Market snapshot: investors await bullish drivers at start of new month
Most of the world's main stock indices finished November in the red, but there is reason for optimism as the traditionally strong festive period begins. ii's head of markets has the latest.
1st December 2025 08:21
by Richard Hunter from interactive investor
US markets advanced in a shortened trading session on Friday, although each of the main indices finished lower overall for the month of November.
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AI-related valuation concerns were the main cause of the damage last month, alongside questions surrounding the phenomenal amounts being pumped into the new technology. Such niggles are likely to remain near the surface in the immediate future.
More positively, next week’s Federal Reserve meeting is expected to announce an interest rate cut for the third meeting in a row, with the early indications of a new Fed Chair, to be announced shortly, likely to be a dove who will continue to ease monetary policy. With inflationary concerns having more recently taken something of a back seat, the Fed is likely to concentrate now on the other part of its dual mandate, with signs of weakness emerging across the labour market.
Investors will also be seeking a boost from heightened consumer spending over Black Friday and Cyber Monday, where the early indications are that this annual retail windfall could reach record highs. With the consumer central to the health of the economy, this could put markets on a firm footing over December.
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Indeed, markets go into the final month of the year in good shape, despite early indications pointing down for Dow futures where Friday’s gains could be erased. Even so, in the year to date, the Dow Jones has added 12.2%, while gains of 16.4% and 21% for the S&P500 and Nasdaq respectively have underscored the prevailing optimism around mega cap technology stocks in particular.
Asian markets were mixed overnight, with weak factory activity numbers coming out of both Japan and China. For the former, there was evidence of contraction for the fifth month in a row, with the possibility that higher tariffs are casting a long shadow.
In China, where the economy has struggled for most of the year under the weight of a beleaguered property sector, high youth unemployment and tepid consumer demand, factory activity also remained in contraction territory despite the more recent trade truce with the US.
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The slightly skittish investor sentiment heading into the new month gave UK markets little room for manoeuvre, and the main indices struggled to make headway at the open. Such caution is not necessarily a harbinger for the remainder of the month, where the bullish drivers of a potential interest rate cut and a traditionally strong run prior to the year-end are waiting to be unleashed.
A broad markdown in the premier index encompassed the previously high-flying defence sector, although the star performers of the year, Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES), kept their heads above water to take their cumulative gains to 137% and 312% respectively.
The FTSE100 also enters December in fine form having added 18.8% so far this year, while the FTSE250 has managed a gain of 6.9% despite the domestic economic travails which have overhung the index.
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