London’s top shares index could be poised for a “fairytale ending” to the year as one of the global stock markets to enjoy a strong return for investors.
The FTSE 100 today hit a new closing high of 9,940.71, up 74 points on the day and representing a year-to-date gain of about 22% ahead of the final and shortened trading session of 2025.
That is more than twice what it achieved in 2024 and ahead of the 17.2% from the S&P 500 index in the US.
The surge comes against headwinds such as the continuing war between Russia and Ukraine and President Trump’s tariffs in the spring.
Danni Hewson, head of financial analysis at AJ Bell, said “a fairytale ending to the year” looks likely for London’s blue-chip index which is “tantalisingly close to that 10,000 mark which at the start of the year seemed inconceivable.”
At a time when technology is all the rage, it has been “old economy” stocks such as miners, banks and defence companies that have propelled the index this year.
Shares in Babcock International, the defence company, have surged by 148% and engineering group Rolls-Royce has more than doubled, while Fresnillo, Endeavour Mining, Lloyds Bank, Barclays and Standard Chartered have also been among the biggest risers.
Investors looking for income growth have turned to the stock market for better returns as interest rates have fallen.
A third of blue-chip companies offer a higher yield than the current central bank interest rate. Dividend yields of around 8% at Legal & General Group and Phoenix Group Holdings continue to highlight the income appeal of the FTSE 100 index.
Retirement and savings business Phoenix yields dividend income of 7.6%, having increased its half-year payment in October by 2.6% to 27.35p a share. The Standard Life brand owner’s strong level of cash generation means the dividend is well covered, with £300 million a year of excess capital a source of financial flexibility.
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