UK Stock Market Today: FTSE 100 Set for Soft December 1 Open as Budget Impact and Rate-Cut Hopes Shape Sentiment

The UK stock market is getting ready for a careful beginning in December, considering that the FTSE 100 futures are already indicating a slight decline for the opening on Monday. Futures at 08:00 GMT showed that the FTSE would drop by 10–16 points and reach the 9,705 level, which is in line with the overall decline in the global risk appetite caused by poor Asian manufacturing data and a steep fall in Bitcoin during the night.

This softer tone follows a strong run in recent weeks. The FTSE 100 ended Friday at 9,720.51, up 0.27% and nearly 18% higher year-to-date, after repeatedly testing record highs just below the psychological 10,000 mark in mid-November.

Key Highlights

• FTSE futures dip slightly:

A more than 4% slide in Bitcoin and disappointing Asian PMI numbers have revived risk-off sentiment, nudging FTSE 100 futures lower.

• Budget fallout continues:

Investors remain focused on Chancellor Rachel Reeves’s tax-heavy Autumn Budget, which is set to raise £26 billion by 2030. While banks rallied due to the absence of sector-specific levies, concerns linger over consumer spending and long-term growth.

• Rate-cut expectations rise:

UK inflation cooled to 3.6% in October, fueling widespread expectations that the Bank of England may cut interest rates in December and again early next year. Rate-sensitive sectors such as real estate, utilities and mid-caps are benefiting.

• Seasonal debate returns:

Historically, December is one of the strongest months for UK equities. But recent Budget uncertainty, crypto volatility and shaky global sentiment mean a traditional “Santa rally” is far from guaranteed.

• Data-heavy day ahead:

UK mortgage approvals, net lending figures and the November manufacturing PMI will be released at 09:30 GMT, alongside corporate updates from Melrose, easyJet, Wizz Air, Foresight Group, Hunting and a new listing from Delta Gold Technologies.

Market Snapshot: Start of December

November proved strong yet choppy for UK markets. The FTSE 100 ended the month roughly flat, pausing after four consecutive months of gains. Internationally, the index has been a standout in 2025, outperforming several European benchmarks and narrowing the gap with US indices.

However, early-morning sentiment has cooled. Futures currently price in a drop toward 9,705 after Bitcoin’s overnight decline and fresh signs of weakness across Asian equity markets.

Macro Picture: Budget Pressure, Easing Inflation and BoE Outlook

The Autumn Budget remains the biggest domestic factor driving markets. Key measures include frozen income-tax thresholds, a new mansion tax, revised pension rules and changes affecting EV usage — all aimed at raising £26 billion by 2029–30.

Bond markets reacted positively, with 10-year gilt yields posting their strongest Budget-day performance relative to US and German bonds since 2006. Bank stocks also surged, relieved that new windfall taxes were avoided.

Meanwhile, easing inflation has boosted expectations of Bank of England rate cuts. The CPI dropped to 3.6% in October, supporting predictions of monetary easing in December and early 2026.

Today’s Economic Catalysts

The 09:30 GMT data releases will be key for early-session direction:

• UK mortgage approvals for October
• Net lending data
• S&P Global UK Manufacturing PMI for November

Later in the week, markets will watch eurozone inflation and the US core PCE index — the Federal Reserve’s preferred inflation metric.

Will December Deliver a Santa Rally?

Seasonal trends are historically strong. Over the past 30 years, December has delivered positive returns for the FTSE 100 in 24 out of 30 years, averaging around 2% gains.

However, this year’s backdrop is more complex:

• Higher taxes could pressure household budgets.
• Crypto and tech volatility is rising.
• Investor sentiment indicators show elevated nerves despite high index levels.

Analysts continue to warn that seasonality alone shouldn't be relied upon in a year defined by fiscal tightening and global uncertainty.

Stocks to Watch Today

• Financials:

Banks remain in focus following last week’s rally. Rate-cut expectations could pressure net interest margins but also support credit demand and lower impairments.

• Foresight Group:

The investment manager announced a fresh round of share buybacks under its ongoing capital-return plan.

• Airlines and consumer sectors:

Travel and retail names tend to benefit from year-end demand. easyJet and Wizz Air confirmed they completed necessary Airbus A320 software updates without flight cancellations.