UK-EU Deal Lifts London Stocks Amid U.S. Credit Downgrade Shock

London stocks hit a seven-week high following a UK-EU deal resetting Brexit ties. The FTSE 100 rose 0.2% while the FTSE 250 slipped slightly. The deal addresses security, defence, and trade, though global markets felt the impact of a U.S. credit downgrade by Moody's over debt concerns.

London's stock market reached a seven-week peak on Monday as the United Kingdom finalized a comprehensive agreement with the European Union, marking the most significant adjustment of post-Brexit relations. This came amid global market turmoil following a Moody's downgrade of the United States' credit rating.

The FTSE 100 index climbed 0.2%, maintaining an upward trend for the third consecutive day, though it had earlier dipped by 0.8%. Meanwhile, the midcap FTSE 250 index ended slightly lower, halting its seven-day ascendancy streak.

Nearly nine years post-Brexit vote, the UK-EU agreement encompasses a security and defence pact, relaxed restrictions for UK food exporters and visitors, and a new fishing deal. Economist Andrew Wishart noted limited benefits to GDP but pointed to a stabilizing or improving UK-EU market access.

This adjustment responds to shifts in global trading norms following Trump's disruptions of international order. Meanwhile, longer-dated U.S. Treasury yields increased due to Moody's concerns over the nation's $36 trillion debt, boosting demand for gold and precious metal stocks.

In company news, Diageo shares declined by 1% as the company announced a $500 million cost-cutting plan and asset disposals by 2028 to improve performance and reduce its liabilities.