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🇬🇧 London’s IPO Drought and the Hunt for the UK’s Real Winners

The UK is a great example of how the stock market and the economy can often head in different directions.

The UK’s headline FTSE 100 index has hit a new record high every month since June, despite negative economic news piling up over the same period.

On Wednesday, the UK Chancellor Rachel Reeves will present one of the most nervously anticipated budgets in years. She’ll be attempting to balance the budget and restore business confidence, without breaking election promises, a task that we don’t envy.

This week, we won’t be speculating about the budget, but we will unpack the FTSE 100 vs FTSE 250 divide, the industries driving returns, and why the UK is increasingly a stock-picker’s market heading into 2026.

🎧 Would you prefer to listen to these insights? You can find the audio version on our Spotify, Apple Podcasts or our YouTube! (Released by 5pm Monday AEST).

This week's Market Insights is an 8 minute read! Full article here

Quote of the week

"The stock market and economy are two different things.”

Milton Friedman

What Happened In The Markets This Week?

Here’s a quick summary of what’s been going on:

🤖 AI Arms race intensifies as Google announces Gemini 3 (CNBC)

• While investors worry about an AI bubble, market leaders continue to fight for market share.
• Alphabet is aggressively defending its turf against OpenAI with Gemini 3, focusing on "generative interfaces" and reducing prompt friction to close the user gap. This is similar to OpenAI’s GPT 5, which aims to improve the entire process, rather than the model.
• Google also announced the "Antigravity" agent platform, promising better context understanding and task-oriented coding. 
• Gemini’s user numbers still lag OpenAI’s, but the gap has narrowed significantly.
• Alphabet and Microsoft enjoy significant advantages in the AI race due to the breadth of their software expertise and distribution.

📈 Nvidia Q3 earnings and sales beat estimates; Q4 sales outlook well ahead of expectations (Sherwood)

• Nvidia just dropped another monster quarter, crushing Q3 earnings and guiding Q4 sales way above analysts’ expectations.

• Data center demand is still red-hot, with more than $500 billion in future chip orders already booked.
• This puts Nvidia in a league of its own heading into 2026, with Blackwell and Rubin platforms effectively sold out. Supply chain strain is a risk, but the company is signaling it has things under control for now. 
• Short-term, this strengthens AI-adjacent names (think hyperscalers, data centers, chipmakers) and adds pressure on cloud giants watching Nvidia muscle deeper into their turf.
• Check out some of the latest narrative updates on Nvidia from our community, which take this news into their fair value estimates.  

To see our take on these market stories below, simply check out the full article!

• 🏠 Home Depot cuts guidance as home improvements slow down (WSJ)

• 🇮🇳 India’s goods trade deficit hits record high as gold imports surge 200% (CNBC)

• 💸 Adobe to buy Semrush for $1.9 billion, sending marketing platform’s shares up 74% (CNBC)

• ⚠️ BlackRock private credit CLO fails key tests as bad loans mount (Bloomberg)

Now let’s dive into the main piece!

🇬🇧 The UK Market: Firmly in the Middle of the Global Pack

For UK investors, the last few years have been frustrating - but also rewarding for those who owned the right stocks. 

The economic recovery that many anticipated has been underwhelming. But UK and European markets got a somewhat unexpected boost as global investors rotated out of US assets earlier this year.

On top of that, there were some other tailwinds:

• 🇬🇧 Domestic companies like UK Banks have benefited as the GBP gained against the USD
• 💸 Lower valuations and higher dividend yields have made cash-flush businesses attractive, at least on a relative basis.
• 📈 The gold price has rallied, boosting miners, many of which are listed on the LSE. 
• 🪖 Defense stocks rallied as Europe and the UK began to commit to increasing defense spending. 

✨ Over the last 3 years, though, UK equities' performance has been roughly in the middle of the pack compared to other major markets.

Global Equity Performance: Oct 2022 to Nov 2025 - Simply Wall St

The industries mentioned above have contributed to most of the last 12 months’ performance for the UK market. Prior to that, it was a mixed bag - apart from fairly consistent performance from the global pharmaceutical giants.

But under the surface, index cycles, IPO flows and policy trade-offs are reshaping where the real upside lies.

So our full piece covers:

📊 Why the FTSE 100 and FTSE 250 have decoupled,

and what that means for growth, dividends and risk.

🏦 How London’s IPO drought and listings exodus

are weakening the LSE’s small and mid-cap engine.

📉 What stagnating growth and sticky inflation imply

for rates, the budget and domestically focused sectors.

🔎 Why the UK is now a stock-picker’s market,

plus the traits we’re seeing in today’s strongest UK companies.

💬 Join the discussion by leaving a comment!

Which stocks in the UK market have the best prospects?

Key Events During the Next Week

Wednesday

• 🇦🇺 Inflation Rate (CPI YoY) 
  • 📈 Forecast: 3.9%, Previous: 3.5% 
  • ➡️ Why it matters: A rise in inflation pressures the RBA to consider a tighter monetary policy, which typically strengthens the AUD.
    
    
• 🇬🇧 UK Autumn Budget 2025 
  • ➡️ Why it matters: There are lots of possible outcomes for this budget, which could lead to significant moves for the bond market, the GBP, the overall stock market or specific industries.
    
    
• 🇺🇸 GDP Growth Rate QoQ 
  • 📉 Forecast: 3.0%, Previous: 3.8% 
  • ➡️ Why it matters: A slowdown in growth suggests economic cooling, and could tip the FOMC toward more rate cuts in the near term.
    
    
• 🇺🇸 US Core PCE Price Index YoY 
  • 📉 Forecast: 2.7%, Previous: 2.8% 
  • ➡️ Why it matters: A slight drop in the Fed's preferred inflation gauge would also support the case for more rate cuts.

Friday

• 🇨🇦 CA Q3 GDP Growth Rate (Annualized)
  • 📈 Forecast: 0.4%, Previous: -1.6%  
  • ➡️Why it matters: A return to positive growth suggests economic recovery, which could support a more hawkish BoC stance and strengthen the CAD.

At this stage in earnings season, it’s mostly retailers and cloud software companies reporting, along with a few chipmakers and international companies:

• Alibaba
• Deere
• Analog Devices
• Dell Technologies
• Autodesk
• Workday
• Zscaler
• Zoom Communications
• Kroger
• Dollar Tree

Until next week, invest well.

Simply Wall St