Nils Pratley: How the FTSE 100 ‘dinosaur’ roared back to life
It was a bumper year for stock markets globally and the surprise, perhaps, is that the FTSE 100 index more than kept up, my colleague Nils Pratley writes.
The London market has sometimes been derided as lacking dynamism – the hedge fund manager Paul Marshall called it the “Jurassic Park” of exchanges a few years ago – but its main index enjoyed its best 12 months since 2009. The Footsie didn’t quite make it to the round number of 10,000 but still improved by 21.5%, slightly outperforming the S&P 500 index in the US.
How did that happen amid weakening UK growth, pre-budget chaos and general gloom? The short answer is that a stock market index reflects only its constituent parts. It is not a symbol of national economic virility. That is especially true of the internationally flavoured Footsie, whose members make about three-quarters of their combined revenues overseas.
The tale of 2025 was one of helpful breezes blowing through many of the most important sectors. Defence stocks enjoyed commitments by Nato’s western European members to spend more heavily on equipment. That assisted companies such as Rolls-Royce, whose remarkable run has taken the shares from sub-100p in 2022 to £11-plus today. Banks have had near-perfect conditions of low defaults and falling interest rates. The bill (for some) from the car finance scandal was brushed off easily….
Dan Coatsworth, head of markets at AJ Bell, said the FTSE 100 “has had precisely the right ingredients desired by investors in a year full of political, trade and market uncertainty”.
He added:
“This year’s success for the blue-chip index is not a flash in the pan.
“The FTSE 100 has delivered positive returns in eight of the past 10 years, averaging 9.1% annually over that period including dividends.
“This kind of performance reinforces the attraction of investing over the long term.
“There may be years when performance disappoints, but history suggests it’s worth pursuing.”
Precious metal producer Fresnillo was the top FTSE 100 performer this year – its shares have soared by 450% during 2025, boosted by record prices for gold and silver.
Rival Endeavour Mining gained 170%, with telecommunications firm Airtel Africa the second-fastest riser, up 210%.
FTSE 250 rises 9% this year
As the FTSE 100 is dominated by multinational companies, it isn’t a great gauge of the health of the UK economy.
The FTSE 250 index, which contains more UK-focused companies, is a better guide to the domestic economy. It has just posted a 9% gain for 2025.
FTSE 100 posts 21.5% gain for 2025
Britain’s stock market has recorded its strongest annual gains since 2009, after a strong year for shares on the London stock exchange and beyond.
The FTSE 100 index of blue-chip equities has just closed for the year, down slightly today at 9,931 points, a fall of 9 points or 0.09%.
But for 2025 as a whole, the Footsie has gained 21.5%, its highest annual gain in 16 years.
Mining stocks, defence companies, and banks were the best-performing sectors of the economy this year, as the UK market rose faster than Wall Street.
Updated
2026 could bring new fiscal challenges to Argentina.
According to Bloomberg, with just five trading days left ahead of a crucial 9 January deadline, Argentina’s Treasury only has $1.9bn of the $4.3bn it owes.
They add:
Economy Minister Luis Caputo still has options though as he looks to scrape together the rest. They include a possible repurchase agreement — effectively a loan — with Wall Street banks or potentially tapping Argentina’s $20 billion swap line with the US Treasury Department. For now, Caputo has downplayed the likelihood of selling bonds abroad in January.
We’ve had encouraging economic news from China overnight, where a slump in factory output has ended.
China’s manufacturing purchasing managers’ index rose to 50.1 in December from 49.2 in November, ending an eight-month contraction streak.
The silver price has been hit by a late sell-off.
Spot silver has fallen by 5.5% today to $72.20 per ounce today, falling back from the record high of $83.62 set on Monday.
According to Marketwatch, there is heavy selling in gold and silver after the CME futures exchange increased their trading margins again.
It’s probably going to be a limp end to trading on Wall Street this year.
The futures market is indicating that the S&P 500 share index will dip by 0.25%, with the tech-focused Nasdaq on track for a 0.35% drop.
US dollar on track for worst year since Trump 1.0
The US dollar is heading for its steepest annual drop since 2017, and Wall Street banks predict further weakness next year.
The dollar index, which tracks the greenback against a basket of currencies, has fallen by over 9% during 2025, as America’s economy was hit by the Trump trade war.
It is under pressure as investors anticipate cuts to US interest rates in 2026; Donald Trump is preparing to name a new head of the Federal Reserve who will lower borrowing costs.
Lee Hardman, senior currency economist at Japanese bank MUFG,
The dollar remains on track for a full-year decline of 9.4%, which would mark the largest calendar-year sell-off since 2017. Both periods coincided with the first years of President Trump’s two terms in office. The dollar regained some ground in 2018 when the index rose by 4.4%, but we do not expect a similar recovery in the year ahead. Instead, the weakening trend is likely to extend into 2026.
The dollar is no longer as overvalued following this year’s sharp sell-off, driven by heightened U.S. policy uncertainty under the Trump administration and the Fed’s decision to resume rate cuts.
Xi: China’s economy set to hit 5% growth goal in 2025
President Xi Jinping has declared China’s economy is set to hit its growth target for this year.
After what he called an “extraordinary year”, Xi told an annual gathering held by the country’s top political advisory body that China’s gross domestic product is expected to expand by around 5% during 2025.
According to the official Xinhua News Agency, Xi told the Chinese People’s Political Consultative Conference:
“China’s economy is forging ahead under pressure, moving toward innovation and quality, demonstrating strong resilience and vitality.
The growth rate is expected to reach around 5%, continuing to rank high among the world’s major economies.”
The pan-European Stoxx 600 share index is poised for its biggest annual gain since 2021, after hitting a record high yesterday.
The Stoxx 600 has gained over 16% this year, led by gains in Milan, Frankfurt and London.
Better-than-expected growth across Europe, and Germany’s plans for higher fiscal spending, have supported European stocks – banks have had their best year since 1997.
The London stock market has opened a little higher, on the final trading day of the year.
The FTSE 100 index has gained 9 points, or almost 0.1%, to 9,949 points, towards the intraday record high set yesterday.
Mobile phone operator Vodafone (+0.8%) is the top riser, followed by pharmaceuticals giant AstraZeneca (+0.6%).
Drinks company Diageo (+0.5%) is close behind; it’s lost a third of its value this year, after suffering weak sales and a supply problem in Latin America.
Oil is on track for a chunky fall in annual prices.
Brent crude futures are down nearly 18% in 2025, the biggest annual drop since 2020 when demand slumped during the Covid-19 pandemic.
That puts oil on track for a third straight year of losses, their longest-ever losing streak according to Reuters.
Supply of oil has outpaced demand in a year marked by wars, higher tariffs and OPEC+ output and sanctions on Russia, Iran and Venezuela.
Eurostar says train services resume, but warns of delays and cancellations
Eurostar has warned passengers could face delays and last-minute cancellations today, as services resume after a power supply failure caused widespread disruption on Tuesday.
Eurostar plans to run a full service today, and says:
“Services have resumed today following a power issue in the Channel tunnel yesterday and some further issues with rail infrastructure overnight.”
“We plan to run all of our services today, however due to knock-on impacts there may still be some delays and possible last-minute cancellations.”
Currently the 6.31am from St Pancras which was scheduled to arrive in Paris at 9.49am is expected to roll into the French capital at 10.24am.
The 8.42am from Paris Gare du Nord, which was due to arrive in London at 10am, is running around 30 minutes late too. The earlier 7.42am is 40 minutes late.
Introduction: FTSE 100 heads for best year since 2009
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The London stock market is ending its strongest year since the aftermath of the financial crisis at record levels.
2025 has been a very strong year for the FTSE 100 – the blue-chip index of UK stocks has climbed by over 21% since the start of January, which would be its best year since 2009.
Last night, the index ended the day at a new closing high of 9,940 points, after touching a new peak of 9,954 points, as a burst of ‘Santa rally’ excitement rippled through the City.
This year’s rally has been driven by mining stocks, precious metals producers, defence companies and banks – in a year in which the gold price has surged, and the dollar has weakened.
And for once, London has outperformed Wall Street – where the S&P 500 index has gained 17%.
Danni Hewson, head of financial analysis at AJ Bell, says:
“The global nature of the inhabitants of London’s top-flight index has helped it avoid the doldrums which have held back the more domestically focused FTSE 250…
“Investors have been looking beyond the usual suspects for value and diversification as the US dollar came under pressure and the world continued to be beset with geopolitical turmoil and fears of an AI bubble. An indication that further interest rate cuts are on the cards in the US could enable Wall Street to find a higher gear and minutes from the Fed’s last meeting of the year should also shed some light on that.
“But after that Liberation Day dip which now feels so long ago, European markets have delivered a strong annual performance and today’s surge should help maintain that momentum into the new year.”
The agenda
12.30pm GMT: Early close on London stock market
1.30pm GMT: US weekly jobless claims report
