The FTSE 100 has risen above 9000 for the first time ever – leaving investors wondering: ‘What’s next?’
This latest leap forward took gains for the year so far beyond 10 per cent and came after Brexit Britain was branded a trade war winner by analysts.
That is because the UK has managed to carve out a deal with US President Donald Trump that means most of our imports to the US face extra tariffs of 10 per cent.
By contrast, Trump is threatening the European Union – of which the UK is no longer a part thanks to Brexit – with levies of 30 per cent.
The so-called ‘Brexit dividend’ led analysts at City investment bank Panmure Liberum to hail the UK as a ‘clear winner’ from the trade war between the US and the EU. They added: ‘As the world stands today, there is one clear recommendation: Buy UK.’
That is music to the ears of investors, particularly as hopes are mounting of a summer cut in interest rates next month – a move that could give the stock market a further lift.
The biggest winners so far this year include gold and silver miner Fresnillo, which has soared 150 per cent on the back of rising precious metal prices, and defence stocks such as Babcock, Rolls-Royce and BAE Systems as Europe races to rearm.
Rolls-Royce shares have risen more than ten-fold since chief executive Tufan Erginbilgic took over at the start of 2023 and described the company as a ‘burning platform’ before setting it on the road to recovery.
Today’s leap forward took FTSE 100 gains for the year beyond 10 per cent and came after Brexit Britain was branded a trade war winner by analysts
So is it now full speed ahead towards 10000 for the record-breaking Footsie? Or is there trouble – or, even worse, a crash ahead?
Darius McDermott, managing director at broker Chelsea Financial Services, says those who wrote off the Footsie ‘as a Jurassic Park of outdated stocks’ have been proved wrong.
He notes that sectors such as banks, defence stocks and building materials – in which the London market is strong – are now back in favour.
‘The index might lack the glamour of Silicon Valley, but that may be exactly what gives it the staying power to outperform from here,’ he adds.
Garry White, chief investment commentator at wealth manager Charles Stanley, said the FTSE 100 is unlikely to reach 10000 ‘until next year at the absolute earliest’ with 2027 ‘being much more likely’.
He added: ‘UK equities are more attractively priced than other developed market regions, but it is possible that it could end the year lower than current levels.’
Dan Coatsworth, an investment analyst at AJ Bell, says there has been ‘quite a shift in sentiment’ so far this year after ‘a lacklustre performance’ in 2024 when ‘UK stocks felt unloved and cheap’.
He adds: ‘It took eight years for the FTSE 100 to go from 7000 to 8000, yet only two years to break through 9000. That suggests the market is shaking off its unloved reputation and more investors like what’s on the menu.
Dan Coatsworth, an investment analyst at AJ Bell, says there has been ‘quite a shift in sentiment’ so far this year after ‘a lacklustre performance’ in 2024
‘It’s impossible to predict what will happen in the rest of the year for the FTSE 100 or when it could hit 10000. While there is currently positive momentum, the index could easily run out of steam or move back down if something big happens with geopolitics, interest rate expectations, inflation, trade deals and more – the kind of factors that have caused widespread uncertainties in recent years.
‘But in the UK’s favour is the fact the market still remains cheap, even after the good run since January. That should give it a buffer if market conditions deteriorate.’
Susannah Streeter, head of money and markets at Hargreaves Lansdown, says the London stock market has benefited from investors ‘seeking shelter from potential volatility in the US’.
She notes its ‘mix of utilities, insurers, consumer goods giants and defence contractors is offering stability in an uncertain world’ and adds: ‘The fact that the UK was front of the queue in signing a trade deal with the US also appears to be boosting confidence.’
But she too is cautious about what’s next, warning: ‘There’s still appears some opportunity ahead and the FTSE 100 looks set to climb further into post-9000 territory. But there are plenty of stumbling blocks which could trip up further gains this year.
‘We are in a high-risk cycle geopolitically and another shock of conflict could be highly disruptive. Trump’s trade stance is still a force to be reckoned with and is likely to slow global growth and limit gains on the internationally focused index.’
Amid the uncertainty over the outlook, these City experts identified stocks that investors may want to consider to boost their finances.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, suggests…
BAE SYSTEMS
With Nato members promising to significantly increase in their defence budgets, BAE Systems looks well-positioned to meet this rising demand.
These increases look set to span decades and are likely to see BAE’s order book reach new heights. As these orders are typically long-cycle, with programs spread over many years, it gives BAE great revenue visibility.
Nearly 50 per cent of BAE’s sales come from the US and the group is in a good place to tap into new funding available for some of the administration’s favoured mega projects, such as the ‘Golden Dome’ missile defence system.
There are risks to watch out for. BAE’s profitability is highly dependent on its ability to estimate future costs and the long-term nature of contracts means that there could be variability over time, so BAE will need to constantly adapt to protect its bottom line.
While the share price has been on a sharp climb upwards, the new cycle of increased defence spending could bring a long runway of growth for BAE.
GREGGS
Greggs’ sales turned flaky in the hot weather but there’s still plenty of underlying consumer demand to power opportunity ahead. The extra payroll costs the company is having to deal with are likely to be short-term indigestion rather than a longer-term ailment.
Consumer spending patterns have been improving, volumes have ticked higher and market share has been steady. Management clearly have confidence in these trends continuing and are pressing on with expansion plans. This includes opening a net total of 140 to 150 new stores this year, as well as ongoing improvements to its delivery services.
Darius McDermott, managing director at broker Chelsea Financial Services, says those who wrote off the Footsie ‘as a Jurassic Park of outdated stocks’ have been proved wrong with this year’s triumphs
Gregg’s value offering is set to continue to lure in cost-conscious customers and it’s expanding its opening times to evenings to capture more trade.
Given the recent disappointment over the heat-induced sales dip and the profit warning, the valuation looks more attractive, but it’ll need to ring up consistent sales growth ahead to lift sentiment.
LLOYDS
Sentiment towards UK banks has been improving, but there is still opportunity ahead for Lloyds. Credit quality is much stronger than it’s been in the past, UK consumers are faring well, and the mortgage market is showing signs of improvement.
Lloyds also benefits from what’s known as the structural hedge. Lloyds was investing in bond-like products at near-zero rates a few years ago. As those mature and get reinvested at better rates today, it can profit from that extra income.
If interest rates continue to fall, that’ll be positive for lending volumes but a headwind for the banks more broadly – they tend to see margins fall when rates drop. However, Lloyds’ deposit base looks like one of the most resilient in the sector and it’s well placed to manage the evolving rate environment.
There are still risks ahead, particularly given the ongoing investigation into motor insurance commission. There’s a ruling due in July and then most likely some form of compensation but there appear to be buffers already built in to withstand these costs.
Richard Hunter, head of markets at Interactive Investor, suggests…
PRUDENTIAL
Prudential has a new strategy and fresh purpose, and the early signs of this renewed focus are extremely encouraging.
Now focused on Asia and Africa, the group is fully aware that such major continents bring significant opportunities.
The combined populations of the two is around four billion, with an estimated $1 trillion of additional annual gross written premiums by 2033 being the addressable market.
In addition, the group has noted that insurance penetration remains low in Asia, where growing demand for savings and protection products come alongside the need for wealth management and retirement planning amid a higher income market.
BARCLAYS
The group has had a good run of late, and much of that optimism revolves around prospects for and performance of its three largest units.
The Investment Bank, which is for the most part a US division, accounts for 50 per cent of group revenues, Barclays UK 27 per cent and the Barclays US Consumer Bank 11 per cent.
Underpinned by the group’s financial strength and its geographical and business diversity, there is little to suggest that the current market consensus of the shares as a strong buy will be troubled with a trading update to come shortly.
The Footsie remains free from Trump’s proposed 30 per cent levies on the European Union
ROLLS-ROYCE
The ‘burning platform’ has long been extinguished, propelling Rolls-Royce to a group which is now firing on all cylinders.
Quite apart from its exposure to military defence products, which has lately come into sharp focus, the group’s Civil Aerospace unit – which accounts for half of group revenue – is paid on flying hours for its engines, which now exceed pre-pandemic levels when those payments unsurprisingly ground to a halt.
Amid a turnaround including optimisation and cost efficiencies, the potent combination of the group’s three units – Civil Aerospace, Defence and Power Systems, all of which are making significant strides – led to a headline set of full-year numbers in February which kept investors’ interest on high alert.
Pre-tax profit of £2.29 billion represented an increase of 82 per cent on the prior year, underpinned by growth of 16 per cent in revenues to £17.85 billion.
The accompanying outlook comments were no less ambitious, with underlying operating profit of between £2.7 billion and £2.9 billion expected this year, rising in the mid-term to a range of £3.6 billion to £3.9 billion.
Nor does the group see that as the end game, describing the new targets as a milestone rather than a destination.
Garry White, chief investment commentator at Charles Stanley, suggests…
ASTRAZENECA
AstraZeneca shares have been relatively weak in 2025 due to a combination of geopolitical, regulatory, and market-related factors, despite strong underlying financial performance.
These include Donald Trump’s recent threat to impose tariffs of up to 200 per cent on pharmaceuticals imported into the US.
The company has a rich pipeline, targeting $20 billion in peak sales, and this does not appear to be fully reflected in consensus expectations.
LONDON STOCK EXCHANGE GROUP (LSEG)
LSEG is a diversified business, which should support resilient earnings in a more volatile market and economic backdrop. Management is targeting improved margins this year.
Compared with its information services peer group, its valuation appears attractive given the potential for stronger near-term growth.
EXPERIAN
The credit checker’s recent update showed continued positive momentum, despite the soft lending backdrop.
After underperforming the FTSE All-Share Index over the past year, the solid update and management’s confidence in the full-year outcome leave some room for outperformance.
