FTSE 100 Breaks 10,000 for First Time as Mining, Defence Rally Lifts London

LONDON — Britain’s blue-chip FTSE 100 index traded above 10,000 points for the first time on Friday, a symbolic milestone that crowns its strongest year in more than a decade and intensifies debate over whether London’s stock market has finally shaken off its reputation for chronic underperformance.

The benchmark index briefly climbed to about 10,046 points in early deals on Jan. 2, the first trading session of 2026, before easing back. It closed 2025 at 9,931.38, up 21.5% for the year — its best annual performance since 2009, when markets rebounded from the global financial crisis.

The breach of 10,000 carries more psychological than technical significance. But it comes at a politically convenient moment for the Labour government, which has staked part of its economic strategy on reviving London’s capital markets and convincing global investors that Britain is back in favor.

“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 of the Exchequer Rachel Reeves said in a post on X.

Market strategists said the round number matters mainly as a signal.

“This is an arbitrary number, but it is something that could get international investors more interested in the FTSE – so it is quite a big deal,” said Rory McPherson, chief investment officer at Wren Sterling.

What drove the rally

The move above 10,000 caps a turnaround for an index long described as a “Jurassic Park” of oil majors, banks and utilities, lacking the fast-growing technology companies that dominate Wall Street. After years of lagging U.S. and European benchmarks and trading at a steep valuation discount, the FTSE 100 has quietly outpaced many peers over the past 12 months.

Several forces combined to push the index higher:

• Mining and precious metals stocks: Fresnillo, the Mexican-focused miner in the FTSE 100, surged by about 450% in 2025 as gold and silver prices hit record highs, while Endeavour Mining also posted triple-digit gains. Investors seeking protection against inflation, geopolitical risk and a weakening U.S. dollar piled into bullion and the companies that produce it.

• Defence and aerospace: Shares in Rolls-Royce, BAE Systems and Babcock International roughly doubled over the year as European governments moved to increase military spending toward NATO targets and reassessed security policy one year into Donald Trump’s return to the U.S. presidency.

“Defence names really stand out globally one year into President Trump’s presidency… a paradigm shift in how the continent views security,” said Neil Wilson, a strategist at Saxo UK.

• Banks, energy and infrastructure: Lenders advanced as they benefited from still-elevated interest rates, which bolstered net interest margins, alongside relatively low loan losses and a firmer domestic economy than many had expected. Energy and infrastructure groups such as BP, Shell, National Grid and SSE added further support on the back of strong cash flows and investment in networks.

Those gains came on top of extremely low starting valuations. At the beginning of 2025, UK equities were trading at just under 10 times forecast earnings, levels portfolio managers described as unusually cheap by historic standards and by comparison with the United States and continental Europe. Share buybacks and takeovers also helped support prices by shrinking the pool of listed equity.

The index’s heavy international tilt has been another factor. Roughly three-quarters of FTSE 100 companies’ revenues are earned overseas, meaning the benchmark often behaves more like a barometer of global conditions than of the domestic British economy. In 2025 it benefited from a broad “risk-on” mood as investors rotated into undervalued markets and away from the most expensive U.S. technology stocks.

London’s listing challenge remains

The 10,000 milestone, however, does not mean London’s long-running challenges are resolved.

In recent years, the London Stock Exchange has suffered a drought of major initial public offerings and the loss of several high-profile listings to New York and other venues. The total number of listed companies on the main market has fallen, and executives have complained that UK valuations are too low to justify selling shares at home.

Reeves has sought to reverse that trend with a package of reforms aimed at “rewiring” the financial system. Unveiled last year and branded the Leeds Reforms, her agenda includes proposals to encourage more long-term investment, tilt tax-advantaged individual savings accounts toward UK assets, and grant a temporary stamp duty exemption on shares in new domestic IPOs.

Regulators are also making changes. The Financial Conduct Authority has moved to scrap generic “your capital is at risk” warnings in favor of more tailored disclosures, arguing that clearer communication can both protect consumers and support greater retail participation in the stock market.

Early signs suggest a modest revival in London’s primary market. A handful of companies, including consumer brands and a specialist bank, chose to list in 2025, and advisers say a pipeline of deals — from software group Visma to veterinary chain IVC Evidensia and roadside assistance firm RAC — is building for 2026.

“Breaking through the 10,000 level is the best new year’s present Rachel Reeves could want,” said Dan Coatsworth, investment analyst at AJ Bell. “It also proves to cynics that the UK market is not stuck in the mud.”

A record index, but a mixed domestic backdrop

London’s main index remains dominated by old-economy sectors, and Britain has relatively few large listed technology companies with direct exposure to the artificial-intelligence boom that powered much of Wall Street’s gains last year. Analysts note that even after the rally, UK stocks on average trade at lower earnings multiples than their European and U.S. counterparts.

The domestic picture also tempers the headline-grabbing record. Inflation has fallen from its post-pandemic peaks but remains close to the Bank of England’s 2% target only gradually. The central bank has cut interest rates from the highs reached in 2023, helping pull typical mortgage rates down from more than 6% to below 4%, but borrowing costs are still significantly higher than in the decade before the pandemic.

Economic growth is subdued, and wages adjusted for prices have only inched higher. House prices were broadly flat in 2025, offering little comfort to homeowners expecting steady appreciation.

Many British households may feel only a faint connection to the surge in equity prices. Over several decades, pension funds and insurers have steadily reduced their exposure to UK equities in favor of bonds and overseas assets. Some estimates suggest domestic pension schemes now allocate only a mid-single-digit percentage of their portfolios to UK stocks, compared with well over 10% a decade ago.

That shift means the benefits of a record FTSE are concentrated among international investors and wealthier savers with direct shareholdings or equity-heavy pension plans, rather than spread evenly across the population.

What comes next

For some market watchers, the key question is whether the move above 10,000 marks the beginning of a durable re-rating of UK assets or merely the late stage of a global upswing in risk taking.

“We’ve been talking down UK stocks for an awfully long time, so to begin the year on the front foot… psychologically that is going to have an impact,” said Danni Hewson, head of financial analysis at AJ Bell.

The answer will depend on whether higher valuations encourage more companies to list and stay in London, whether reforms succeed in channeling domestic savings back into productive investment, and whether the sectors that have led the market — from defence to gold mining — can sustain their earnings if geopolitical and monetary conditions change.

For now, the FTSE 100 has crossed a line that once seemed distant. Supporters of London’s markets hope that investors, at home and abroad, will see it not as the end of a long climb, but as the start of a more lasting change in how Britain’s corporate assets are valued.