Britain’s stock market has increased in value by a fifth over 2025 – its biggest annual gain since 2009 – in a strong year for shares around the world.
The FTSE 100 index of blue-chip stocks closed up 21.5% on New Year’s Eve compared with the start of January, beating Wall Street returns. The wider all-share market was 19.75% higher.
The precious metal producer Fresnillo was the top performer – its shares have soared by 450% in 2025, boosted by record prices for gold and silver. Its rival, Endeavour Mining, gained 170%. The telecommunications company Airtel Africa was the second-fastest riser, up 210%.
Defence company stocks also surged as Europe boosted its spending on weapons amid the Russia-Ukraine war and pressure from Donald Trump on Nato allies to spend more on defence.
Babcock International, the defence contractor which kits out the Royal Navy’s nuclear submarine fleet, jumped by almost 150% this year. Rolls-Royce, which supplies engines for fighter jets, turbines and propulsion systems for warships and power systems for the British army, doubled in value.
On Tuesday, the FTSE 100 hit a new intraday record high of 9,954 points, but fell short of breaking through the 10,000-point mark for the first time.
More than a fifth of the stocks on the FTSE 100 went down. The biggest fallers were the distribution company Bunzl and drinks maker Diageo. Both lost a third of their value.
World stocks rallied by 21%, their strongest year since 2019 and the sixth annual rise in the past seven years.
It was a turbulent year for global markets, however. In January, the launch of the Chinese chatbot DeepSeek wiped $1tn from US technology stocks in a “Sputnik moment” for the world’s AI superpowers.
The bigger shock came on 2 April, when Trump announced sweeping tariffs on trading partners. The ensuing market panic knocked 10% off the FTSE 100 by mid-April, but there was a recovery rally when the US president decided to pause the new levies.
Toward the end of the year, hopes for US interest rate cuts in 2026 pushed shares higher, with Trump signalling that he would appoint a new head of the Federal Reserve who would lower borrowing costs.
“Investors have been looking beyond the usual suspects for value and diversification as the US dollar came under pressure and the world continued to be beset with geopolitical turmoil and fears of an AI bubble,” said Danni Hewson, head of financial analysis at AJ Bell.
Despite the lingering fears of an AI bubble, Wall Street’s S&P 500 was on track to record a 17% rise for 2025, while the Nasdaq was about 21% up. Among tech stocks, Google’s parent company, Alphabet, has gained 65% in 2025 as its Gemini artificial intelligence product gained market share.
Meta, which owns Facebook, lagged behind with a 13% rise, while online retailer Amazon gained only 6%.
Anxiety over the US economy, and three interest rate cuts since September, pushed the US dollar down by 9% in 2025, its worst year since 2017. Wall Street analysts expect further losses over the next 12 months.
Fears of currency debasement drove a sharp rally in precious metals this year. Gold has gained 65%, its best showing since 1979, as investors sought out protection from inflation and geopolitical tensions.
The pan-European Stoxx 600 index recorded its best year since 2021, gaining almost 17%. Germany’s plans to boost government spending supported stocks, as did better-than-expected economic data.
“2025 has been a pivotal year for Europe,” said Anthi Tsouvali, multi-asset strategist at UBS Global Wealth Management’s chief investment office. “After a strong start driven by German fiscal stimulus and rising defence spending, markets faced headwinds from US tariffs and weak data. Yet sentiment is improving, and we’ve upgraded our outlook for European equities to ‘attractive’.”