The UK stock market hit a new high at the start of 2026, with the FTSE 100 index breaking through the 10,000 level for the first time and extending last year’s solid run. The 25.8% total return from the FTSE 100 in 2025 was the fifth best year for the UK index since inception in 1984.
US strikes on Venezuela on 3 January 2026 failed to derail the UK market performance as two sectors were in demand. Investors sought assets with supposed haven qualities – gold has a reputation for acting as a store of value in trouble times. That drove up shares in precious metal miners Fresnillo and Endeavour Mining.
Defence stocks often move higher when there are heightened tensions between two countries as investors believe events could spur governments to spend more on military protection. That explains why FTSE 100 defence company BAE Systems was in demand on the stock market following events in Venezuela, with its shares also getting a boost on 8 January after Donald Trump called for a 50% increase in defence spending by 2027.
Why has the FTSE 100 done well over the past year?
Gold miners and defence contractors were among the top performing FTSE 100 stocks in 2025. They played a big role in helping the FTSE 100 to beat the flagship US index, the S&P 500, in 2025. Importantly, the diverse range of industries on the UK stock market offered a tonic to investors who started to get the jitters about tech stocks.
Investors have faced considerable uncertainty, and many have looked away from the US for opportunities. They’ve focused on cheaper areas of the market, of which the UK is one.
We’ve seen increased interest from foreign investors looking to diversify their holdings and the FTSE 100 has also shone during the more tumultuous periods thanks to its plethora of defensive-style companies.
When everything looks gloomy or chaotic, such as in the depths of the Liberation Day market drops, 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.
Lots of people have criticised the UK for being an old economy market, full of boring companies in the banking and natural resources sector. Yes, it could be accused of lacking the excitement of go-go-growth stocks omnipresent in the US, but boring can also be beautiful when it comes to investing. The UK is a rich hunting ground for dividends, and it is also full of companies that have slow but steady growth and which are underappreciated engines for wealth creation.
How long did it take to hit previous 1,000 increments?
It’s taken 171 days for the FTSE 100 to go from 9,000 to 10,000, making it a record-breaking leap as the shortest period for the index to jump by 1,000 points. Previously, the fastest jump in blocks of 1,000 happened when the FTSE 100 went from 5,000 to 6,000, which took 229 days in the late 90s.
The longest period was 6,206 days between hitting 6,000 in March 1998 and 7,000 in 2015. Admittedly, that period included a global financial crisis, so it was unusual times.
What does hitting the 10,000 level really mean?
Breaking through this level is important from a psychological perspective and could help drive goodwill towards the UK stock market following a long period of it being unloved. This momentum, together with solid performance figures in recent years, shows the market can deliver positive gains for investors.
While investors shouldn’t expect positive returns every year and what’s worked in the past may not necessarily work in the future, historical performance offers a reason to be hopeful.
Over the past 10 years, the FTSE 100 has delivered a 9.4% average annual total return, which factors in both share price movements and dividends.
We recently surveyed AJ Bell customers, and more than half of respondents said they are considering investing in UK shares in 2026.
Data also suggests the tide is turning when it comes to investor appetite for the UK market. Trade body the Investment Association’s latest analysis of activity among UK retail investors shows a significant shift in behaviour.
Its December 2025 figures show a sharp decline in the rate of net outflows for funds investing in the UK All Companies sector. The data shows that net outflows dropped from £1 billion in November 2025 to £144 million a month later. However, the sector is still seeing outflows and July 2021 was the last time there were monthly net inflows for the sector.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
