Which UK Sectors Outperformed in the Past Month?

With the FTSE 100 just below the record high scored earlier this week, most sectors are in the green. However, some have had notably better performance amid the shifting economic landscape.

Top 5 UK Sectors in the Last 30 Days

• Producer Manufacturing +8.0%
• Energy Minerals +6.4%
• Distribution Services +6.4%
• Retail Trade +5.6%
• Health Technology +5.5%

Stagnant UK Economy Drags on UK Stocks

The British economy failed to meet expectations in the third quarter, growing just 0.1% instead of matching the 0.3% of the second quarter. The FTSE hit a record high earlier in the week after the unemployment rate increased, but it fell into the red following the GDP figures. The meagre growth exerts pressure on the Chancellor's Autumn Budget, as the government's reduced income is likely to suggest further tax increases. On the other hand, slower growth raises the odds of a rate cut in December. This push-and-pull on the economy has disparate effects on different sectors, leading to some clear winners and losers. The following three sectors appear to be thriving in the current environment:

Producer Manufacturing Supported by Defence Machines

Businesses that produce the machines used by other producers have seen their stock prices accelerate. That could be because the sector is traditionally defensive, with investors searching for higher valuations. Furthermore, UK industrial producers are major exporters, and the recent weakness in the pound could explain some of the optimism in the sector. The sector is led by Goodwin (GDWN), which has benefited from increased demand for defence manufacturing, and its share price has risen by almost 63% in the last month. Another notable stock, increasing 31%, is Xeros Technology, an innovative polymer company that uses its products in advanced water filtration.

Energy Minerals Supported by Crude Prices

In late October, crude prices surged as trade tensions between China and the US eased, and OPEC indicated that its production increases would soon come to an end. Since then, the price of crude has been trending down, though recently geopolitics has pushed it higher after Ukraine attacked one of Russia's main export hubs. Empyrian Energy (EME) is by far the top outperformer, surging 108% in a single day after announcing its Indonesia partner would wind down operations in the Mako field. But more illustrative of the sector might be Orcadian Energy (ORCA), the North Sea energy explorer and producer. A few weeks ago, rumours circulated that the UK government was considering scrapping the windfall tax on oil and gas in an effort to boost economic growth. This has helped support shares in North Sea oil companies over the last month.

Resilient UK Shoppers Support Retail Trade

Despite slow economic growth, UK retail sales have continued to grow, although October data shows a slowing of the pace of non-food items ahead of Black Friday. Major grocers in the UK reported solid earnings, and Sainsbury's raised its full-year outlook, which further supported the performance in the retail sector. However, smaller firms outperformed the major supermarket chains, attracting increased investor interest. FIH Group (FIH) saw its share price rise 25% over the last 30 days. But its reliance on the Falkland Islands market could indicate it's a bit of an outlier. Topps Tiles (TPT) saw gains of 16% in the period after posting record sales for its fiscal year 2025. The company also guided that it expects LFL sales growth to accelerate in the new year.

TPT has broken above a long-term trendline near 37 GBX and reclaimed the 40 GBX handle after nearly a year. If bullish momentum extends towards 70 on the weekly RSI, the stock could accelerate towards the 50 GBX round resistance, which led the latest declines at the end of 2024. However, a fall back below the major trendline could potentially expose the Covid-crash bottom near 35 GBX.

Source: SpreadEx | TOPPS TILES

Where Next for UK Markets?

Although still near record highs bolstered by these sectors, UK stocks have been put under pressure on Friday after the Financial Times suggested that Chancellor Reeves dropped plans to increase income tax rates. Representatives of the government said that no decision had been made yet. Markets could remain in a holding pattern until the contents of the Budget are disclosed on 26 November.