Britain’s blue-chip stock index has risen through the 9,000-point mark to touch a new high.
The FTSE 100 share index hit 9,016.98 points in early trading on Tuesday, taking its gains during 2025 to more than 10%.
Analysts said the London stock market had benefited from a range of factors this year, including a move by some investors to diversify away from US shares because of concerns about Donald Trump’s economic policies.
The US president’s trade war has also helped UK stocks, as Britain is one of the few countries to have reached a trade deal guaranteeing lower tariffs.
The UK stock market is the calming cup of tea and biscuit in an uncertain world
The AJ Bell investment analyst Dan Coatsworth said: “With the UK having already reached an agreement on a 10% tariff for trade with the US, with exemptions for certain industries, the country is now seen to have an advantage in terms of trade relations.”
However, the FTSE 100 fell back below 9,000 points during the session, and closed almost 60 points lower at 8,938 points, after a rise in the US inflation rate dampened hopes of early interest rate cuts in America.
In recent years, the London stock market has been derided as a “Jurassic Park” index, due to its reliance on companies in long-established industries and a shortage of fast-growing tech companies. However, that reliance has proved an asset in uncertain times.
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“The UK stock market is the calming cup of tea and biscuit in an uncertain world,” Coatsworth said. “There’s nothing fancy on offer, just reliable names that do their job day in, day out. That’s an underrated characteristic and a reason why investors are finally warming to the UK stock market’s appeal in 2025.”
However, Trump’s trade war has created choppy conditions in financial markets throughout 2025. The FTSE 100 index fell as low as 7,544 points in early April, when tariff announcements sent shares tumbling. It then recovered sharply, as traders embraced the “Taco trade” – the idea that Trump always chickens out if his policies spook investors.
The precious metals producer Fresnillo has been the top riser on the FTSE 100 so far this year, up by more than 140%. It has benefited from surging prices, with gold hitting several record highs this year and silver trading at a 14-year peak this week.
The prospect of higher military spending has pushed up shares in the defence contractor Babcock by 115% this year, with BAE Systems up 65%. The engineering firm Rolls-Royce has gained 75%, as its turnaround plan has yielded results.
John Moore, a wealth manager at RBC Brewin Dolphin, said “strong earnings momentum in the banking and defence sectors” had helped to push the FTSE 100 to a record high. Moore also credited the UK’s “relative political stability”.
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“While there may be tax increases to come, which was part of the reason for the sell-off of the pound in early June, the government has a clear mandate and tenure for the next few years,” he said.
“That compares favourably to other parts of Europe, even, where coalition governments are having a tough time.”
Roughly 75% of the FTSE 100’s earnings come from overseas, meaning the index is a gauge of global economic prospects rather than the health of the UK economy. But some domestically focused stocks have had a good 2025, so far. Lloyds Banking Group has gained 38%, the retailer Next is up 28%, and the wealth manager St James’s Place has risen 40%.
Ben Russon, co-head of UK equities (large cap) at the investment manager Martin Currie, argued that the FTSE 100’s rally was showcasing the strength of the UK market.
Russon suggested that the outlook for the UK economy is “increasingly bright”, and that expectations of more interest rate cuts this year were fuelling optimism.
“International investors are taking notice. With the pound holding steady and UK equities looking attractively priced versus global peers, private equity is ramping up deal activity and targeting undervalued mid-sized companies ready to benefit from the UK’s coming upswing,” he added.
The UK market has risen faster than Wall Street this year, where the S&P 500 index is up 6.75% during 2025. But Germany’s DAX index has outperformed both, up by more than 20% owing to Berlin’s plans to lift government spending and investment.
