Sweet spot for FTSE 100 as these stocks surge

HSBC Holdings (LSE:HSBA), Glencore (LSE:GLEN) and Shell (LSE:SHEL) today powered the UK’s outperformance in a session when FTSE 100  investors snapped up high-yielding Phoenix Group Holdings (LSE:PHNX) and £6.5 billion-valued Games Workshop Group (LSE:GAW).

Rate-sensitive stocks also fared well after a surprise fall in inflation fuelled hopes for lower borrowing costs, with the resulting fall in sterling a positive for overseas earners.

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The blue-chip benchmark rose 1.6% to within 100 points of its all-time high, in contrast to flat performances in Paris and Frankfurt and expectations for a lacklustre S&P 500 index.

A day after the Bank of America’s fund manager survey showed little appetite among bullish professional investors for UK stocks, the FTSE 250 index put on about 1%.

The domestic momentum came as traders repriced expectations for interest rates in the wake of today’s surprise fall in November’s annual inflation rate to 3.2% from 3.6% in October.

A quarter-point cut to 3.75% appears certain tomorrow, with money markets now seeing a 65% chance of a further reduction by the Bank of England before the end of 2026’s first quarter.

City bank Peel Hunt expects a move in February. It said: “No growth since summer and a labour market that is rapidly cooling: the risk is that the Bank of England has fallen behind the curve and may need to play catch-up in 2026.”

The progress towards the Bank’s 2% inflation target will fuel hopes that the UK can finally escape its gilts doom loop, having experienced five years of rising yields. This will help lower discount rates for future cash flows and reduce the cost of capital.

The brighter outlook for mortgage affordability boosted housebuilders as Persimmon (LSE:PSN) shares extended their recovery since the start of September to 28%.

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The York-based builder is up 13% year-to-date, which compares favourably with rivals Berkeley Group Holdings (The) (LSE:BKG) and Barratt Redrow (LSE:BTRW). They rose 56p to 3,886p and 9.3p to 371p in today’s session.

Other beneficiaries of today’s economic developments included United Utilities Group Class A (LSE:UU.), which rallied 33.5p to 1206.5p, and Land Securities Group (LSE:LAND) following a rise of 9p to 596p.

More than a quarter of stocks in the FTSE 100 posted gains of 2% or more, including the oil giants Shell and BP (LSE:BP.) after the price of Brent crude returned back above $60 a barrel.

Banking stocks also fared well, led by HSBC after analysts at Keefe Bruyette & Woods raised the Asia-focused lender to Outperform with a price target of 1,240p.

The shares lifted 42.4p to 1,154.2p, while Standard Chartered (LSE:STAN) rose 47.5p to 1,801.5p and Barclays (LSE:BARC) improved 11.35p to 461.8p.

The “old economy” momentum of the FTSE 100 index in today’s session was completed by the commodity sector, which contributes about 25% of the top flight’s earnings.

Anglo American (LSE:AAL) lifted 94p to 2,932p after the Canada government backed the miner’s merger with Teck Resources and analysts at Berenberg ranked the shares among their picks for 2026.

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They also favour Glencore after raising their price target to 480p, believing that shares will either rerate as part of plans to double copper volumes or be acquired if it fails to deliver on its ambitions.

The Buy recommendation helped Glencore to advance 10.25p to 383.55p near the top of the FTSE 100.

Berenberg also likes Antofagasta (LSE:ANTO) and FTSE 250-listed Atalaya Mining Copper SA (LSE:ATYM) among the industry’s pure-plays but thinks that Rio Tinto Ordinary Shares (LSE:RIO) and BHP Group Ltd (LSE:BHP) will need to pull more strategic levers to move away from the depressed iron ore valuation multiple.

Phoenix Group led the FTSE 100, rising 30.5p to 726.5p after UBS backed the high-yielding life insurance and savings business with a 15% hike in its price target at 770p.

It expects that the Standard Life brand owner will soon be in a position to switch the use of its current £300 million a year of excess cash generation from debt leverage towards new business funding and recurring share buybacks.

The bank said Phoenix trades with one of the sector’s highest all-in yields at more than 10%, which includes a projected dividend yield among the best in the FTSE 100 at 8.5%.

Games Workshop shares traded near a fresh record after the Warhammer hobby firm announced plans to pay a dividend of 50p a share on 27 March.

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This means the amount declared so far in the 2025-26 financial year now stands at 375p a share, up from 265p at the same stage of 2024-25.

As the company only makes payments out of “truly surplus capital”, today’s announcement gave a boost to expectations ahead of January’s interim results.

Broker Peel Hunt said: “This provides confidence over early Christmas trading, particularly given that the previous dividend was only announced on 20 November.”

The shares rose 360p to 19,880p, having surged by about 50% this year for a valuation of more than £6.5 billion.