The FTSE 100 index has climbed above 10,000 points for the first time, passing a significant stock market milestone, on the first trading day of the year.

Shares included in the index performed strongly in 2025, leaving the benchmark more than 21% higher than a year ago, when it stood at just over 8,260. It set a new all-time record reaching 10,046 points before falling back below the 10,000 mark.

Despite much talk of high stock valuations in the US over the past year, the London index outperformed the major American indexes in 2025.

Shares in British brands such as Currys and Next rose steeply alongside gains for precious metal miners, defence and financial services companies.

The FTSE 100 tracks the performance of the 100 largest companies listed on the London Stock Exchange.

A big rise is good news for investors, including anyone with a pension or other savings that are invested in the stock market, but is not a direct measure of the UK economy’s performance.

Many of the constituent companies have large overseas operations as well as a UK presence, and around three quarters of the revenues of the FTSE 100 firms is generated abroad.

In 2025 rising gold and silver prices boosted firms such as Rio Tinto, while increased global defence spending lifted contractors including Babcock and Rolls-Royce – amid economic uncertainty and geopolitical tensions.

The British benchmark index set a new all-time intraday record as trading resumed after the new year holiday, rising more than 1% within the first hour to reach 10,046 points – up 115 from its previous level, before falling back below the threshold. Shortly after midday on Friday, it had dropped to 9,981.21 points.

Susannah Streeter, an independent financial commentator, said the 10,000-point marker was “a psychologically important milestone” and showed London’s blue-chip index was “back in favour” with investors.

“Concerns continue to swirl about the super-high valuation of US tech sector,” she said, making the UK market more appealing.

Dan Coatsworth, head of markets at investment platform AJ Bell, said crossing the 10,000-point was a New Year’s gift for the chancellor, Rachel Reeves, who has been calling for more investment in the UK share market to boost economic growth.

“She has been banging the drum about the merits of investing over parking cash in the bank.

“The FTSE 100’s achievements just go to show what’s possible when buying UK shares,” he said.

While London-quoted companies were sometimes considered “old and boring”, the mix of industries, including mining and banking, appealed to investors seeking stability during uncertain times, he said.

“Investors often seek solace in companies whose goods and services should be in demand no matter what’s happening in the world.

“For example, we all need to pay insurance or water bills, or those in the habit are still likely to buy cigarettes or vapes, and the FTSE 100 has plenty of companies playing on these themes on offer.”

The chancellor said the FTSE’s break-through was “a vote of confidence in Britain’s economy and a strong start to 2026”.

The FTSE index, which is dominated by large international companies, closed 2025 at 9,931, after repeatedly hitting record highs during the year.

Although it is often seen as a measure of Britain’s corporate strength, the FTSE 100 largely reflects global business activity because most of its companies earn a significant share of their revenues overseas rather than from the UK economy.

Its rise follows a global trend, which has seen stock markets surge over the expectation that artificial intelligence (AI) will boost company earnings.

However, some experts have warned that if high hopes for AI are not realised, or do not appear quickly enough, that enthusiasm could evaporate – and prompt a steep fall in share values.

Share prices rise or fall based on investors’ expectations of what they think companies will earn in the future. Among the strong performers in 2025 were fashion retailer Next, which raised its profit outlook four times over the year, and luxury brand Burberry which returned to profit after back-to-back annual losses.

However, shares in bakery chain Greggs have seen a 39% drop with investors anxious about its expansion plans and lacklustre sales growth. Diageo and WH Smith also suffered sharp falls.