UK Investment & Market Weekly Report Mon 20 Oct – Fri 24 Oct 2025

FTSE 100 Performance

The FTSE 100 delivered a strong recovery week, reversing the previous week's banking sector-driven decline with impressive gains across multiple sessions. The index closed Friday, 24 October 2025, at approximately 9,645.62 points, representing a weekly gain of approximately +3.11% from the previous week's close of 9,354.57 points.

The index demonstrated consistent upward momentum throughout the week, with daily movements as follows:

• Monday, 20 October: 9,404.00 (opening with recovery momentum)

• Tuesday, 21 October: 9,427.00 (building gains)

• Wednesday, 22 October: 9,508.00 (breaking through resistance)

• Thursday, 23 October: 9,594.82 (accelerating rally)

• Friday, 24 October: 9,645.62 (closing near weekly highs, +0.84% on the day)

Current Trading Context:

• Year-to-Date Performance: +15.02% (strong annual trajectory maintained)

• 52-week range: 7,544.83 - 9,672.74 (Friday's close approaching upper range)

• Banking and financial stocks led the recovery, reversing previous week's sharp losses

• Approximately three-quarters of the index posted gains for the week

• Record high territory: Index approaching all-time highs set earlier in October

Currency Performance

GBP/USD: The pound showed relative stability with modest strength during the week

• Friday close: Approximately 1.3326 (consolidating recent gains)

• Weekly range: 1.3312 - 1.3385 (tight trading band)

• Year-to-date: Maintaining elevated levels above 1.33

• Market focus: Budget speculation and UK economic resilience supported sterling

Top Performing & Declining Sectors

Banking & Financial Services (Strong Recovery)

Financial stocks staged a powerful rebound following the previous week's sharp selloff, with banking shares recovering as contagion fears from US regional banking concerns eased. HSBC, Barclays, and Standard Chartered led gains among major UK lenders, recouping significant portions of the previous week's £13 billion valuation loss.

Commodity & Energy (Relative Strength)

Oil majors and commodity-linked stocks provided support as energy prices stabilized and risk sentiment improved throughout the week.

Industrial & Consumer Stocks (Broad-Based Gains)

Industrial and consumer-facing names participated in the rally, reflecting improved market confidence and reduced financial sector concerns.

Precious Metals (Relative Weakness)

Gold miners and precious metal stocks underperformed as risk-on sentiment reduced safe-haven demand, though losses were modest relative to broader market gains.

Investment Market Highlights

Banking Sector Recovery

The week's primary narrative was the sharp recovery in banking stocks as fears over US regional banking sector credit quality and private credit market vulnerabilities subsided. Market participants reassessed contagion risks, leading to aggressive buying of oversold financial names.

Venture Capital & AI Investment Momentum

Global venture capital investment surged to $120 billion, with AI continuing to dominate funding flows. UK AI startups maintained strong momentum, benefiting from both domestic and international capital. The AI investment wave showed no signs of slowing, with major data centre and infrastructure deals announced during the week.

Budget Speculation & Policy Uncertainty

Chancellor Rachel Reeves' upcoming Budget (26 November) remained a key focus, with speculation mounting over potential capital gains tax increases and spending measures. Market participants positioned cautiously ahead of expected tax policy changes affecting investment returns.

M&A and Private Equity Activity

M&A activity remained steady with improved sentiment following the banking sector recovery. Deal financing availability concerns eased, though participants remained watchful of credit market conditions.

IPO Market Tentative Revival

London's IPO market showed tentative signs of life, with Beauty Tech Group completing a £300m listing and Princes Group (tinned fish brand with £2.1bn turnover) confirming plans for a potential £1.5bn IPO. However, overall Q3 activity remained muted with only three new listings, according to EY-Parthenon analysis.

Market Trends

• Banking Sector Rebound: Sharp recovery from previous week's contagion fears, with financial stocks leading market gains

• Risk-On Sentiment: Investors rotating back into cyclical sectors and growth-oriented positions

• Credit Market Stabilization: Private credit and banking sector concerns easing, improving financial stability outlook

• AI Investment Dominance: Technology and AI sectors continuing to attract substantial capital despite broader market volatility

• Currency Stability: GBP maintaining strength supported by UK economic resilience

• Budget Positioning: Market participants adjusting portfolios ahead of anticipated tax policy changes

Economic Context

The week marked a dramatic reversal from the previous week's sharp decline, with the FTSE 100 recovering approximately 291 points (+3.11%) as banking sector fears subsided and risk appetite returned. The recovery represented one of the strongest weekly performances in recent months, with Friday's close approaching the record highs set earlier in October.

UK economic fundamentals provided underlying support, with resilience in GDP growth and labour market data offsetting concerns about the upcoming Budget. The contrast with the previous week's panic selling underscores the market's sensitivity to financial sector sentiment and the speed with which contagion fears can both emerge and dissipate.

Global AI investment momentum continued unabated, with the UK maintaining its position as a significant beneficiary of venture capital flows into artificial intelligence and technology infrastructure.

Investment Strategy Outlook

Market participants have shifted from defensive positioning back towards growth-oriented strategies following the banking sector recovery. While AI and technology sectors continue to attract substantial capital, the week's broad-based rally demonstrates renewed confidence across multiple sectors.

The upcoming Budget remains a key focus, with investors positioning for potential capital gains tax increases and policy changes affecting investment returns. Despite this uncertainty, the market's resilience and strong year-to-date performance (+15.02%) suggest underlying confidence in UK equities.

The tentative revival in London's IPO market, while still modest, provides encouraging signs for capital markets activity. However, participants remain watchful of credit quality, regulatory developments, and global economic conditions. The week's performance highlights the importance of maintaining diversified exposure while remaining alert to both sector-specific opportunities and broader market volatility.