Back at the end of November, we took a closer look at the characteristics of the London stock market, highlighting the resilience of the index and, in particular, its booming banking sector. Since then, published macroeconomic data have been positive, with the index continuing its upward trend.
The International Monetary Fund (IMF) has stated that UK economic growth is set to accelerate this year after missing forecasts in 2024. The IMF said that UK gross domestic product (GDP) is expected to grow by 1.6% in 2025, slightly ahead of the 1.5% it forecast in October last year. Recent statistics show GDP up 0.1 points in November 2024, as well as a Royal Institution of Chartered Surveyors (RICS) house price balance indicator up for the fifth consecutive time, reaching its highest level since September 2022.
Finally, inflation is stable, which Berenberg sees as a "great relief" for the UK Treasury. The Bank of England will probably feel encouraged to continue its easing cycle in February.

From there, the stage is set. British businesses are off to a flying start this year. The banking sector is building on the considerable growth seen in 2024. It has to be said that U.S. banking publications have given an air of optimism to a sector that is already on a roll. Banks are benefiting from a favorable environment characterized by high interest rates and a euphoric stock market: Standard Chartered (+9.3%), Barclays (+8.8%), Lloyds Banking Group (+6.8%), 3i Group (+5.7%), and HSBC (+5.2%) are the companies of the moment that are expected to rise in 2025.

The extractive sector is back with a vengeance. While the mining sector was the worst sector in which to invest in 2024, recent macroeconomic news from China, the rise in oil prices at the end of December, and rumors of consolidation in the sector have boosted the fortunes of the British giants. BP plc and Shell gained 10.5% and 10.3% respectively, in contrast to their difficult 2024 financial year. Glencore (+7.6%) has approached Rio Tinto (+6.6%) about a hypothetical merger of their copper activities, which could create the world's largest copper producer. But rumors are rife of a possible total merger. Even so, this would be a rather surprising decision, as the two groups have rather limited common activities and different strategies, analysts observe. In its wake, other major copper producers Antofagasta (+10.4%) and Anglo American (+8.1%) jumped.

Other important market news included significant movements in the shares of two British companies. On the one hand, Smiths Group saw its share price appreciate by 7.8% following the intervention of the American activist fund Engine Capital, which holds around 2% of the company's capital. The fund sent a letter to Smiths Group's board of directors, urging strategic spin-offs to maximize shareholder value. On the other hand, Trustpilot, a position in our Europa One fund, saw a 7% rise in its share price, a positive market reaction to the company's announcement forecasting 16% revenue growth for 2024. This news has been particularly well received by investors, reinforcing the position of the British advice site as a promising player in its market.