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The FTSE 100 climbed above 10,000 points for the first time on Friday as UK stocks made an upbeat start to 2026, building on a year when the index rallied more than 20 per cent and outperformed Wall Street.
The UK’s blue-chip index rose as much as 1.1 per cent as global markets advanced, adding to last year’s 21.5 per cent increase, its largest annual gain since 2009. It later fell back to trade 0.4 per cent higher.
“The FTSE 100 breaking through 10,000 points for the first time is a vote of confidence in Britain’s economy and a strong start to 2026,” chancellor Rachel Reeves said on X on Friday.
But analysts said the London stock market’s strong performance in 2025 came despite lacklustre economic growth and concerns over Reeves’ tax-raising Budget in November that spurred domestic investors to pull cash out of the UK stock market at a record rate.
Global investors seeking alternatives to US equities after Donald Trump’s trade war rocked global markets warmed to British stocks that looked cheap following years of relatively poor performance.
“Investors [are] rotating away from high-priced US tech, rather than buying UK because they suddenly love UK growth,” said Florian Ielpo, head of macro at Lombard Odier.
The index was also buoyed by a strong rally in banking, mining and defence stocks, all well represented in a London market largely devoid of the technology companies that have powered Wall Street higher in recent years.
“The FTSE 100 sector mix is overweight global winners such as mining and banks,” said Arun Sai, a multi-asset strategist at Pictet Asset Management, who pinpointed Friday’s rally as part of a broader “global risk-on start to the year”.
The FTSE’s rally came as global markets began 2026 with gains. Futures for the US tech-heavy Nasdaq 100 index and the blue-chip S&P 500 were up 1.1 per cent and 0.7 per cent respectively.
The Stoxx Europe 600 index hit a record high and was up 0.4 per cent by late morning. Asian equities also rallied earlier in the day, with Hong Kong’s Hang Seng index climbing 2.8 per cent and the South Korean Kospi closing 2.3 per cent up.
In 2025, the FTSE 100 outperformed the S&P, boosted by a strong year for the financial and mining sectors. London-listed banks Standard Chartered and Lloyds surged 84 per cent and 79 per cent respectively last year, helped by strong earnings and the lack of a feared tax raid on the sector in Reeves’ Budget.
Meanwhile, shares in miner Fresnillo, the index’s top performer, increased more than fivefold, fuelled by precious metals’ blistering rally.
Alongside other European markets, UK stocks have benefited from investors’ concerns around US tech companies’ high valuations and spending in recent months, as they offer a cheap way for nervous investors to diversify exposure outside the US.
“FTSE and Stoxx [Europe] 600 are an ‘AI-hedge’ in portfolio construction,” said Ielpo, describing the indices as a “practical alternative to direct megacap tech exposure, with cheaper starting valuations and a very different sector mix”.
Companies in London’s blue-chip index make less than a quarter of their revenues inside the UK, helping it shrug off an economy that slowed in the second half of the year and unexpectedly shrank in the run-up to the Budget.
In contrast, the FTSE 250 index — which comprises smaller companies more exposed to the UK economy — lagged behind the more international blue-chip index, rising 9 per cent in 2025.
“The FTSE 100 derives most of its revenues overseas,” said Jackie Bowie, head of Emea at Chatham Financial. “Resilience in global demand supported earnings, even as UK domestic growth remained subdued.”
Data visualisation by Ray Douglas