London’s FTSE 100 index has reached a milestone that just a few years ago seemed almost out of reach: on January 2, 2026, the blue-chip benchmark surged past the 10,000-point mark for the first time in its history. This symbolic breakthrough comes on the heels of a remarkable 2025, when the index soared nearly 22%—its strongest annual gain since 2009, according to Reuters and Sky News.
While the FTSE 100’s leap above 10,000 briefly electrified markets, the index ultimately closed the day just shy of that level, ending at 9,931.38 points. Nonetheless, the moment was historic—a testament to the resilience and global reach of Britain’s largest listed companies. Data from the London Stock Exchange Group (LSEG) revealed that the FTSE 100 logged 41 record closes in 2025, with its latest all-time high coming on December 30. Over the year, it gained more than 1,750 points, leaving its closest European rival, Germany’s DAX, and even the U.S. S&P 500 trailing behind.
So, what powered this extraordinary run? The answer lies in the FTSE 100’s unique sector mix. Unlike the technology-heavy indices that dominate Wall Street, London’s premier index is stacked with mining giants, defense contractors, and major banks. In 2025, it was these very sectors that led the charge. Fresnillo, a leading miner, jumped 3.5% on the day the index topped 10,000, while defense powerhouse Rolls-Royce climbed 3%. As Dan Coatsworth, head of markets at AJ Bell, put it, “Miners and defense stocks spurred the index’s strong performance throughout 2025.”
Miners benefited from surging metal prices and a global rush toward safe-haven assets, while defense firms enjoyed booming demand amid rising geopolitical tensions and increased military spending. Banks, led by Lloyds, capitalized on persistently high interest rates, which bolstered their profitability. This sectoral strength set the FTSE 100 apart from indices like the S&P 500, where gains were concentrated in a handful of AI-driven tech giants.
Another key driver was the FTSE 100’s international orientation. According to The Guardian’s Nils Pratley, about three-quarters of the combined revenues of FTSE 100 companies come from overseas. This global exposure has helped insulate the index from domestic economic headwinds, such as a sluggish UK housing market. As a result, the FTSE 100’s performance in 2025 far outpaced the more domestically focused FTSE 250, which rose about 9% over the year.
Currency moves also played a role. Many FTSE 100 firms report earnings in pounds but generate sales abroad, so swings in sterling can amplify or dampen reported profits. On January 2, the British pound hovered near recent highs, trading around 1.3475 against the dollar, while the U.S. dollar itself rebounded 0.2% after a bruising 9.4% slide in 2025, according to Investing.com and OANDA.
Shareholder returns have also evolved. Once dubbed the “dividend yield capital of the world,” the UK stock market has seen a shift toward share buybacks as a preferred method for returning excess cash to investors. Sue Noffke, head of UK equities at Schroders, noted, “The UK stock market has moved on from being the dividend yield capital of the world,” highlighting the growing influence of buybacks in supporting share prices and boosting earnings per share.
The FTSE 100’s ascent came amid a global equity rally. According to data cited by MarketPulse and OANDA, global stock funds attracted $26.54 billion in new investments in the final week of 2025, following a $37 billion inflow the previous week. The global market gained nearly 21% in 2025, its best showing since 2019. While American stock funds led the pack, European and Asian funds also saw robust inflows, with investors favoring finance, real estate, and industrial stocks over healthcare.
Asian markets, in particular, kicked off 2026 with a bang. Technology and AI chip companies led the way, with Samsung hitting a record high and Taiwan’s market continuing a strong rally that delivered a 27% gain in 2025. This tech-driven surge stood in stark contrast to the FTSE 100’s commodity, defense, and banking-fueled rise.
Meanwhile, the UK’s domestic economic picture was more mixed. The S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) rose to 50.6 in December, marking a 15-month high and signaling expansion in the sector. However, the housing market showed clear signs of cooling. According to Nationwide Building Society, house prices unexpectedly fell by 0.4% in December, capping the year with just 0.6% annual growth—the weakest since April 2024. This slowdown, experts say, reflects both a hangover from previous price surges and a cautious outlook amid higher mortgage rates. Still, affordability is slowly improving as wages begin to outpace property prices, and mortgage approvals have returned to pre-pandemic levels.
Commodities also made headlines as 2026 began. Gold prices rose 1.4% to about $4,372 per ounce, continuing their safe-haven appeal, while silver, platinum, and palladium notched strong gains. Oil prices, battered by oversupply in 2025, inched higher on the first trading day of the year, with Brent crude at $61.07 a barrel and U.S. crude at $57.64, buoyed by geopolitical tensions and supply concerns.
For investors, the FTSE 100’s breach of 10,000 is more than just a round number—it’s a psychological milestone that could reshape sentiment. Technical analysts warn that such breakouts are often followed by bouts of volatility. Immediate support levels are seen at 9,973, 9,943, and 9,872 points, with the swing low from December 30 at 9,872 serving as a key marker for bullish momentum. If that level holds, “fresh highs will likely materialize,” according to OANDA’s MarketPulse analysis.
As fund managers reset portfolios for the new year, all eyes are on whether the FTSE 100’s winning mix—commodities, defense, and banking—will keep delivering. The index’s outperformance, especially compared to its European and American peers, has sparked renewed investor confidence after years of Brexit uncertainty and political turmoil. While the UK’s domestic economy faces headwinds, the global nature of the FTSE 100’s constituents means that, for now, London’s market is dancing to a different tune.
With the FTSE 100’s historic surge, the City of London has started 2026 on a high note. Investors, analysts, and everyday savers alike will be watching closely to see if this momentum can be sustained—or if, as history so often reminds us, markets have a few more surprises in store.
