In a historic moment for the City of London, the UK's premier share index, the FTSE 100, has smashed through the 10,000-point barrier for the very first time. The blue-chip benchmark, which tracks the 100 most valuable companies on the London Stock Exchange, soared to a peak of 10,046 points on Friday morning before settling slightly lower, cementing an extraordinary year for British equities.
A Stellar Year for the Footsie
This landmark achievement caps a phenomenal 12-month period for the index, often nicknamed the 'Footsie'. Over the course of 2025, the FTSE 100 rallied by an impressive 21.5%. The final push was fuelled by a traditional 'Santa Claus rally', a period encompassing the last five trading days of the old year and the first two of the new, where shares often climb amid lighter trading volumes.
Leading the charge on the day were engineering giant Rolls-Royce, aerospace firm Melrose, and precious metals producer Fresnillo, each gaining around 3%. The rally in London also helped lift the pan-European Stoxx 600 to a record high, driven by strength in mining and energy sectors.
Global Winds Fill UK Sails
The surge is part of a broader global market upswing over the past year, lifted by optimism over potential interest rate cuts, the artificial intelligence boom, and a supportive economic backdrop. While markets wobbled last April after former US President Donald Trump announced steep tariffs, a subsequent easing of trade war tensions spurred a recovery.
This uncertainty, however, encouraged some investors to diversify away from the US and into perceived cheaper markets like the UK during 2025. Dan Coatsworth, head of markets at AJ Bell, noted the milestone was a "best new year's present" for Chancellor Rachel Reeves, proving the UK market is "not stuck in the mud" and that the US is not the only place to make money.
Standout Performers and Sector Trends
Individual stock performances have been dramatic. Fresnillo was the FTSE 100's star of 2025, skyrocketing approximately 450% on the back of soaring gold and silver prices. Defence stocks also enjoyed a banner year, with Babcock and Rolls-Royce doubling in value since January 2025.
Neil Wilson, an investor strategist at Saxo UK, linked this to geopolitical shifts, stating that pressure on NATO members to boost defence spending has "triggered a paradigm shift" reflected in the strength of European and UK defence stocks.
Created in 1984 with a base level of 1,000 points, the FTSE 100 is a globally-focused index, home to mining titans like Rio Tinto, oil majors BP and Shell, pharmaceutical leaders AstraZeneca and GSK, and major banks including Barclays and HSBC.
Looking ahead, despite fears of an AI valuation bubble, Wall Street analysts predict further gains for global markets in 2026. A recent poll by eToro found 53% of UK retail investors are confident the current bull market will continue throughout the coming year.
