London’s blue-chip FTSE 100 index crossed the symbolic 10,000-point mark for the first time on Friday, extending a powerful rally in UK equities that gathered pace through 2025 and has carried into the new year.
At 10:50 am, the index had slipped below the 10,000 mark and was trading at 9,971.23.
The index has risen by nearly 21% over the past 12 months, marking one of its strongest annual performances since 2009 and outpacing the S&P 500, which gained just under 17% over the same period.
The FTSE 100 tracks the performance of the 100 largest companies listed on the London Stock Exchange, offering heavy exposure to banks, miners, energy groups and defence firms.
Miners, defence firms and banks lead gains
Mining stocks have been among the biggest contributors to the index’s advance, supported by higher metals prices.
Antofagasta, Rio Tinto and Endeavour Mining have all benefited from strong commodity markets.
Fresnillo was the standout performer in 2025, with its shares rising about 450%, driven by record gold and silver prices.
Defence stocks also played a major role.
BAE Systems, Babcock and Rolls-Royce all saw strong gains as NATO’s Western European members committed to higher defence spending, boosting order books and earnings visibility.
Banks delivered solid returns as well, supported by resilient credit quality and easing interest rates.
Lloyds, Barclays, HSBC and Standard Chartered all posted strong share price gains as defaults remained low and margins held up better than expected.
Fastest climb between milestones
According to investment platform AJ Bell, the move to 10,000 represents the fastest ever rise between 1,000-point milestones for the FTSE 100.
The benchmark index reached the five-digit milestone in just 171 days after first hitting the 9,000-point mark in July 2025
“Previously, the fastest jump in blocks of 1,000 happened when the FTSE 100 went from 5,000 to 6,000, which took 229 days in the late 90s,” said Dan Coatsworth, head of markets at AJ Bell.
“The longest period was 6,206 days between hitting 6,000 in March 1998 and 7,000 in 2015. Admittedly, that period included a global financial crisis, so it was unusual times,” he said.
Profits, buybacks and rate cuts support stocks
Analysts say several structural tailwinds have helped UK equities outperform.
Corporate profits have improved, while companies have returned increasing amounts of cash to shareholders.
Lower interest rates from the Bank of England have also provided support, even though government bond yields have remained stubbornly high.
“Lower interest rates from the Bank of England may have helped, too, even if benchmark government bond yields have not quite stuck to the script as the 10-year gilt yield has barely fallen even as the Monetary Policy Committee has cut the base rate,” said Russ Mould, AJ Bell investment director, in a note last month.
Sue Noffke, head of UK equities at Schroders, has pointed to what she describes as corporate self-improvement, with companies tightening capital allocation and leaning more heavily on share buybacks.
“There is a long list of companies that can be seen as getting stricter in their capital allocation in pursuit of better returns, and being prodded by shareholders to do so,” Noffke said in comments cited by the Guardian late last year.
She estimates that 55% of large UK-listed companies have bought back at least 1% of their shares over the past year, compared with about 40% in the US.
Shell alone has repurchased more than 20% of its equity since 2020.
“The UK stock market has moved on from being the dividend yield capital of the world,” she argues.
“It’s still attractive on dividend income, but it’s not so standout. It has now moved to become the share buyback capital of the world.”
“Boring becomes beautiful” as investors prefer the UK to the US during volatile periods
The FTSE 100 also outperformed US equities in 2025 as some global investors grew wary of high valuations in American technology stocks.
Coatsworth said uncertainty has encouraged investors to look outside the US and toward cheaper markets.
“We’ve seen increased interest from foreign investors looking to diversify their holdings and the FTSE 100 has also shone during the more tumultuous periods thanks to its plethora of defensive-style companies,” he says.
While the UK market is often criticised for its heavy weighting toward banks and commodity producers, that composition has proved advantageous during volatile periods.
“Yes, it lacks the excitement of go-go-growth stocks omnipresent in the US, but boring can also be beautiful when it comes to investing. The UK is a rich hunting ground for dividends, and it is also full of companies that have slow but steady growth and which are underappreciated engines for wealth creation,” Coatsworth adds.
Noffke agrees.
“We have a different sectoral mix that is not dependent, or wholly dependent, on an AI thematic. We are cheap. We are cash rich. We’re buying a lot of shares back, and are quite shareholder-friendly. And we’re seeing a lot of companies that, through a combination of top-down from management and bottom-up from the investor base, are showing more grip and more ambition.”
Outlook for 2026 remains constructive
Analysts have begun upgrading earnings forecasts for 2026 and 2027, a notable shift after several years of downgrades.
AJ Bell forecasts the FTSE 100 will reach 10,750 by the end of 2026. JPMorgan sees potential gains of up to 10% over the year ahead, which would put the index close to 11,000.
Still, higher valuations could become a constraint. After the strong rally, the UK market is no longer as cheap as it was.
“The FTSE 100 trades at about 13.5 times consensus forecasts for 2026,” Mould said.
“That is not expensive by historical standards, but it is no longer deeply discounted.”
He noted that continued earnings upgrades could make valuations appear more attractive than they initially seem.
Sector mix shapes risks and rewards
Consensus forecasts suggest that about 54% of the FTSE 100’s pre-tax profits in 2026 will come from just three sectors: financials, oil and gas, and mining.
Strong operational performance from banks and miners has already driven upgrades, while sticky inflation could keep investor interest in commodities and other hard assets.
However, a sharp global slowdown or recession would pose risks, potentially undermining dividend growth and buyback programmes.
“In short, the FTSE 100 is well positioned for a world of steady growth and inflation,” Mould said.
“But a return to the low-growth, low-inflation environment of the 2010s would likely favour technology and long-duration assets instead.”
For now, the index’s milestone reflects renewed confidence in UK equities, with investors betting that earnings strength, shareholder returns and global diversification will continue to support the market in the year ahead.
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