Key Takeaways
- Positive earnings season has boosted sentiment.
- FTSE 100 has struggled to make headway for years.
- Defensive and defense stocks have helped.
The FTSE 100 has hit multiple record highs this year but last week represented a landmark for the index: it’s the first time that the 9,000 points level has been breached and held. Earnings season momentum has helped boost the index in recent days, with a number of 10% daily moves among key stocks like BT BT. A and Reckitt Benckiser RKT.
Year to date the index is up 10%, recovering its momentum following the tariff-related global selloff. An early trade deal with the US has helped sentiment, but the wider context is that most world equity indexes have followed the same pattern, achieving new records from mid-April onwards.
While the UK is following wider market trends, there is a case that the UK is also benefiting from investor flows to Europe.
“Institutions might be wary about putting more money to work in the US despite the bounce, but the FTSE 100 provides an ideal combination of valuation and dividends, making it far easier to make a case to cautious investment committees,” says Beauchamp.
UK Stocks Have Been Unloved
In terms of valuation, UK stocks as a whole have been out of favor with global asset allocators for a number of years. The country is a G7 economy with an AA credit rating from S&P and Morningstar DBRS, but makes up 3% of the MSCI World Index.
The UK also lacks companies like the Magnificent Seven, and London has struggled to compete with New York for new listings.
Political turmoil has been a negative backdrop too, with six different prime ministers in 10 years, and a messy exit from the European Union.
Dan Coatsworth, investment analyst at AJ Bell, says the UK’s previously dull reputation, with “old economy” stocks in abundance, is now working in its favor.
“Investors seek companies with defensive qualities and the UK market has them in spades.
“Industries including tobacco, utilities and telecoms typically have steady earnings. They provide services which consumers and businesses need, and certain companies fall under the category of non-discretionary spending. We all have to pay energy and phone bills every month.
“The UK stock market has a wealth of defence contractors which have attracted investor interest against a backdrop of increased government spending on areas like cybersecurity and military forces.”
Rolls-Royce and BAE Systems Lead the FTSE Higher
For example, Rolls-Royce RR and BAE Systems BA, the fifth and 10th largest holdings in the Morningstar UK Index, are up around 60% this year.
The Morningstar UK Index is up 14.05% in the year to date through July 24, marking its best start to the year since 2019, when it rallied 14.46%.
FTSE 100 Technical Analysis: The Long Road to 9,000 Points
- 6,000 points first breached in April 1998
- 7,000 points in March 2015
- 8,000 points in February 2023
- 9,000 points in July 2025
The FTSE 100 index launched in 1984 with a starting level of 1,000 points and has risen more than 600% since then. For comparison the Dow Jones Industrial Average is up more than 3,000% over a similar period.
The journey to 9,000 points has been a slow grind for UK index investors. A lot of external factors have intervened, including the dotcom boom and bust, global financial crisis, Brexit, 2020 pandemic and most recently, the April tariff turmoil.
From a technical analysis point of view, for many years the FTSE 100 seemed stuck between 6,000 and 7,000 points, which represent key “support” and “resistance” levels.
The 6,000 points closing level was first breached in 1998 before the dot-com crash. It took until 2015 to break above 7,000 points, the next significant technical level. The covid pandemic selloff was a setback but then the FTSE 100 moved back above 7,000 decisively in 2021. Then the index closed above 8,000 points for the first time in 2024, and last week the index moved above 9,000.
So each 1,000 point increase above 6,000 has taken 17 years (6,000 to 7,000), eight years (7,000 to 8,000) and then one year (8,000 to 9,000) to achieve.
