The FTSE 100 is inching a step closer to the magic 10,000 mark after almost a year of outperforming counterparts across the Atlantic.
London’s blue-chip index rallied on the open before giving up some gains to settle on a broadly flat level.
It follows two consecutive record closes with the City shrugging off bubbling tensions around private credit and fears of the ever-ballooning AI bubble.
This broke ranks with overseas indices, particularly in the US, with the tech-heavy Nasdaq down nearly two per cent in the last month after AI jitters spooked investors.
“It’s been a historic year for the UK as the FTSE 100 has outperformed all the major US stock indices,” Dan Coatsworth, head of markets at AJ Bell, said.
“Hitting 10,000 would be the cherry on top, proving to cynics that the UK market is not stuck in the mud.”
The FTSE 100 notched the 9,000 threshold on 15 July – 120 days ago. If the index can pass the 10,000 mark in the coming days, it will be the quickest threshold jump on record.
FTSE 100 flies above US
On Tuesday, the Dow Jones – an index of 30 blue-chip firms spanning across industries – closed at a record high after a 1.18 per cent rise to 47,927.96p.
Meanwhile, the Nasdaq lost 0.25 per cent, falling to 23,468.30p.
It came as health care giants such as Merck and Johnson & Johnson rallied through the session whilst AI giants pulled back.
Chipmaker Nvidia lost around three per cent after Softbank offshored its entire stake in the firm for $5bn.
This investor appetite has helped kick the FTSE 100 on the front foot, with the City index heavily weighted towards more ‘traditional’ stocks.
“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 lacks the excitement of go-go-growth stocks omnipresent in the US, but boring can also be beautiful when it comes to investing,” Coatsworth said.
Miner Fresnillo has topped the index for highest gains for the year-to-date up nearly 260 per cent for the year-to-date.
Among the top ten performers include FTSE darling Rolls-Royce (up over 90 per cent), banking juggernaut Lloyds (over 70 per cent) and defence giant Babcock (over 130 per cent).
The energy in UK equities has also benefited from volatility overseas, with a number of top City voices saying Trump’s Liberation Day triggered a rotation out of US assets.
Asset manager Royal London sold off some of its US allocation over the summer amid valuation worries, and bolstered its UK exposure.
The boss of investment bank Cavendish – which is a leading broker to the AIM index – told City AM earlier this year, the aftermath of Trump’s tariffs had led to a major movement of funds across the Atlantic.
Investors on Budget watch
Coatsworth added the UK was “rich hunting ground” for dividends, with countless firms having “slow but steady growth” that are “underappreciated engines for wealth creation”.
Though, on the road to the Budget dividend excitement may be squandered as the Chancellor mulls increasing the tax rate.
The current basic rate for shareholder returns sits at 8.75 per cent for Brits on the basic income tax band between £12,571 and £50,271.
The higher rate on dividends is 33.75 per cent and the additional rate for people on the highest tax band is 39.35 per cent.
“Investor sentiment is still guided by what’s happening on these shores,” Coatsworth said.
“The Budget will be the key test for the market. Anything deemed negative for the economy could weigh on shares in the retail, banking, construction, housebuilding and property sectors.”