Monthly Commentary December 2025

The UK equity market finished 2025 with a strong rally in December adding several percentage points.

The increase was a little surprising as sterling strengthened a little against the dollar although it was not much changed relative to the euro. Oil prices continued the slide that has been evident all year.

Rising precious metal prices, and commodities in general, underpinned the double-digit gain recorded by the Materials sector in December, making it the top performer. Not far behind was Financials and then Consumer Discretionary. Industrials and Real Estate all advanced by low single digits. The other seven sectors declined over the month, although none of them by very much. The largest drop was recorded by Energy.

Forecasts for dividends to be paid next year decreased slightly over the month but are up on a year ago. Even so, the increase is far less than the UK market gain of about one fifth over the year indicating that UK equity valuations did increase in 2025.