UK Stock Market Faces Turbulence Amid Economic Contraction

The UK's FTSE 100 took a hit following unexpected GDP contraction in October. Despite a weekly gain, the midcap FTSE 250 saw a minor loss. Finance Minister Rachel Reeves' budget introduced tax hikes, impacting GDP. Investor attention pivots to anticipated US Fed rate cuts amid mixed economic signals.

Britain's FTSE 100 index experienced a slight decline on Friday, reflecting market reactions to unexpected economic data revealing a contraction in the nation's GDP for October.

Despite a minimal drop of 0.1%, the FTSE 100 managed a fourth consecutive week of gains. In contrast, the midcap FTSE 250 recorded a 0.3% dip, marking its first weekly loss in a month. The UK economy's output fell for the second straight month as October's GDP slipped by 0.1%, mirroring September's performance and defying economists' forecasts of modest growth.

Finance Minister Rachel Reeves presented a budget on October 30 imposing hefty tax burdens on businesses, impacting future GDP figures. Sterling declined against the dollar post-data release, signaling markets' new expectation of more rapid Bank of England rate cuts in the coming year. Economic sentiment showed mixed results as consumer morale improved in December, but post-budget business sentiment waned, with industrial sectors experiencing various shifts in stock performance.

(With inputs from agencies.)