The FTSE 100 in London marked its third consecutive week of gains on Friday, supported by corporate takeovers and rising expectations of monetary policy easing. These factors helped to offset global concerns surrounding the potential disruptive impacts of artificial intelligence across various industries. The blue-chip FTSE 100 index rose by 0.4%, trading just below the record highs it reached on Thursday. The FTSE 250 mid-cap index also saw positive movement, gaining 0.5% and securing its first weekly rise following two weeks of losses.
Investor sentiment has been buoyed by major mergers and acquisitions this week. These include a U.S. buyout of fund manager Schroders and NatWest Group’s plans to acquire wealth manager Evelyn Partners. NatWest reported a 24% jump in annual profit, slightly ahead of forecasts, and outlined more ambitious performance targets as it increases investment in Britain’s wealth management market. However, NatWest shares fell 2.5% after a strong performance last year.
Economic data released this week showed that Britain’s economy grew by only 0.1% in the fourth quarter, matching the pace of the previous quarter. This partly reflected uncertainty in the lead-up to the finance minister’s November budget. Investors are currently pricing in a 63.4% probability that the Bank of England will lower borrowing costs by 25 basis points at its meeting in March. However, BoE Chief Economist Huw Pill cautioned that underlying inflation remained near 2.5% and that interest rates must remain restrictive until disinflation is firmly secured.
Among individual stock movements, defence stocks received a boost, rising 3.1% following reports that Prime Minister Keir Starmer intends to promote a multinational defence initiative at the Munich Security Conference this weekend. London Stock Exchange Group, which operates exchanges, rebounded on Friday. Credit analytics firm Experian and information group RELX also recovered after being among the worst-hit stocks in a global selloff related to AI concerns.
