Published by Global Banking & Finance Review®
Posted on January 2, 2026
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleThe FTSE 100 surpasses 10,000 points, driven by global AI optimism. Defence and aerospace sectors lead gains, while UK house prices fall.
By Tharuniyaa .
Jan 2 (Reuters) - The UK's FTSE 100 ended higher on the first trading session of the year on Friday, after blowing past the 10,000 points mark for the first time on a wave of optimism sweeping global markets.
The blue-chip index ended up 0.2%, after capping its strongest yearly performance in 16 years on Wednesday.
"(It) is a powerful signal for UK markets, reflecting ongoing confidence in earnings resilience, attractive valuations and the growing appeal of UK equities to international investors at a time when policy headwinds are beginning to ease," said Axel Rudolph, senior financial analyst at IG.
European benchmarks, along with indexes in Taiwan and South Korea, also hit record highs on Friday, while U.S. stock futures advanced as optimism around the global AI-driven rally and easing policy headwinds lifted risk appetite.
On the FTSE 100, the defence and aerospace sector led gains, rising 3.2%. Rolls-Royce jumped 3.6%, Melrose Industries advanced 3.5% and BAE Systems rose 2.2%.
Personal goods followed with a 2.1% advance.
The two were among the best-performing sectors in 2025.
The British benchmark gained nearly 22% in 2025, outperforming Europe's STOXX 600 and the S&P 500. Its gains largely reflect the diversification that the index offers, with little direct exposure to the artificial intelligence sector.
Commodity-linked stocks, such as oil firms and miners, are heavyweights on the FTSE 100 and have largely benefited from record metal prices and higher oil prices.
Rudolph noted that diversified earnings, strong cash generation and the prospect of a more accommodative Bank of England suggest that the market's outperformance was sustainable even if gains moderate.
London's domestically focused mid-cap index closed down 0.2%.
Meanwhile, data from mortgage lender Nationwide Building Society showed UK house prices unexpectedly fell 0.4% in December, leaving annual growth at just 0.6% for 2025, the weakest since April 2024.
Construction and materials and real estate stocks fell 0.7% and 1.2%, respectively.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Harikrishnan Nair and Louise Heavens)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, based on market capitalization.
Market capitalization is the total market value of a company's outstanding shares of stock, calculated by multiplying the share price by the total number of shares.
A blue-chip stock refers to shares of well-established companies with a history of stable earnings, reliability, and strong performance in the stock market.
Commodity-linked stocks are shares in companies whose performance is closely tied to the prices of commodities like oil, metals, and agricultural products.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, managing monetary policy, and maintaining financial stability.
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