Key Takeaways
- HSBC the biggest contributor to Morningstar UK Index gains.
- UK market a strong performer since April 9.
- Index on track for best annual gains since 2021.
The FTSE 100 closed just below a record high on June 16, supported by rising energy stocks amid escalating Middle East conflict.
The most recent closing record high was set on June 12, of 8,884 points, just hours before Israel struck Iran’s nuclear facilities, sending oil prices soaring and briefly knocking global equity markets.
This latest high comes amid a wider resurgence for UK stocks since the April 9 turnaround in global equities, which saw markets recover from the early April tariff turmoil. In that period, the Morningstar UK Index has been one of the best-performing stock markets in Europe, hitting multiple new highs in recent months.
According to Morningstar Direct data, since April 9, global bank HSBC HSBA has been the biggest contributor to the Morningstar UK Index’s gains in that period, followed by in-demand defense and aerospace stock Rolls-Royce RR. and oil giant Shell SHEL. BAE Systems BA., which has also benefited from the European defense rally, was the fourth biggest contributor to the index gains. Of these, all are considered fairly valued by Morningstar metrics, except for BAE Systems, which has a 4-star rating, meaning that the shares are undervalued.
Shell, the third largest company in the Morningstar UK Index, has been boosted by soaring oil prices since the Iran-Israel conflict and its share price is up 4% in the last five days.
Shares in rival BP BP.A, the 10th largest stock in the Morningstar UK Index, are up nearly 5% in the same period.
UK Banks Are Buoyant
There are three high-street banks in the top 10 largest contributors, including Lloyds Banking Group LLOY and NatWest NWG.
Banks have been strong performers in 2025, following on from a breakout year in 2024, as markets have scaled back expectations of interest rate cuts this year amid above-target inflation.
Mark Preskett, senior portfolio manager at Morningstar Wealth, says that net interest margins, a key metric for banks’ profitability, remain high despite four interest rate cuts.
“The banks have benefited from high net interest margins. They have had two years now of higher interest rates which have come down slightly but not by much.
“And the reality is defaults are low, the housing market is not in a boom time but repossessions are low. The banks are well-capitalized businesses,” he adds.
Gold, Takeovers and Travel Demand
Looking at the Morningstar UK Index’s biggest risers in absolute terms since April 9 brings up a different set of stocks.
The stock leading the rally is mining company Fresnillo FRES which returned 66.95% from April 9 to June 11, benefiting from soaring prices for silver and gold as investors sought out safe-haven assets.
Burberry BRBY is close behind with a gain of 66.04% as the luxury brand pursues its turnaround strategy and takeover speculation continues.
Meanwhile, Spectris SXS saw a 64.15% return as the scientific instruments manufacturer said it would accept a £3.73 billion bid from US private equity firm Advent.
Airlines performed also well in the period as travel demand continued to boom: Jet2 JET2 experienced a 57.25% jump, British Airways owner International Consolidated Airlines Group IAG rose nearly 43% and low-cost airline easyJet EZJ gained nearly 33%.
Two stocks covered by Morningstar analysts were in the top 10 gainers in the period, Burberry BRBY and food delivery firm Deliveroo ROO, which has accepted a takeover from US competitor DoorDash.
Year to date, the Morningstar UK Index has climbed just below 10% from January to June 11 in sterling terms, positioning it for its best annual gain since 2021, when it climbed 18.43%.
This marks its best start to the year since 2021, when it rallied 12.57%.
