London Markets Show Resilience Amid Economic Concerns
Britain's premier stock index demonstrated unexpected strength on Friday, closing in positive territory despite confronting a barrage of disappointing economic indicators. The FTSE 100 advanced 12.06 points, representing a 0.1% gain, to settle at 9,539.71. This performance notably outpaced European counterparts, showcasing London's relative resilience during a challenging trading session.
Economic Data Points to Slowdown
Multiple economic releases painted a concerning picture of the UK economy. Official figures revealed that retail sales unexpectedly declined by 1.1% in October, following a 0.7% increase in September. This contraction occurred despite analysts anticipating stable performance.
Meanwhile, the government's financial position showed additional strain. Public sector net borrowing reached £17.4 billion in October, exceeding both the £15.2 billion forecast from FXStreet and the £14.4 billion prediction made by the Office for Budget Responsibility in March. Although this represented an improvement from September's £19.9 billion, it still indicated higher-than-expected government debt accumulation.
The purchasing managers' index data provided mixed signals. The flash composite PMI dropped to a two-month low of 50.5 points in November, down from October's final reading of 52.2. While manufacturing activity showed improvement, reaching a 14-month high of 50.2 points, the services sector declined to a seven-month low of 50.5 points.
Market Reactions and Sector Performance
The disappointing economic data increased market expectations for monetary policy easing. Rob Wood, chief UK economist at Pantheon Macroeconomics, commented that risks to growth forecasts now "lie to the downside" and suggested that a December interest rate cut from the Bank of England appears increasingly likely.
Housebuilding stocks emerged as notable beneficiaries of potential rate cuts. Persimmon led the FTSE 100 gainers with a 4.7% surge, while Barratt Redrow advanced 3.6% and Berkeley Group climbed 2.2%. Additional support came from reports suggesting next week's Budget might include changes to Lifetime ISAs aimed at assisting first-time buyers.
Credit checking firm Experian enjoyed a 3.5% rise after Citigroup upgraded its rating from 'hold' to 'buy', citing potential margin improvements in the company's North American operations.
Defence contractor Babcock International gained 1.8% after increasing its interim dividend by 25% to 2.5p per share and reaffirming full-year targets. The company reported a 32% jump in pretax profit to £226.3 million for the six months ended September 30.
However, technology-focused investment trusts faced pressure, with Polar Capital Technology Trust declining 5.3% and Scottish Mortgage Investment Trust falling 3.1%. Analysts noted that initial enthusiasm following Nvidia's results had quickly dissipated amid concerns that the artificial intelligence boom might have progressed too rapidly.
On the FTSE 250, property firm Hammerson surged 7.1% after acquiring the remaining 50% interest in The Oracle shopping centre in Reading and raising its full-year rental income growth guidance to 19%.
Weekly Performance and Global Context
Despite Friday's gains, the broader weekly picture revealed market weakness. The FTSE 100 declined 1.6% over the full week, while the FTSE 250 fell 2.1% and the AIM All-Share dropped 1.4%.
In currency markets, sterling traded at $1.308 during London's equity close, slightly lower than Thursday's $1.309. The euro stood at $1.150, down from $1.153 the previous day.
European markets showed mixed performance, with Paris's Cac 40 ending unchanged while Frankfurt's Dax 40 declined 0.8%. Meanwhile, US markets demonstrated strength during London trading hours, with the Dow Jones Industrial Average up 0.7%, the S&P 500 gaining 0.5%, and the Nasdaq Composite advancing 0.2%.
Commodity markets saw Brent crude oil quoted lower at $62.15 per barrel, down from $63.44, while gold traded higher at $4,073.57 per ounce compared to $4,058.47.
As markets look ahead to next week's Budget announcement, investors will be watching closely for government measures that could stimulate economic activity and address the concerning trends revealed in Friday's data releases.
