UPDATE 1-FTSE 100 tops 10,000 as global AI boom lifts sentiment

European benchmarks, along with indexes in Taiwan and South Korea, also hit record highs on Friday, while U.S. stock futures advanced as optimism around the global AI-driven rally and easing ⁠policy ‌headwinds lifted risk appetite. On the ⁠FTSE 100, the defence and aerospace sector led gains, rising 3.2%.

The UK's FTSE 100 ended higher on the first trading session of the year on Friday, after blowing past the 10,000 points mark for the ⁠first time on a wave of optimism sweeping global markets. The blue-chip index ended up 0.2%, after capping its strongest yearly performance in 16 years on Wednesday.

"(It) is a powerful signal for UK markets, reflecting ongoing confidence in ​earnings resilience, attractive valuations and the growing appeal of UK equities to international investors at a time ‍when policy headwinds are beginning to ease," said Axel Rudolph, senior financial analyst at IG. European benchmarks, along with indexes in Taiwan and South Korea, also hit record highs on Friday, while U.S. stock futures advanced as optimism around the global AI-driven rally and easing ⁠policy ‌headwinds lifted risk appetite.

On the ⁠FTSE 100, the defence and aerospace sector led gains, rising 3.2%. Rolls-Royce jumped 3.6%, Melrose Industries advanced 3.5% and BAE Systems rose ‍2.2%. Personal goods followed with a 2.1% advance.

The two were among the best-performing sectors in 2025. The British benchmark gained nearly ​22% in 2025, outperforming Europe's STOXX 600 and the S&P 500 . Its gains largely reflect the ⁠diversification that the index offers, with little direct exposure to the artificial intelligence sector.

Commodity-linked stocks, such as oil firms and miners, are heavyweights on ⁠the FTSE 100 and have largely benefited from record metal prices and higher oil prices. Rudolph noted that diversified earnings, strong cash generation and the prospect of a more accommodative Bank of England suggest that ⁠the market's outperformance was sustainable even if gains moderate.

London's domestically focused mid-cap index closed down 0.2%. Meanwhile, data from mortgage ⁠lender Nationwide Building Society showed ‌UK house prices unexpectedly fell 0.4% in December, leaving annual growth at just 0.6% for 2025, the weakest since April 2024. Construction and materials and real estate stocks fell ⁠0.7% and 1.2%, respectively.

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