5th Dec 2025 17:05
(Alliance News) - Blue chip stocks in London underperformed European and US peers on Friday, despite stable inflation data across the pond, as falls in oil majors BP and Shell weighed.
The FTSE 100 index closed down 43.86 points, 0.5%, at 9,667.01. The FTSE 250 ended just 7.04 points lower at 22,063.95, but the AIM All-Share closed up 1.87 points, 0.3%, at 751.30.
For the week, the FTSE 100 fell 0.6%, the FTSE 250 ebbed 0.5% and the AIM All-Share declined 0.3%.
The Cboe UK 100 was down 0.5% at 968.47, and the Cboe UK 250 ended 0.1% lower at 19,145.72, while the Cboe Small Companies was up 0.3% at 17,685.63.
In European equities on Friday, the CAC 40 in Paris closed down 0.1%, while the DAX 40 in Frankfurt ended 0.6% higher.
Stocks in New York were higher at the time of the London equity close.
The Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite were all 0.3% higher.
Markets broadly took encouragement from in-line US inflation data, which supports hopes for a US rate cut next week.
According to data from the US Bureau of Economic Analysis, the personal consumption expenditures price index for September increased 0.3% on-month, unchanged from August, and in line with FXStreet consensus.
Excluding food and energy, the core PCE price index, which is the Federal Reserve's preferred inflation gauge, increased 0.2% in September on-month, unchanged from August, and also in line with consensus.
Year-on-year, the PCE price index cooled to 2.8% growth in September, from 2.9% in August. FXStreet consensus had forecast the rate to remain unchanged.
Core PCE price index picked up to 2.8% year-on-year in September from 2.7% in August, as expected.
"September's rise in the core PCE deflator should be small enough for most FOMC members to revise down their near-term inflation forecast next week, helping to justify another policy easing," commented Samuel Tombs, chief US economist, Pantheon Macroeconomics.
The CME's FedWatch tool now places an 87% probability on a quarter-point rate reduction, although the decision could prove contentious.
Minutes from the October Federal Open Market Committee meeting showed officials were at loggerheads and expressed "strongly differing views" about what policy decision would most likely be appropriate at the December meeting.
"The FOMC has grown increasingly split over its near-term course of action, and multiple dissents seem likely," analysts at Wells Fargo said.
While Bank of America thinks Fed Chair Jerome Powell is facing the most "divided committee in recent memory."
Separate figures showed US consumer sentiment rose for the first time in five months, supported by a more optimistic outlook among younger consumers.
The preliminary December sentiment index rose to 53.3 from 51.0 a month earlier, according to the University of Michigan. The estimate beat FXStreet consensus, which predicted a rise to 52.0.
The pound was quoted lower at USD1.3326 at the time of the London equities close on Friday, compared to USD1.3353 on Thursday.
The euro stood at USD1.1635, down against USD1.1658. Against the yen, the dollar was trading higher at JPY155.42 compared to JPY154.75.
The yield on the US 10-year Treasury was quoted at 4.14%, widened from 4.10%. The yield on the US 30-year Treasury was at 4.80%, stretched from 4.76%.
Wall Street's attention was also gripped by news that Netflix has reached an agreement with Warner Bros Discovery to purchase Warner Bros.
The Los Gatos, California-based streaming service said the deal includes the Burbank, California-based media and entertainment company's film and television studios, HBO Max and HBO.
The cash and stock transaction is valued at USD27.75 per Warner Bros Discovery share, with a total enterprise value of around USD82.7 billion, and an equity value of USD72.0 billion.
Netflix traded down 0.7% in New York while Warner Bros rose 3.8%.
Holding London's FTSE 100 back were falls in oil majors and index heavyweights BP and Shell, down 2.6% and 1.4% respectively.
Both were downgraded by Bank of America, which moved BP to 'underperform' from 'neutral' with a reduced price target of 375 pence, down from 440p, and Shell to 'neutral' from 'buy' with a lowered target of 3,100p, down from 3,200p.
"Lower oil & gas prices and deflating refining margins will leave the sector grappling for more free cash flow cushions than it is already sitting on: And we see fewer inorganic cushions available that are not already discounted in elevated share prices," BofA said in a research note on Friday.
The broker cut its 2026 Brent oil price forecast by 14% to USD60 per barrel and its 2027 forecast by 11% to USD62.0 per barrel.
On the FTSE 250, Trustpilot rallied by 13% after Thursday's heavy falls following a critical report from Grizzly Research.
On Friday afternoon, Trustpilot issued a response to Grizzly's report, saying it "contains factual inaccuracies and false claims, which were intended to adversely impact the company's share price."
"We are considering all appropriate options in response to [Grizzly's] demonstrably false statements," the Copenhagen-based consumer review platform added.
Greggs climbed 5.3%, as JPMorgan initiated coverage with an 'overweight' rating.
A "re-rating" is "on the menu," analysts at JPM said about Greggs, with catalysts more resilient-than-expected like-for-like sales and earnings delivery from financial 2026 onwards, coupled with an inflexion in free cash flow and capital returns.
Ocado rose 0.3%, as it said it will receive a USD350 million one-off cash payment as compensation following Kroger's decision to close three customer fulfilment centres in 2026.
"An enhanced compensation payment does at least take the edge off Kroger's reduced use of Ocado's technology," commented AJ Bell investment director Russ Mould.
Elsewhere, shares in Big Yellow fell 4.3% after it abandoned takeover talks with Blackstone.
Advanced Medical Solutions, however, jumped 8.9% following a Sky News report that private equity house Bridgepoint is considering making an offer for the company.
Sky said a bid could be pitched at 270 pence to 280p a share, well above the 207.5p closing price on Thursday.
Brent oil was quoted at USD63.60 a barrel at the time of the London equities close on Friday, up from USD63.45 late Thursday.
Gold was quoted at USD4,208.77 an ounce on Friday, lower against USD4,214.64.
The biggest risers on the FTSE 100 were Rightmove, up 17.40 pence at 540.20p, JD Sports Fashion, up 2.22p at 82.72p, Smith & Nephew, up 33.50p at 1,265.00p, 3i Group, up 78.00p at 3,231.00p and ICG, up 32.00p at 2,084.00p.
The biggest fallers on the FTSE 100 were Smiths Group, down 86.00p at 2,372.00p, BP, down 12.15p at 452.85p, LondonMetric Property, down 3.70p at 186.50p, Severn Trent, down 47.00p at 2,769.00p and Airtel Africa, down 5.20p at 309.00p.
Monday's economic calendar has Japan's GDP data and the US consumer inflation expectations report.
Later in the week, interest rate decisions are due in Australia, Canada, Switzerland and the US.
There are no significant events in Monday's UK corporate calendar. Later in the week, however, half-year results are due from equipment hire firm Ashtead Group and housebuilder Berkeley Group.
By Jeremy Cutler, Alliance News reporter
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Related Shares:
BPShellTrustpilotBig YellowOcadoGreggsAdvanced Medical Solutions GroupIcg PlcRightmove3i GroupJD SportsSmith & NephewSmiths GroupLondonMetricSevern TrentAirtel Africa