London close: Stocks led higher by rising metal prices

The FTSE 100 index rose 0.83% to 8,319.69 points, buoyed by demand for heavyweight commodity stocks, while the more domestically-focussed FTSE 250 climbed 0.27% to 20,005.14 points.

In currency markets, sterling was last down 0.49% on the dollar to trade at $1.2303, as it slipped 0.28% against the euro, changing hands at €1.1950.

“The turmoil in gilts and sterling has understandably caught everyone’s attention, but the FTSE 100 has managed another strong day today,” said IG chief market analyst Chris Beauchamp.

“Sterling weakness has proven to be a boon once again, and the international nature of many of the index’s members mean there is little read-across from the doom-laden trading in UK-focused assets.

“Leading the charge has been the mining sector, occupying four of the five top riser slots today thanks to a global rebound in commodity prices.”

Beauchamp added that the pound had “got off to a miserable start” in 2025, but as the crescendo of gloom-laden news reached a peak, there was some tentative buying.

“Markets look to be assuming some kind of fresh fiscal consolidation will be needed to help restore the UK’s position.

“Comparisons with 2022 are overblown, but are unlikely to disappear in the short-term.”

US markets remained closed due to a national day of mourning for former president Jimmy Carter, who passed away in December.

UK shop prices fall in December, business sentiment slides

In economic news, shop prices in the UK declined at a faster pace in December, driven by heavy discounting around Black Friday.

According to the BRC-NielsenIQ shop price index, prices fell by 1.0%, compared to a 0.6% decline in November.

Non-food items saw a significant deflation of 2.4%, the sharpest since April 2021, while food inflation held steady at 1.8%, its lowest rate since December 2021.

Retailers extended discounts into early December, a trend amplified by Black Friday occurring later this year.

“Retailers discounted heavily for Black Friday, as they attempted to make up for weaker sales earlier in the year,” said Helen Dickinson, chief executive of the British Retail Consortium.

“However, the later Black Friday timing brought many of the non-food discounts into the measurement period, making non-food prices look more deflationary than the underlying trend.

“As retailers battle £7bn of increased costs in 2025, including higher employer NI, National Living Wage and new packaging levies, there is little hope of prices going anywhere but up.”

Optimism in the UK financial services sector meanwhile dropped sharply despite an increase in business volumes, according to the latest CBI survey.

Sentiment fell at its fastest pace since September 2022, with a balance of -28, down from -13 in the previous quarter.

Business volumes grew with a balance of 32, up from 6 in September, and similar growth is expected in early 2024.

However, profitability continued to decline and is projected to worsen in the months ahead, as firms grapple with rising costs and subdued margins.

“Financial services firms faced a challenging end to 2024, marked by a record-fast decline in spreads and the quickest increase in non-performing loans over three years,” said Louise Hellem, chief economist at the CBI.

“These adverse conditions contributed to a fall in both profits and optimism, despite a pick-up in business volumes growth.

“The survey also highlighted widespread concerns among firms about the potential drag on investment from rising costs following the Budget.”

Businesses in the UK were indeed preparing for higher costs in 2025, including increased National Insurance contributions and a rise in the National Living Wage, according to the Bank of England’s Decision Maker Panel survey.

It showed firms expect price growth of 4% in the year ahead, up from November’s 3.8%, with wage growth expectations also edging higher to 3.9%.

More than half of surveyed firms anticipate raising prices, reducing employment, or cutting wages to offset the anticipated cost pressures, with 61% expecting narrower profit margins.

On the continent, eurozone retail sales in November grew by just 0.1%, falling short of analysts’ expectations for a 0.4% increase.

Non-food sales saw a 0.6% decline, offsetting gains in food, drinks, and tobacco.

Germany, the bloc’s largest economy, reported a 0.6% drop in retail trade volumes, while France posted modest growth of 0.3%.

Germany also reported stronger-than-expected industrial production and export data for November.

Exports rose 2.1% month-on-month, surpassing forecasts, with a notable 6.9% increase in shipments to non-EU countries.

Industrial production grew 1.5% against expectations of a 0.5% rise, suggesting resilience in Europe’s largest economy.

Miners rise, retailers in the red

On London’s equity markets, mining stocks were among the top performers, supported by rising commodity prices.

Copper miners led the gains, with Antofagasta up 3.25%, Anglo American climbing 3.3%, and Rio Tinto rising 1.79%.

Gold miners also benefited from higher gold prices, as Fresnillo added 3.32%, Hochschild Mining advanced 3.38%, and Endeavour Mining increased 1.63%.

Ferrexpo shares jumped 3.23% after the company reported its strongest annual production since the start of the war in Ukraine, despite challenging conditions.

Retail stocks faced headwinds, however, with several major players under pressure.

Marks & Spencer dropped 8.07% despite reporting a 6.4% rise in third-quarter UK like-for-like sales, driven by robust Christmas trading.

Sales totalled £3.9bn, with food revenue up 8.9% and clothing and home revenue increasing 1.9%, both exceeding forecasts.

Tesco slipped 0.54% despite achieving its highest market share in eight years and solid holiday sales growth.

Discount retailer B&M European Value Retail tumbled 8.61% despite third-quarter revenue growth of 2.8% and a special dividend of 15p per share, as investors appeared unimpressed by its seasonal performance.

Bakery chain Greggs fell 9.35% after the bakery chain crossed the £2bn sales mark in 2024 but reported slowing like-for-like sales growth in the fourth quarter, citing weaker consumer confidence and declining high street footfall.

Other laggards included Greencore Group, down 4.49%, along with Primary Health Properties, Workspace Group, and XPS Pensions Group, which fell 0.96%, 1.85%, and 0.61% respectively, as they all traded without entitlement to a dividend.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,319.69 0.83%
FTSE 250 (MCX) 20,005.14 0.27%
techMARK (TASX) 4,607.85 0.11%

FTSE 100 - Risers

Anglo American (AAL) 2,439.50p 3.30%
Antofagasta (ANTO) 1,718.00p 3.25%
Fresnillo (FRES) 669.00p 3.24%
Compass Group (CPG) 2,732.00p 2.59%
Smith (DS) (SMDS) 567.50p 2.44%
Hikma Pharmaceuticals (HIK) 2,062.00p 2.38%
AstraZeneca (AZN) 10,988.00p 2.18%
JD Sports Fashion (JD.) 99.66p 2.17%
Rightmove (RMV) 642.60p 2.16%
London Stock Exchange Group (LSEG) 11,865.00p 2.15%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 345.30p -8.36%
Entain (ENT) 648.80p -4.42%
Sainsbury (J) (SBRY) 263.20p -3.24%
Centrica (CNA) 132.65p -2.64%
WPP (WPP) 732.00p -2.11%
Kingfisher (KGF) 230.40p -2.08%
Flutter Entertainment (DI) (FLTR) 20,210.00p -1.94%
NATWEST GROUP (NWG) 385.00p -1.94%
Hiscox Limited (DI) (HSX) 1,070.00p -1.92%
Associated British Foods (ABF) 1,966.50p -1.72%

FTSE 250 - Risers

CMC Markets (CMCX) 254.50p 5.17%
Elementis (ELM) 142.20p 4.10%
Alpha Group International (ALPH) 2,340.00p 3.54%
Abrdn (ABDN) 137.00p 3.47%
IntegraFin Holding (IHP) 330.50p 3.44%
Oxford Nanopore Technologies (ONT) 133.30p 3.17%
Hochschild Mining (HOC) 228.50p 2.93%
Ibstock (IBST) 166.00p 2.85%
GCP Infrastructure Investments Ltd (GCP) 70.10p 2.64%
Frasers Group (FRAS) 586.00p 2.63%

FTSE 250 - Fallers

Greggs (GRG) 2,210.00p -15.84%
B&M European Value Retail S.A. (DI) (BME) 318.90p -8.52%
Hays (HAS) 72.20p -4.77%
Ocado Group (OCDO) 279.00p -3.96%
PPHE Hotel Group Ltd (PPH) 1,280.00p -3.73%
Essentra (ESNT) 121.00p -3.66%
Baillie Gifford US Growth Trust (USA) 270.50p -3.39%
SThree (STEM) 275.50p -3.16%
Just Group (JUST) 145.80p -2.93%
Serco Group (SRP) 151.40p -2.39%