FTSE 100 Edges Up 0.5% Despite Commodity Selloff; UK Mining Stocks Weigh Market

The UK’s primary equity benchmark, the FTSE 100, posted a modest gain of approximately 0.5% during Friday’s mid-session trading, supported by strength in financial and consumer-oriented shares. The index climbed 45.84 points to reach 10,217.60, though the upward momentum faced headwinds from pronounced weakness in mining and energy sectors as commodity prices retreated sharply across the board.

Precious Metals and Oil Prices Trigger Selling Pressure Across Commodities

A broad-based selloff in commodity markets set the stage for sector rotation in equities. Gold prices plummeted 4% while silver experienced an even steeper decline of 11%, underscoring the depth of the precious metals correction. Copper fell 2.2% and crude oil futures slipped 1.1%, pressuring the energy complex. This cascade of commodity losses immediately filtered through to resource-dependent stocks, with mining companies bearing the brunt of investor risk-aversion.

Banking and Consumer Sectors Drive Mid-Session Rebound

Despite headwinds from commodities, the 0.5% advance in the FTSE 100 reflected strength concentrated in specific sectors. Lloyds Banking Group surged 2.3% after announcing a substantial share repurchase scheme targeting up to £1.75 billion in ordinary shares. Other banking heavyweights posted gains ranging from 1% to 2.2%, with Barclays, NatWest Group, and Standard Chartered advancing 1.5%-2.2%, while HSBC Holdings climbed nearly 1%. Consumer discretionary and retail names also contributed to the recovery, with Experian jumping 3.6% and firms like Smith & Nephew and Diageo gaining 2.5% and 2.4%, respectively. Mid-cap consumer and industrial stocks, including Pearson, Compass Group, and Marks & Spencer, added between 0.8% and 2%.

Mining Sector Reverses as Commodity Pressures Intensify

The mining index bore the full weight of the commodity correction. Precious metals explorers and producers saw the sharpest declines, with Fresnillo retreating 3.2% and Endeavour Mining sliding 4%. Diversified mining conglomerates posted material losses: Anglo American dropped 2.3%, Glencore retreated 1.7%, and Rio Tinto eased down 1.6%. Meanwhile, energy stocks showed limited resilience, with Shell and BP declining 0.3% and 0.7% respectively.

Several secondary names also succumbed to selling pressure, including Airtel Africa, which tumbled more than 8%, and Mondi, which fell 3.1%, alongside select industrial and discretionary holdings that retreated 1%-2%.

Bank of England Data Signals Mixed Economic Signals

Underpinning the market’s nuanced performance, the Bank of England reported that net mortgage approvals for property purchases fell by 3,100 to 61,013 in December, marking the lowest level since June 2024. Consumer credit expansion slowed to £1.5 billion in December from £1.1 billion in November, though annual growth in consumer credit held steady at 8.2%. UK businesses demonstrated more resilience, borrowing £1.0 billion from banking institutions compared to net borrowing of £6.2 billion in the prior month.

Political developments also contributed to market sentiment, with reports of a bipartisan U.S. funding agreement to prevent government shutdown providing modest support. Additionally, speculation regarding President Donald Trump’s anticipated nomination of Kevin Warsh, a former Federal Reserve official, to succeed Jerome Powell as Federal Reserve chair added to the backdrop of geopolitical and monetary policy considerations influencing market positioning.