- The FTSE adds 89 points to 9,774
- UK inflation falls more than expected
- Pound sinks as Bank of England rate cut nailed on
5.02pm: Another winning day
London stocks saw another solid session on Wednesday, with the FTSE 100 adding 89 points at 9,774.
It was a different story on Wall Street. “The optimism shown in the FTSE is not being replicated on Wall Street, where a positive session for futures has given way to more selling in the cash session,” IG chief market analyst Chris Beauchamp said.
“Once again it is tech leading the way to the downside, with notable losses for Nvidia and Alphabet. Concerns about AI have reared their head again, weighing on sentiment just as the Santa rally was meant to get underway.”
4.13pm: US tech selling off again
London's blue-chip index is seeing some of its earlier gains ebb away, but that's nothing compared to the Nasdaq in New York, which is down 285 points or 1.2%.
Bigger fallers on the tech-heavy index include Constellation Energy, down 6.5%, following by Broadcom, ASML, Lam Research, AMD, Nvidia all down 3.5% or more.
Google owner Alphabet is down 2.6% despite CEO Sundar Pichai posting a post about the company's new AI.
"Gemini 3 Flash is our latest model with frontier intelligence built for lightning speed, and pushing the Pareto Frontier of performance and efficiency. It outperforms 2.5 Pro while being 3x faster at a fraction of the cost."
3.32pm: A good year for the FTSE, can it continue for a few more days?
This has been the best year for the FTSE 100 since 2009 and a half and is the index's seventh best in its history, as the index has surged to multiple record highs.
That performance in 2009 was a rebound from the plunge in 2008 stemming from the global financial crisis, when it fell over 30%.
This is "in stark contrast to the underlying pessimism surrounding the UK economy, and the UK government’s stewardship of it, which has seen borrowing costs remain elevated despite 5 rate cuts since the Labour administration came to power in July 2024", says independent market analyst Michael Hewson.
London's blue-chip index has outperformed its mid-cap sibling, with the FTSE 250 up just over 5% for the year to date, still below its previous record highs set in 2021.
Gains for the Footsie could top 18% as the UK index has managed to keep pace with the DAX, which is "no mean feat given the DAX is a total return index", says Hewson, as the German index takes account of dividends, which the UK benchmark does not (see ex-dividends day most Thursdays).
In his analysis of global performance this year, Hewson notes that Japan's Nikkei 225 has done even better, up around 25%, helped to a large part by a weak currency.
US markets have provded attractive for European investors thanks to the AI trade, prompting strong gains for the Mag 7 of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVidia and Tesla and the Nasdaq, which at over a 19% gain is just ahead of the Footsie.
"This surge in valuations has also prompted fears of a bubble in the sector with some wild swings in recent weeks on the back of some end of year profit taking, with some chatter that 2026 could prompt a bit of a reset when it comes to AI winners, and AI losers," says Hewson.
2.49am: US stocks wobble
Hmm. Wall Street has not started as confidently, with most stocks trading in the green for only a matter of seconds and now on the slide.
The S&P 500 has dropped 0.2% and the tech-heavy Nasdaq is down 0.4%. Going against the grain is the Dow Jones, up 0.3%.
Nvidia is down 2.3% and Alphabet is 1.1% lower, creating a heavy drag. Netflix is higher, after Warner Bros backed its merger.
Lifting the Dow are names such as Procter & Gamble, Salesforce.com, Goldman Sachs, Chevron and Boeing, which are top risers so far.
Back in London, the FTSE is holding onto its gains.
1.57pm: Govt will sue to get Chelsea sale funds
Keir Starmer has issued an ultimatum to Roman Abramovich, demanding the sanctioned Russian oligarch and former Chelsea FC owner release £2.5 billion from the 2022 sale of the football club to Ukraine.
The government is prepared to take Abramovich to court if he fails to honour his pledge, Starmer said in the Commons today.
Funds from the Chelsea sale remain frozen amid a dispute over whether they should aid all war victims or solely Ukrainian humanitarian efforts.
The UK granted a licence for the transfer earlier this year, but tensions with Abramovich’s lawyers have delayed distribution.
1.04pm: UK defence plan reportedly being reworked
There are less than 20 FTSE stocks in the red and none of them are defence sector names, despite a FT story that the Prime Minister has held back from signing a major defence spending plan.
Keir Starmer has reportedly asked for aspects of the defence investment plan to be "reworked" by the Ministry of Defence, meaning a delay until next year.
Starmer raised concerns about "affordability", sources told the paper.
But a Downing Street spokesperson countered that it was "categorically untrue" that Starmer had declined to sign off on the investment plan.
12.23pm: Wall Street to open higher
US futures are in green, with the tech-powered Nasdaq out in front.
Nasdaq futures are up 0.4%, with those for the S&P 500 up 0.35% and for the Dow Jones up 0.2%.
Earlier, the open was expected to be softer.
12.09pm: Warner Bros rejects Paramount bid
The board of Warner Bros Discovery has rejected the $108 billion hostile takeover bid from Paramount Skydance, with shares in WBD down 1% in premarket trading.
In a statement, directors unanimously reiterated their backing for the Netflix deal and recommended that shareholders reject Paramount's offer.
Board chair Samuel Di Piazza Jr said: "Following a careful evaluation of Paramount's recently launched tender offer, the board concluded that the offer's value is inadequate, with significant risks and costs imposed on our shareholders.
"This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals.
"We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination."
Overnight, investment firm Affinity, owned by President Donald Trump's son-in-law Jared Kushner, confirmed that it had withdrawn backing for Paramount's bid.
Affinity said in a statement: "With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity."
11.17am: Industrial mood
The CBI Industrial Trends survey has shown a slight improvement in sentiment among UK manufacturing compani3es.
Its total orders balance rose to -32 in December, from -37 in November, above the consensus forecast of -35.
In seasonally-adjusted terms, the balance rose to -34, from -37 in November.
11am: FTSE roaring
The FTSE is absolutely roaring, up 1.7%, while the rest of Europe is largely flat.
Phoenix Group and HSBC are still top, both up over 4%, while miners, housebuilders, utilities, banks and oil companies are playing strong supporting roles.
The latest inflation numbers are the main differentiator between the London index and its Continental peers.
A 0.2% decline for both headline and core CPI month-on-month metrics was much sharper than expected.
"Coming off the back of a jobs report that saw a higher unemployment rate, lower employment count, and higher claimants, markets can not only look forward to a rate cut but also a likely dovish tone from the BoE tomorrow," said Josh Mahony at Scope Markets.
"While markets are currently pricing a mere 50% chance that we see either 25bp or 50bp worth of cuts next year, the deterioration in the jobs market coupled with falling inflation could help raise hopes of a more accommodative BoE than has been predicted."
Neil Wilson at Saxo agrees that the inflation news will "cement" the Bank of England rates cut tomorrow and supports the view that "the BoE should be easing policy more quickly – the inflation we have seen is not done to a roaring economy that needs cooling, and it’s going to fall back to target just as GDP is about to show some very weak signals.
"It's time to ease, ease, ease."
The pound has fallen back after hitting a two-month high on yesterday's jobs numbers.
"Stocks are ripping as investors adjusted to the prospect of deeper and swifter rate cuts next year," says Wilson.
"I think we should be seeing one or two of the hawks on the MPC turning more dovish now and this is enough - with the committee divided down the middle - to sharply change the calculation for cuts next year.
"I expect further cuts in Feb and Apr and ultimately 3% Bank Rate before this easing cycle ends."
Insurers, banks, housebuilders are all rallying on the easing rates prospects, while metal prices are lifting the miners.
Spot silver hit a fresh record high of $65.23, up 2.3% from the prior close, lifting Fresnillo in particular.
10.35am: Investment trust tussles
There are a couple of tussles going on in the world of investment trusts.
Edinburgh Worldwide Investment Trust PLC has urged shareholders to vote against a renewed attempt by Saba Capital to take control of the company, after receiving a requisition to replace the entire board with three US-based nominees selected by Saba.
This marks the second takeover effort by the activist investor this year. A similar proposal was rejected by shareholders in February 2025, with 63.8% voting against.
Saba has since increased its stake in the trust to over 30%, raising the risk of success in a new vote.
Among its several criticisms of Saba and its proposals, the board accused the hedge fund of pursuing its own commercial interests, including a possible change in investment manager and strategy, which could be to the detriment of other shareholders.
Elsewhere, Saba has doubled its stake in Gore Street Energy Storage to 10%.
And further afield elsewhere, shares of Abrdn European Logistics Income are up 5.6% to 25.35p after the board's commitment to the managed wind-down strategy was reaffirmed, following open letters from DL Invest Group opposing the plan.
The company said shareholders representing around 25% of its register have recently confirmed continued support for the wind-down, which was first approved by shareholders in 2024.
9.35am: House prices and rent inflation cool
The UK's official house price index rose by 1.7% year-on-year in October, down from a 2.0% gain in September.
Growth in September was revised down from 2.6% previously.
In seasonally adjusted terms, prices rose by 0.1% month-to-month in October, up from a 0.3% fall in September. September’s drop was revised worse from a 0.2% fall before.
ONS housing data chief Ian Boreham says: "UK annual house price inflation slowed again in October. The North East was the English region with the highest house price inflation while the regions with the lowest remain in the south of England. London and the South West were the only regions showing an annual fall this month."
He added that rent inflation eased for the eleventh consecutive month, to the lowest annual rate since June 2022, with all countries of the UK seeing a slowdown.
8.56am: Oil and China in focus
Oil prices have been on a ride in the past 48 hours.
Yesterday, Brent crude front-month futures fell to below $59 a barrel, levels not seen for almost five years.
Then prices surged after US President Donald Trump announced a "total and complete" blockade on all sanctioned oil tankers entering or leaving Venezuela.
Brent is back up to $59.64 now, though this is still around the lowest in four and a half years.
Trump's move "has heightened geopolitical tensions amid ongoing concerns about global oil demand," says market analyst Patrick Munnelly at Tickmill Group.
"The action represents Washington's latest effort to ramp up pressure on Venezuelan President Nicolas Maduro's administration, targeting its primary revenue source."
China is also highlighted, as the market "told two very different stories", Munnelly says, including AI chipmaker MetaX Integrated Circuits making a spectacular debut in Shanghai, with its shares skyrocketing 700%.
"Investors are eager to seize opportunities tied to China's push to reduce reliance on AI chips from major US companies," he says.
"On the flip side, property developer China Vanke is requesting an extension for a 2 billion yuan ($283.6 million) bond payment grace period, increasing it from five trading days to 30.
"This highlights ongoing struggles in China's troubled real estate sector."
China-focused stocks in the FTSE include HSBC, Standard Chartered and Prudential, all in the top 15 risers this morning. Miners, which often rise and fall on China economic sentiment, are also well bid, with Anglo American up 3.1% and Glencore up 2%.
8.15am: FTSE shoots higher at open
The FTSE 100 has shot up 91 points to 9,775.55 in initial trades.
Financials, particularly ones focused on China, along with housebuilders, miners and oil producers, are top of the early leaderboard.
Phoenix Group, HSBC and Standard Chartered are top of the list, followed by Barratt Redrow, Persimmon, and Land Securities.
Fresnillo, Anglo American and Glencore are up too.
7.59am: Serco ups guidance
Serco Group PLC (LSE:SRP) has raised its profit and cash flow guidance for 2025, and forecast further growth in 2026 thanks to a slew of new defence contracts.
For the current calendar year, the government outsourcer said revenues are set to rise 2% to around £4.9 billion, or 3% at constant currency.
Gains in defence, justice and citizen services have offset lower immigration activity.
Underlying operating profit is expected to be about £270 million, ahead of previous guidance for around £260 million.
7.46am: Pound falls
The pound is down 0.4% against the euro and 0.7% versus the US dollar, following the inflation numbers.
CPI inflation fell to 3.2% in November from 3.6% in October, below the Bank of England’s forecast of 3.4% and the market consensus of 3.5%.
Services CPI dropped to 4.4% from 4.5%, below the consensus and the MPC’s forecasts, both at 4.5%.
ONS chief economist Grant Fitzner noted that inflation fell to its lowest annual rate since March.
"Lower food prices, which traditionally rise at this time of the year, were the main driver of the fall with decreases seen, particularly for cakes, biscuits, and breakfast cereals.
"Tobacco prices also helped pull the rate down, with prices easing slightly this month after a large rise a year ago. The fall in the price of women’s clothing was another downward driver.
“The increase in the cost of goods leaving factories slowed, driven by lower food inflation, while the annual cost of raw materials for businesses continued to rise."
Rob Wood at Pantheon Macroeconomics says an interest rate cut tomorrow is "beyond doubt now".
However, he says part of the fall is likely to "unwind in the coming months because it was concentrated in erratic or volatile items like airfares and accommodation services, or was likely driven by the temporary effect of early Black Friday discounts.
"For instance, the MPC’s preferred measure of underlying services inflation accelerated to 4.1% year-over-year in November, from 4.0% in October and saw a 5.9% month-to-month annualised gain, the strongest since February."
7.35am: Bunzl backs outlook
Bunzl PLC (LSE:BNZL) has backed its profit outlook for the current year,
Revenue is forecast to grow 2-3% at constant exchange rates, broadly flat at actual exchange rates, with underlying revenue flat and growth driven by acquisitions.
The adjusted operating margin is projected to be around 7.6%, as the decline seen in the first half moderated in the second, supported by performance improvements in North America and Continental Europe.
Chief executive officer Frank van Zanten said it remained "a challenging market" but he expects a return to organic growth in 2026, with ongoing cost actions to support a more stable profit outlook.
7.18am: FTSE set for strong start after inflation numbers
A stronger start for the FTSE 100 is anticipated on Wednesday as inflation continues to retreat and open the door for the Bank of England to cut interest rates.
The consumer price index for November was up 3.2% on a year ago, easing from rise of 3.6% in October and below the forecast 3.5%.
This was thanks to a month-on-month fall of 0.2% in November. The core rate of CPI, which excludes the more volatile energy and food prices, also was down to 3..2% from 3.4%, while the services CPI, used as a measure of the persistence of inflation, cooled to 4.4% from 4.5%.
A rebound in the London benchmark of around 60 points is predicted on the futures market, which would continue a fairly rollercoaster week, after the index fell 66.5 points to close at 9,684.79 yesterday, having added just over 102 points on Monday.
On Wall Street last night, the Nasdaq edged up 0.2%, helped by strength from names like Tesla, Meta and Palantir, but the Dow Jones slid 0.6% and S&P 500 dipped 0.2% as investors worried about the unemployment rate climbing to 4.6%, its highest level since 2021.