UK stocks outperformed Wall Street this year
London’s FTSE 100 returned more than all three major Wall Street averages this year.
TL;DR
- The FTSE 100 index has gained over 21.1% in 2025, surpassing the Nasdaq Composite's 20.7% and the S&P 500's 16.2%.
- The FTSE 100 set a record high of 9,930.09 points on November 12.
- Factors driving the FTSE 100's performance include rising corporate profits, shareholder returns, M&A activity, and falling interest rates.
- Analysts forecast 14% profit growth for the FTSE in 2026, with potential for further boosts from dividend growth and share buybacks.
- The U.K. market is considered attractively valued and offers exposure to global growth, inflation, cyclicals, commodities, and financials.
- Some analysts suggest that investor caution towards other markets has also benefited the U.K. market.
- Concerns about growth, taxes, and politics in the U.K. are noted, and some analysts do not recommend overweighting U.K. assets due to a lack of clear growth acceleration.
- The Bank of England's interest rate cut on December 18 has led to positive movement in homebuilder and financial services stocks.
- Mislav Matejka of JP Morgan suggests the FTSE 100 might rise 5% to 10% next year but doesn't see a compelling angle for significant outperformance.