FTSE 100 down 66 points to 9,684 UK unemployment rate rises to 5.1% Pound rises as flash PMIs cause for optimism Defence companies and tech funds fall IG Group and Hollywood Bowl results impress 4.58pm: FTSE retreats
London stocks finished Tuesday’s session on the back foot, down 66 points at 9,684.
Meanwhile, oil prices were down, trading at lows not seen since February 2021, on expectations the war in Ukraine may end and, as a result, ease Russian oil export restrictions.
“Year-to-date losses exceed 22% – the worst annual performance since 2018,” IG senior technical analyst Axel Rudolph said in a statement.
“The US dollar also depreciated to a two-month low as investors continue to price in two more rate cuts in 2026, one more than the Federal Reserve’s dot plot.”
4.35pm: UK workers’ rights bill passes
The workers’ rights bill has finally broken its House of Lords deadlock after months of wrangling in parliament, meaning it will be able to receive Royal Assent and become law.
The legislation will ban zero-hours contracts, introduce sick pay from day one and introduce better protection from harassment, and other measures.
From April the first round of measures will become law.
Recent analysis by the Trades Union Council calculated the wider benefits of the bill at £10.4 billion, versus costs that have previously been estimated at between £0.9-5 billion.
“The Employment Rights Bill will bring the UK closer to the European mainstream. The UK has been an outlier on workers’ rights with insecure work rife in every corner of the country,” the TUC said.
“One in nine of the workforce are currently stuck in insecure work, and one million are on zero-hours contracts.”
4.16pm: Defence and oil pressure London benchmark
Defence and aerospace companies and oil producers are lead the decline, as thee Footsie looks to be wiping out around three quarters of the previous day’s gains.
Babcock is down 3.9%, BP 3.5%, Shell 2.7%, BAE 1.9%, Melrose 1.6%, Rolls 1.5%.
But events company Informa, Polar Cap Tech Trust, commodities giant Glencore, utilities Metlen and Centrica, consumer products makers Haleon and Unilever, all are among the 15 biggest fallers.
Defence shares are lower following comments from Donald Trump that peace between Ukraine and Russia is “closer than ever”, based on his latest phone call with Ukrainian president Volodymyr Zelenskyy.
Oilers are down as Brent crude is now below $60 per barrel, despite news that Europe has scrapped its ban on combustion engines for cars.
The market is “focusing on an expected surplus in the oil market, and signs that supply is outstripping demand in the Gulf and in the US”, says Kathleen Brooks at XTB.
“Middle Eastern crude prices are now in a bearish contango pattern, where spot prices are significantly lower than futures prices.
“When this happens, expectations are that future prices will fall back towards spot price levels, which can aggravate price declines.
“The prospect of an end to the war in Ukraine and continued strong production from Opec+ is also weighing on prices.
“Even though US growth has been upgraded for 2026, this is not filtering through to a stronger oil price. Until we get a clearer demand picture or supply restraint from Opec +, it is hard to see how the oil price will recover.”
2.55pm: Wall Street mixed
A confusing picture from Wall Street’s early trades.
The Dow Jones and S&P 500 slightly in the red, while the Nasdaq is up 0.2%.
All three started in the red and it’s fair to say investors are not showing a huge amount of certainty so far.
Earlier, the US jobs data showed around 105,000 jobs were lost in October, before 64,000 were added in November.
The US unemployment rate climbed to 4.6%, a four-year high, last month.
US retail sales were unchanged in October, a bit below the consensus forecast of 0.1%. Net revisions were -0.1%.
Sales excluding autos rose 0.4%, above the consensus estimate of 0.2%. Net revisions were -0.2%.
1.50pm: AIM float welcomed
Lucy Rigby, economic secretary to the Treasury, has hailed the IPO of Pathos Communications Plc (LSE:NEWS), which raised has raised £5.6 million as part of an AIM float.
“There’s real momentum behind companies listing in London,” says Rigby.
She says this is “boosted by this government’s drive to make the UK the best place in the world to start, scale, list and stay”.
“I’m delighted to see that momentum continue with Pathos listing on AIM, Europe’s leading growth market, today.”
Shares in Pathos are up over 6% to 32p.
CEO Omar Hamdi, a former BBC presenter and stand-up comedian, spoke to Proactive earlier about the company and the listing – watch here.
12.16pm: Markets update
Just after midday, and the FTSE 100 is continuing to slowly undo a good part of the gains made at the start of the week, down 0.5% now.
Meanwhile, the FTSE 250 is dawling moderately positively. up 0.1%.
Across the Channel, the DAX and CAC are down 0.5% and 0.2%, with tech and aerospace & defence weighing. Rheinmetall is down 4.6% in Frankfurt, with Airbus down 2%, while in Paris STM is down 2.7%, Thales 2.1%. Saab, Leonardo, Hensoldt, Renk all lower too.
“Defence stocks across Europe fell on news that the US has pledged Nato-like security guarantees to Ukraine to safeguard a peace agreement,” says Saxo analyst Neil Wilson.
He notes that this “leaves tricky issues unresolved,” like Kyiv giving up land to Russia in return for an end to the war.
Gold has eased back a touch, having hit two-month highs either side of the weekend, while Bitcoin retreated further to $86k in the morning but has climbed back above $87k.
Across the Atlantic, US stock futures have cut their losses.
Dow Jones and S&P 500 futures are both almost back to flat now, while Nasdaq 100 futures are down 0.1%, having been around 0.4% lower earlier.
11.20pm: BP hit by Shell report
BP shares are down more than Shell today, after reports that the latter’s mergers chief departed after CEO Wael Sawan blocked a bid for its FTSE rival.
A lack of enthusiasm for the deal from Sawan and finance chief Sinead Gorman suggests a deal is not likely under his reign.
According to reports from the FT and Reuters, Greg Gut pushed for a potential deal with BP and chair Andrew Mackenzie was interested in exploring the idea.
Shell publicly denied in June that it had made a bid for BP, saying it was constrained by UK takeover rules, which barred it from pursuing BP for six months following that statement.
That restriction is due to expire on December 26.
10.32am: PMIs provide optimism
The pound has climbed 0.3% against the USD and EUR, as the flash PMIs had some cause for optimism in the economy and some worrying inflation signs, which could make the Bank of England decision a little more tricky.
Thomas Pugh, chief economist at RSM UK, said the improvement in the flash PMIs “suggests that the economy recovered a little in December after the budget turned out to be more benign than expected”.
He does not think this will change the BoE decision for Thursday’s rates decision, but the rise in both input and output prices “will make the hawks on the committee nervous”.
The rise in the manufacturing PMI “probably continues to reflect the phased restart of Jaguar Land Rover production as new order levels remained similar to November”, Pugh says.
“The rebound in the services PMI is a good sign that activity recovered in December as pre-budget uncertainty dissipated.
“Indeed, the new orders index recovered almost all of the ground lost in November. That gives us some hope that the economy will finish the year on a stronger note after what is likely to be a weak October and November.”
Elliott Jordan-Doak at Pantheon Macroeconomics says the flash PMI improved “as businesses finally put a chaotic few months of Budget speculation behind them and looked towards the year ahead with greater policy certainty”.
The rise in the PMI follows from a “chunky” upward revision in November’s final PMI, which he says gives “confidence that business sentiment has further to rise in 2026”.
9.46am: UK PMIs improve in flash reading
The preliminary ‘flash’ reading of the UK composite PMI survey showed a rise to 52.1 for December from 51.2 in November, above the consensus of 51.5.
This reflects the services PMI climbing to 52.1 from 51.3, above the consensus forecast of 51.6.
Manufacturing also improved, with the PMI jumping to 51.2 from 50.2, versus the consensus of 50.3.
New orders are in fact growing at the fastest rate for over a year, the survey found, with data collected between December 4 and 12.
“December’s flash PMI surveys brought welcome news on faster economic growth at the end of the year, with businesses buoyed in part by the post-Budget lifting of uncertainty,” says Chris Williamson, economist at S&P Global Market Intelligence, which carries out the survey.
He says the PMI is consistent with GDP growth accelerating to 0.2% in December, albeit with a more modest 0.1% gain signalled for the fourth quarter as a whole.
“It’s a big relief that business confidence has not slumped in a repeat of last year’s post-Budget gloom. Instead, companies have ended the year on a slightly more optimistic note amid signs of improving demand now that some of the uncertainty created by the Budget has cleared.”
9.34am: IG hits new high
Shares in IG Group Holdings Plc (LSE:IGG) are up 5.4% to a new all-time high after the online trading and investment platform extended its share buyback by £75 million and reported strong revenue growth for its latest quarter.
Chief executive Breon Corcoran said: “We have made good progress this quarter, with strategic initiatives translating into strong revenue growth and accelerating customer acquisition. This momentum gives us confidence to achieve our medium-term revenue growth targets ahead of schedule in 2026.”
Analyst Rae Maile at Panmure Liberum says that because the company is in the process of changing both year-end (from end May to end December) and changing its divisional reporting, “it is fair to say that estimates are in something of a state of flux”.
That said, he says that while IG reports that its guidance has been accelerated, “it is not indicating any change to EBITDA or cash EPS estimates” and also suggests that early December 2025 saw “softer trading conditions” which it builds into its assumptions, as well as an intention to increase marketing investment.
“The issue always for the market is that it is easy to include flagged costs and harder to estimate future benefits.”
8.59am: Markets summary
There is now a near 90% chance of a rate cut from the Bank of England later this week, notes market analyst Kathleen Brooks at XTB.
“While this labour market report may protect further GBP downside in the near term, we do not think that it will move the dial for UK stocks or more broadly for risk sentiment.”
The FTSE 100 is down just six points, with other European indices mixed and the Euro Stoxx 50 down 0.2%.
Brooks says the hefty losses for Japanese and Chinese benchmarks, and falls for US stocks overnight led by some tech names and bitcoin-linked stocks “suggests that the market remains uncomfortable with risk”.
“After a strong run since April, investors may be taking money off the table earlier than usual, which is thwarting hopes of a Santa Rally,” Brooks said, adding that the US non-farm payrolls report later was the market’s top prioroty.
“We could see stocks drift lower until we get the NFP report later today. This report has the power to determine the direction of risk sentiment for the rest of the year.”
8.32am: Jobs market challenges ‘likely to continue’
Looking at the jobs market numbers, Matt Swannell, chief economic advisor to the EY ITEM Club, said underlying earnings growth in the private sector slowed to 3.9%, its lowest reading since November 2020.
“While revisions to the pay data suggest wage growth has slowed less quickly than previously thought over the last few months, it has still lost momentum, with three-month annualised pay growth easing to just 2.7% in October.
“Softening earnings growth comes on the back of a deteriorating jobs market,” Swannell says, pointing to estimates of payrolled employees declining further in November, falling by the biggest month-on-month reduction in five years.
“Having seemingly stabilised over the summer as businesses came to terms with the rises in employer National Insurance Contributions (NICs) and the National Living Wage, headcount has fallen over the last few months as public sector organisations have been recruiting fewer staff.
“Challenges are likely to continue for the labour market in the near-term, as public sector hiring remains soft and private sector demand is weak.”
He says a cut at this week’s Bank of England meeting “appears likely, but it will be a close call, with tomorrow’s inflation data presenting the remaining hurdle”.
“Looking further ahead, a soft growth outlook and a loosening labour market will allow the Monetary Policy Committee (MPC) to cut interest rates further in 2026. But with recent indications that next year’s pay settlements could remain above the rate consistent with inflation settling at 2%, the MPC will continue to tread carefully.”
8.15am:
The FTSE 100 has opened slightly in the red, down 17.5 points to 9,733.81 in opening trades.
Defence groups and tech investment funds are among the prominent fallers, with BAE Systems PLC (LSE:BA.) and Polar Capital Technology Trust PLC (LSE:PCT) the top two fallers, down 2.3% and 2.2%.
Babcock International PLC (LSE:BAB), Rolls-Royce Holdings PLC (LSE:RR.) and Scottish Mortgage Investment Trust PLC (LSE:SMT) are just behind.
Oil producer BP PLC (LSE:BP.) is a weight on the index too, as Brent crude falls another 1% to below $60 a barrel.
7.54am: Centrica’s Spirit sells final stakes in producing assets
British Gas owner Centrica PLC (LSE:CNA) will get £39 million after its majority-owned Spirit Energy sold its final 15% interest in the Cygnus gas field, along with all other producing assets in the Greater Markham Area and Southern North Sea, to Serica Energy for a total transaction value of approximately £98 million.
The deal includes £57 million in headline consideration and the transfer of £41 million in decommissioning liabilities.
Centrica’s portion is based on its 69% stake in Spirit.
7.43am: Rolls-Royce tops up share buyback
Rolls-Royce Holdings PLC (LSE:RR.) has launched a £200 million “interim” share buyback ahead of its full-year results, after completing a £1 billion scheme last month.
The new buyback is expected to run from 2 January until the week when its results are due on 26 February.
Rolls-Royce said the total quantum of its next full buyback for 2026 is still under review and will be announced alongside the results.
7.31am: Weakening UK labour market
More details on the jobs market data from the Office for National Statistics.
As well as the unemployment rate rising to 5.1%, employment fell by 16,000 in the three months to October, less than the 75,000 decline forecast.
ONS director of economic statistics Liz McKeown said: “The overall picture continues to be of a weakening labour market. The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.”
She added: “This weakness is also reflected in an increase in the unemployment rate, while vacancies remained broadly flat. The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.”
Wage growth slowed across much of the private sector, with average weekly earnings excluding bonuses rising 4.6% year-on-year, unchanged from the previous month. Private sector pay growth fell to 3.9%, while public sector wages increased further.
7.15am: FTSE called lower as UK jobs market weakens
The FTSE 100 has been called lower on Tuesday, after weaker jobs market figures, including a rise in the unemployment rate and slower wage growth.
Unemployment rose to 5.1% in the three months to October, from 5.0%, while average pay growth fell to 4.7% from 4.8%.
London’s blue-chip index was called 29 points lower, chipping off some of the gains from the previous day, when the benchmark added over 102 points to close at 9,751.31.
US stocks closed mostly lower overnight, with the Nasdaq slipping 0.6%, the S&P 500 down 0.2% and the Dow Jones 0.1%.
Tesla had a standout day, briefly touching an all-time high, up more than 3.5% by the end, as optimism grew around its robotaxi business.
Asian markets are more deeply in the red this morning, extending losses for a second day, with Japan’s Nikkei and Hong Kong’s Hang Seng both down over 1.5%, while Chinese domestic stocks are 1.1% lower in Shanghai.
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