As you can see from the accompanying table, it was a broader and much more positive week for markets.
U.S. markets ended the holiday-shortened week on a strong note, supported by a combination of encouraging Federal Reserve commentary and softer economic data that reinforced expectations for a December interest rate cut. The S&P 500 gained 2.44%, while the tech-heavy Nasdaq advanced 3.62% in sterling terms over the week. Investors appeared to move past concerns about extended valuations and rising AI-related spending, refocusing instead on the sector’s robust long-term growth potential. U.S. markets were closed on Thursday for the Thanksgiving holiday, but risk appetite remained firm throughout the week.
European equities also posted solid gains. The upbeat tone was supported by encouraging inflation data across several major economies, reinforcing expectations that eurozone-wide inflation may stay near the European Central Bank’s 2% target.
The UK’s FTSE 100 Index climbed 1.95%. As expected, the market climbed a wall of worry before clearing it around 1:40 p.m. on Wednesday as Chancellor Rachel Reeves put down her red book in the Commons. Investors weren’t entirely wrong to feel perturbed in the lead-up to the announcement, given the delay, the downbeat rhetoric emanating from Downing Street, and the leaking of an OBR report some 30 minutes prior that sent gilt yields swinging. Reeves unveiled £26 billion in tax increases as part of the 2025 Autumn Budget aimed at strengthening public finances.
Ultimately, both global equity markets and UK bond traders recovered composure mid-afternoon, and a relief rally took hold in some FTSE 100 sectors. Entain rebounded on news that in-person gambling and horse racing would be spared additional levies; banking stocks bounced after the widely anticipated raid on profits failed to materialise; while regional builders such as Persimmon and Taylor Wimpey initially fell due to the lack of new policy support but recovered modestly as existing measures remained largely supportive.
Japanese equities also moved higher, buoyed by softer U.S. economic data and dovish Federal Reserve commentary that lifted global risk sentiment. Domestic fundamentals remained supportive: Tokyo’s core inflation held steady at 2.8% year-over-year in November, above the Bank of Japan’s (BoJ) target, reinforcing expectations that the BoJ may begin lifting rates in the months ahead. October’s economic indicators, including industrial production and retail sales, exceeded expectations and helped strengthen confidence in Japan’s economic resilience.