark in mid‑November. City AM+5TechStock²+5markets.businessinsider.com+5

Key points

Futures signal a soft open: FTSE 100 futures indicate a modestly lower start around 9,705, as a more than 4% drop in Bitcoin and weak Asian purchasing managers’ indices rekindle risk‑off sentiment. ^[2]
Budget fallout still in focus: Markets are digesting a tax‑heavy Autumn Budget that raises about £26bn by 2030 while avoiding new levies on banks, prompting a relief rally in financials but concern for consumers and growth. ^[3]
Rate‑cut bets support equities: Inflation has cooled to 3.6% in October and economists widely expect the Bank of England to cut rates in December and again early next year, underpinning rate‑sensitive UK shares. ^[4]
Santa‑rally debate returns: Long‑run data show December is often one of the strongest months for UK equities, but recent Budget uncertainty and two weak Decembers in 2022 and 2024 remind investors that seasonality is no guarantee. ^[5]
Today’s catalysts: UK mortgage approvals, net lending and November manufacturing PMIs hit at 09:30 GMT, alongside corporate news from Melrose, easyJet, Wizz Air, Hunting, Foresight Group and a fresh Aquis listing in Delta Gold Technologies. ^[6]

Where the UK market stands at the start of December

Friday’s close capped a strong but choppy November for UK equities:

FTSE 100: 9,720.51 (+0.27% on Friday).
FTSE 250: around 22,165, also higher on the day. TechStock²+1
On a monthly basis, the FTSE 100 was roughly flat for November, pausing after four straight months of gains – even as it repeatedly notched fresh record highs near 9,900 earlier in the month. City AM+4TechStock²+4Trading Economics+4

Internationally, the index has been a standout in 2025, with year‑to‑date gains of around 17–18%, outpacing many European peers and narrowing a long‑running performance gap versus US benchmarks. ^[7]

Yet this morning’s tone is more cautious. Share‑Talk reports that FTSE 100 futures are pricing in a 16‑point drop to about 9,705 at the open, after Bitcoin slid roughly 4.7% in Asian trade and regional equity markets turned lower on disappointing manufacturing data. ^[8]

Macro backdrop: Budget hangover, cooler inflation and BoE expectations

A tax‑heavy Autumn Budget still reverberates

Chancellor Rachel Reeves’s Autumn Budget 2025 remains the central domestic story for UK assets. The Budget – delivered on 26 November – freezes income tax thresholds until the start of the next decade, introduces a new “mansion tax” on high‑value property and tightens pension and ISA rules, among other measures, raising about £26bn in additional taxes by 2029–30. ^[9]

While some economists welcomed the focus on fiscal credibility and debt sustainability, critics argue the package leans too heavily on tax hikes, risks dampening consumer demand and does little to unlock long‑term productivity growth. ^[10]

For markets, the immediate reaction was nuanced:

Gilts rallied: Ten‑year UK government bond yields fell by about 11 basis points on Budget day, marking their strongest Budget‑day performance versus US and German equivalents since 2006. ^[11]
Banks jumped: A Reuters recap notes that UK bank shares outperformed the wider market after the Budget appeared to avoid new windfall or sector‑specific taxes, with Lloyds, NatWest, HSBC and Barclays all gaining more than the FTSE 100 on the day. ^[12]

At the same time, sectors more exposed to consumer wallets – from retailers to carmakers and EV‑related businesses – are grappling with the prospect of higher taxes and targeted levies, including per‑mile charges for electric vehicles and changes to Motability eligibility. ^[13]

Inflation is easing, and markets are betting on a December BoE cut

On the data front, the inflation picture has finally started to improve:

The Consumer Prices Index (CPI) rose 3.6% year‑on‑year in October, down from 3.8% in September.
The broader CPIH measure, which includes owner‑occupiers’ housing costs, slowed to 3.8% from 4.1%. ^[14]

These numbers, while still above the Bank of England’s 2% target, have reinforced expectations that the tightening cycle is over. A Reuters poll of economists last month found a majority predicting a BoE interest‑rate cut in December and another in early 2026, following a November decision to hold Bank Rate at 4% while signalling openness to easing if inflation continues to cool. ^[15]

Market commentators at Morningstar and elsewhere highlight that falling inflation, plus the Budget’s focus on fiscal restraint, have increased the odds of near‑term rate cuts, supporting both UK equities and gilts – especially in rate‑sensitive sectors such as real estate, utilities and domestically focused mid‑caps. ^[16]

Today’s economic diary: Data deluge at 09:30 GMT

The first half‑hour of trading is likely to be dominated by domestic economic data:

UK mortgage approvals and net lending for October are released at 09:30 GMT, providing a fresh read on the housing market and broader credit conditions.
At the same time, the S&P Global UK Manufacturing PMI for November will be published, with investors watching closely for any signs that the sector is stabilising after a prolonged period of weakness. ^[17]

Later in the week, traders will also contend with:

Eurozone inflation prints, which could influence the euro and European yields.
Core US PCE inflation – the Federal Reserve’s preferred price gauge – due on Friday, described by IG’s “Market Navigator” as the final major inflation test before the Fed’s December meeting. ^[18]

Together, these releases will shape expectations for global central‑bank policy, which in turn feed directly into valuations for UK exporters, dollar‑earners and multinational blue chips in the FTSE 100.

Santa rally or December wobble? What history and strategists say

December has usually been kind to UK investors

With the calendar flipping to December, the perennial question is back: will the “Santa rally” show up this year?

Fresh analysis published this morning by Fidelity suggests that, over the past 30 years, the FTSE 100 has delivered positive December returns in 24 out of 30 years, making it one of the best months of the year for UK equities. ^[19]

Looking at broader indices, Fidelity notes that:

Over the last 20 years, the FTSE All‑Share has averaged monthly gains of around 2.1% in December, compared with about 0.3% across all months.
Volatility has typically been lower in December than at any other point in the year, reflecting thinner trading volumes and a bias towards year‑end optimism. ^[20]

Trustnet’s own seasonality study echoes this, finding that the FTSE 100 has averaged nearly 1.9% gains in December over the past two decades, with only five negative Decembers – two of which came recently, in 2022 and 2024. ^[21]

Why this December may be different

Both Fidelity and Trustnet caution that seasonality is not a guarantee. This year, several cross‑currents complicate the usual festive pattern:

The Autumn Budget has raised questions about disposable incomes, especially for consumers facing frozen thresholds and targeted tax changes. Analysts warn that higher taxes could offset some of the tailwinds from lower inflation. ^[22]
Volatility in crypto and tech – both key barometers of global risk appetite – has increased in recent sessions, with Bitcoin’s overnight slide and mixed signals from US growth stocks unsettling traders at the start of the week. ^[23]
Sentiment surveys and “fear gauge” indices have ticked higher into year‑end, suggesting investors are more nervous than headline index levels alone might imply. ^[24]

Retail‑investor commentary from outlets like The Motley Fool underlines the tension: one article published this morning notes that a much‑feared November “crash” never materialised, with the FTSE 100 actually gaining about 5.6% between September and November and standing roughly 17.7% higher since the start of 2025. The author argues that such swings reinforce the case for long‑term, diversified investing rather than trying to time every wobble. ^[25]

Sectors and stocks to watch on 1 December

Financials and rate‑sensitive plays

Banks remain in the spotlight after emerging as clear Budget winners, at least in the short term. Reuters reports that UK lenders rallied sharply last week as investors concluded that Reeves had spared the sector from fresh windfall taxes, even as she raised levies elsewhere. ^[26]

If the Bank of England does follow through with a December rate cut, markets will need to weigh:

The drag from narrower net interest margins as rates fall;
Against the benefits of stronger credit demand, lower impairments and a healthier domestic economy into 2026. ^[27]

Outside the big banks, investment manager Foresight Group Holdings – a FTSE 250 constituent – has announced fresh share buybacks today under a programme first unveiled in April. The company disclosed new purchases of its own stock on 1 December as part of a broader capital‑return strategy, a move typically viewed as supportive for earnings per share and investor confidence. ^[28]

Travel, leisure and consumer names

Seasonality studies highlight consumer‑facing sectors as frequent beneficiaries of year‑end rallies:

Airlines and hotel groups – such as International Consolidated Airlines Group (IAG), InterContinental Hotelsand easyJet – have historically done well in the fourth quarter, helped by holiday travel demand.
Retailers ranging from Burberry and Marks & Spencer to Sainsbury’s and Games Workshop have often appeared among the top Q4 performers in recent years. ^[29]

Today, easyJet and Wizz Air are back in focus for a more technical reason: both airlines confirmed that they completed software upgrades on their Airbus A320 fleets over the weekend – after warnings that solar radiation could interfere with onboard computers – without cancelling flights, and with no change to easyJet’s financial guidance. ^[30]

The news removes a short‑term operational overhang and could help sentiment in a sector already eyeing strong holiday‑season bookings.

Industrials, energy and miners

Aerospace and engineering group Melrose Industries announced that its chief financial officer, Matthew Gregory, plans to retire in 2026, with Intertek executive Ross McCluskey set to take over the role. Management transitions at such large industrials can introduce short‑term uncertainty but often have limited impact on fundamentals if executed smoothly. ^[31]

Meanwhile, global growth jitters are weighing on resource‑heavy segments of the FTSE 100:

Share‑Talk’s morning wrap highlights weak manufacturing PMIs in Japan and China, and a mixed performance across Asian indices overnight. ^[32]
That combination, plus a stronger dollar earlier in the week, has left UK miners and energy names sensitive to any further downgrades to the global growth outlook.

Oil‑services specialist Hunting also features today after announcing a breakthrough contract in Brazil for its energy‑services production technology arm – its first new geography since a strategic acquisition earlier this year. The deal underscores ongoing international demand for UK engineering expertise, even as energy markets themselves remain volatile. ^[33]

Small‑cap actions and listings

Beyond the main indices, there is a steady stream of corporate activity on smaller UK markets:

Delta Gold Technologies is due to begin trading today on the Aquis Stock Exchange Growth Market, bringing a new early‑stage mining and technology play to UK investors. ^[34]
Aim‑listed Vast Resources has launched a tender offer for part of its share capital, while other small caps continue to announce buybacks, placings and board changes – moves that matter more to stock‑pickers than to index‑level performance. ^[35]

How analysts see the FTSE 100 from here

Near‑term outlook: pausing after record highs

After hitting a record close above 9,900 points in mid‑November, several strategists have warned that the FTSE 100 may need a breather before attempting a sustained move through the 10,000 barrier. ^[36]

Commentaries from outlets such as IG and Share‑Talk emphasise:

The risk that positioning is now crowded in popular UK dividend and defensives trades;
The possibility that weaker global data – particularly out of China – could cool the powerful rally in miners and exporters that helped drive the index to its recent highs. ^[37]

Medium‑term: Analysts still see upside… with caveats

Longer‑term, the tone remains surprisingly constructive:

Fidelity calculates that equity analysts’ average 12‑month target for the FTSE 100 is over 10,700, roughly 10% above current levels, though it stresses that such projections are often too optimistic. ^[38]
UK stocks still trade at a valuation discount to US and European peers on conventional metrics such as price‑to‑earnings ratios, even after this year’s rally. On a more growth‑adjusted PEG basis, the FTSE 100 is cheaper than the S&P 500, but not by an extreme margin. ^[39]

Seasonality data from EquityClock and others also point to December as historically strong for global indices, including the FTSE 100, supporting the idea that pullbacks this month could prove shallow if macro data co‑operate. ^[40]

At the individual‑stock level, quantitative forecasters such as StockInvest expect only modest day‑to‑day moves in many UK names – for instance, modelling Santander UK shares to open marginally higher today – underscoring that much of December’s story may be about grind rather than fireworks. ^[41]

What this means for investors

For short‑term traders, today’s session will likely hinge on:

The 09:30 GMT data dump on UK mortgages, lending and PMIs;
Intraday swings in gilts and sterling as rate‑cut expectations evolve;
Incoming headlines from the US and eurozone later in the week on inflation and central‑bank guidance. ^[42]

For longer‑term investors, the bigger narrative remains:

The UK market is close to record highs but still valued at a discount to many global peers;
The Budget and tax changes might weigh on domestic consumption, yet they have improved fiscal optics and helped bring down borrowing costs;
A potential pivot by the Bank of England – if delivered without reigniting inflation – could be a powerful medium‑term tailwind, particularly for domestically exposed mid‑caps in the FTSE 250. ^[43]

As always, the usual caveats apply: past performance is not a guide to future returns, seasonal patterns break down, and today’s cautious open is a reminder that even in a strong year for UK stocks, headline‑driven volatility can reappear quickly.

This article is for information only and is not personal investment advice. Anyone considering investing in UK shares or funds should assess their own risk tolerance – and, if in doubt, seek regulated financial advice.