The FTSE 100 looked set to close the week out with a very marginal high despite the disappointing news the UK economy shrank in news in October.
“The UK economy has failed to deliver an early Christmas present for Sir Keir Starmer and Rachel Reeves, after it unexpectedly contracted 0.1% in October with construction and manufacturing both showing weakness, and services stagnating,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“On a brighter note, consumers are feeling more optimistic than they have for a while with the GfK consumer confidence index reaching a four-month high in December of minus 16. But with the major purchase index unmoved since last month, it may be more mince pies than new TVs that feel the benefit this Christmas. That reflects ongoing concerns around the prospects for growth in 2025. Confidence levels for the economy over the next 12 months remained unchanged at minus 26.”
Thankfully, the FTSE 100 does not reflect the UK’s soggy and slow economy, and stocks were little changed by the news of the economic decline that was attributed to the decisions made by the Labour government.
“The Budget continued to be blamed for the UK’s fragile economic performance as official figures showed GDP unexpectedly contracted in October, having also done so in September. This led to weakness in the pound, which can be helpful to the FTSE 100 given the relative boost it affords its dominant overseas earners,” said Dan Coatsworth, investment analyst at AJ Bell.
While US indices rocket to record highs, investors in London’s leading index must make do with a paltry gain of less than 1% on the week after the index rose 0.1% on Friday.
There was little conviction in the market moves on Friday with few FTSE 100 stocks moving over 1%.
Rentokil Initial was the top FTSE 100 gainer after announcing that an activist investor had increased their stake in the company. Rentokil shares were 3% higher at the time of writing.
Diageo was still feeling the positive impact of a broker upgrade with another 2% gain.
All eyes will be on the Federal Reserve and their interest rate decision next week.