10th Dec 2025 17:01
(Alliance News) - The FTSE 100 outperformed European peers on Wednesday as markets weigh future interest rate expectations ahead of the Federal Reserve's decision later in the day.
Dan Coatsworth, head of markets at AJ Bell said: "A quarter point [US] rate cut is widely expected, but more interesting to the market will be commentary on the direction of rates in 2026. There have been conflicting signals from the Fed about monetary policy and markets are keen to see if there is more joined up thinking from the central bank."
The FTSE 100 index closed up 13.52 points, 0.1%, at 9,655.53. The FTSE 250 ended 78.15 points lower, 0.4%, at 21,830.97, and the AIM All-Share ended down 0.96 of a point, 0.1%, at 746.62.
The Cboe UK 100 closed up 0.1% at 968.05, the Cboe UK 250 ended 0.5% lower at 18,965.33, and the Cboe Small Companies was down 0.1% at 17,585.86.
London's gains came amid falls elsewhere in Europe. The CAC 40 in Paris closed down 0.5%, while the DAX 40 in Frankfurt ended 0.1% lower.
Stocks in New York were mixed at the time of the London equity close.
The Dow Jones Industrial Average was up 0.5%, the S&P 500 index was 0.1% higher, while the Nasdaq Composite stood 0.2% lower.
While Wednesday's US rate cut is seen as priced-in, concerns around lingering inflation have generated a division within the Federal Reserve.
As a result, analysts think Fed Chair Jerome Powell's messaging may be 'hawkish'.
Goldman Sachs thinks this could be reflected in an "implied higher bar for further cuts in the statement language," and a "hawkish skew" to the dot plots – Fed officials projections for future rate cuts.
The yield on the US 10-year Treasury was quoted at 4.18%, unchanged from Tuesday. The yield on the US 30-year Treasury was at 4.78%, trimmed from 4.80%.
The pound was quoted higher at USD1.3332 at the time of the London equities close on Wednesday, compared to USD1.3311 on Tuesday.
The euro stood at USD1.1647, up against USD1.1637. Against the yen, the dollar was trading lower at JPY156.36 compared to JPY156.90.
On the FTSE 100, Scottish Mortgage Investment Trust rose 3.7% after reports SpaceX is moving ahead with plans for an initial public offering that could it see valued at about USD1.5 trillion.
The London-listed technology investor had a 7.6% stake in the Elon Musk-led company, which designs and manufactures rockets and spacecraft, as at October 31 - its most significant holding.
Berkeley Group rose 3.2% after well received results.
RBC Capital Markets said the housebuilder believes that the housing market tide is turning, but that it has not yet reached the inflexion point.
"Berkeley is like a swan; the serene, smooth and graceful performance we see masks the hard work going on below the surface managing blustery market winds and the ebbs and flows of planning regulations. In challenging times there are few surprises for Berkeley's shareholders," the broker added.
HSBC rose 3.2% after receiving an upgrade to 'buy' from Bank of America.
BofA thinks the Asia-focused lender is well placed to capture growth in Hong Kong deposits and Asia wealth while it trades at an attractive valuation for a "high quality franchise."
"Both are areas where we think HSBC has significant competitive advantage, and where management has committed to focus more investments in," BofA said in a research note.
On the FTSE 250, FirstGroup climbed 5.0% after being named the preferred operator of the London overground suburban rail network by Transport for London.
The Aberdeen, Scotland-based bus and rail transport provider said the contract is estimated to have a value of around GBP3 billion over eight years, with an optional extension period of two years.
Gerald Khoo at Panmure Liberum said: "Beyond the uplift to earnings and value, this represents further progress in diversifying FirstGroup’s sources of earnings and customers, reducing risk and improving earnings quality."
Volution Group rose 3.6% after announcing the acquisition of Australia's AC Industries alongside an encouraging update.
The Crawley, England-based energy efficiency and indoor air-quality solutions firm said the GBP89.5 million acquisition of Sydney-based ACI will be immediately earnings accretive.
In addition, Volution said financial 2026 has started well with organic revenue growth at constant currency of 5% in the four months ended November.
Evoke rallied 14%, after a turbulent few weeks, after announcing a strategic review which could include a sale of the company.
Shares in the William Hill owner have fallen 52% in the last six months amid speculation, and confirmation, of taxes on the UK gambling sector in November's budget, which Evole said would lift yearly duty costs by up to GBP135 million.
Evoke said the review will look into a "range of potential alternatives to maximise shareholder value". These include a sale of the whole group, or some assets.
UK Chancellor Rachel Reeves set out gambling duty changes in her autumn budget in late-November.
On Wednesday, Reeves faced questions from the Treasury select committee.
She said her decision to bolster her budget headroom to nearly GBP22 billion, coupled with a move to commission assessments of compliance with the Treasury’s fiscal rules only once a year, means she should not need to take any action in the spring.
But while insisting that she wants to hold only one fiscal event a year, Reeves declined to rule out taking extra steps to raise tax or curb spending if necessary.
"I reserve the right to be able to take action at any point, but I believe the headroom that we have and the changes we have made means I won’t need to do that in the spring," she said.
Brent oil was quoted at USD61.42 a barrel at the time of the London equities close on Wednesday, down from USD61.98 late Tuesday.
Gold was quoted at USD4,200.39 an ounce on Wednesday, lower against USD4,214.16.
The biggest risers on the FTSE 100 were Magnum Ice Cream, up 42.00p at 1,123.00p, Scottish Mortgage Investment Trust, up 40.50p at 1,140.00p, Berkeley Group, up 116.00 pence, at 3,696.00p, HSBC Holdings, up 34.20p at 1,102.20p, and British American Tobacco, up 96.00p at 4,399.00p.
The biggest fallers on the FTSE 100 were Halma, down 84.00p at 3,542.00p, SSE, down 48.00p at 2,092.00p, Land Securities, down 11.50p at 586.50p, Legal & General, down 4.20p at 242.10p and United Utilities, down 20.50p at 1,175.00p.
Thursday's economic calendar has an interest rate decision in Switzerland and weekly initial jobless claims data in the US.
Thursday's UK corporate calendar has full-year results from NCC Group and RWS Holdings.
By Jeremy Cutler, Alliance News reporter
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Scottish MortgageHSBC HoldingsEvoke PlcVolution Group PLSFirstgroupBerkeley GroupBritish American TobaccoHalmaSSELegal & GeneralLand SecuritiesUnited Utilities