9 December 2025
The past week saw increased regulatory focus and a cooling labour market. The Bank of England (“BoE”) launched a "system-wide exploratory exercise" to stress-test private equity and credit markets, which hold 15% of UK corporate debt. The exercise will be run over two rounds, allowing officials to examine the impact of a crisis on the private capital market as well as on the wider financial system. Regulators around the world are concerned about the build-up of risks in the rapidly expanding private credit market after the collapse of the US car parts supplier First Brands and subprime auto lender Tricolor. UK Employment data showed a slowdown, with the BDO Employment Index hitting a 14-year low, and KPMG reporting continued declines in permanent placements and vacancies due to high costs and budget uncertainty. Despite this, persistent wage pressure for skilled labour pushed permanent salary inflation to a five-month-high, offering a slight sign of stabilisation.
The UK government faced significant political turmoil. Polling shows Labour's support plummeting to 14%, trailing the Greens and Reform UK. Amid instability and weak growth, the Brexit debate is reigniting, with Prime Minister Keir Starmer refusing to rule out rejoining the EU in his lifetime, as senior officials push the move to revive the economy. Fiscal challenges are also escalating, with high speculation of further cuts to the overseas aid budget, already reduced to 0.3% of gross domestic product (“GDP”).
UK equity markets were broadly flat, with the FTSE 100 dropping 0.6%, but still up 16.6% year to date, whilst the FTSE 250 fell 0.5%. Sterling strengthened to USD $1.334 and gilt markets stabilised post-Budget, with attention shifting to softening macroeconomic signals. The benchmark 10-year yield consolidated around 4.45%, down from November’s peak of 4.6%, while the 30-year yield retreated below 5.2% having reached 5.37% on Budget Day. Market sentiment is increasingly driven by expected monetary easing, with Goldman Sachs forecasting the 10-year yield will drop to 4.25% by year-end, reflecting four anticipated BoE rate cuts by summer 2026.
US equities trended higher ahead of this week’s Federal Open Market Committee (“FOMC”) meeting, with the Nasdaq rising 1.2% and the Russell 2000 up 1.65%, outperforming the S&P 500, which gained 0.3%. Risk sentiment firmed, with markets pricing in a 90% chance of a 0.25% cut, supported by a negative private payroll report which showed a decrease of 32,000 jobs in November, a sharp reversal from October’s revised gain of 47,000. Corporate activity was high, with Netflix agreeing to buy Warner Bros for $83 billion. Warner Bros Discovery rallied on the partnership news, while other artificial intelligence (“AI”) related stocks, Salesforce and Marvell, were buoyed by strong earnings. Defensive sectors like utilities and healthcare lagged, and Bitcoin fell 1.7%.
The UK housing market showed cooling momentum, with the Halifax House Price Index slowing significantly to 0.7% year-on-year in November, missing the 1.7% consensus and down from 1.9% in October. Prices were flat month-on-month. Halifax attributed the deceleration to challenging base effects from a sharp rise a year ago, calling it one of the most stable years for the housing market in a decade.
Antofagasta, the Chilean-focused copper mining group, advanced 6.74% last week, tracking a broader surge in industrial metals, which emerged as a standout sector. The rally was underpinned by a 0.5% decline in the US dollar, increasing the appeal of commodities, alongside positive read-across from rallying Chinese tech stocks, signalling improving sentiment in the world’s top metal consumer. These macroeconomic tailwinds bolstered the outlook for copper demand, positioning Antofagasta as a key beneficiary of the week's risk-on rotation.
JD Sports, the leading global sports-fashion retailer, saw its shares climb 6.43% last week. The rally was underpinned by renewed investor confidence following reports of robust holiday spending in the US, now a critical growth engine for the group, which alleviated recent concerns over consumer fatigue. Sentiment was further bolstered by positive read-across from strong sector data, suggesting resilience in its core athletic footwear division and keeping the group on track to meet full-year profit expectations.
Diageo, the global spirits giant, fell 4.41% last week, weighing on the FTSE 100 as investors rotated out of defensive sectors. The decline tracked a broader sell-off in consumer staples, which were among the worst-performing sectors globally, as rising bond yields dampened the appeal of high-dividend stocks. Sentiment was further pressured by the UK’s gloomy consumer backdrop and subdued confidence, prompting fears that squeezed household budgets could continue to curb demand for premium alcohol brands.
Market Commentary prepared by Walker Crips Investment Management Limited.
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