FTSE 100 Achieves Record Close as Geopolitical Tensions Drive Market Movements
The FTSE 100 index outperformed its European and American counterparts on Friday, closing at a historic high of 10,910.55, marking a gain of 63.85 points or 0.6%. This milestone capped off a record-breaking week for UK stocks, with the index reaching an intra-day peak of 10,934.94 earlier in the session. Year-to-date, the FTSE 100 has surged by an impressive 9.6%, signaling a potentially strong year for investors in British equities.
Market Performance and Analyst Insights
Russ Mould, investment director at AJ Bell, commented on the trend, stating, "Two months into 2026, it appears that this could be another bumper year for investors who place their faith in UK stocks, provided current performance trends persist." The FTSE 250 also saw modest gains, rising 38.15 points to 23,757.15, while the AIM All-Share index increased by 4.30 points to 819.53. Over the week, the FTSE 100 climbed 1.1%, with the FTSE 250 and AIM All-Share showing slight and moderate gains, respectively.
Global Context and Inflation Data
London's gains occurred against a backdrop of renewed losses on Wall Street, where investors grappled with stronger-than-expected wholesale inflation data and escalating tensions between the United States and Iran. The Dow Jones Industrial Average fell by 1.0%, the S&P 500 declined 0.6%, and the Nasdaq Composite dropped 0.9%. In the US, the Producer Price Index (PPI) rose 0.5% month-on-month in January, matching December's pace, while the annual growth rate eased slightly to 2.9%. Core PPI, excluding food and energy, accelerated to 0.8% monthly and 3.8% annually, exceeding forecasts.
Geopolitical Tensions and Commodity Impacts
Oil prices jumped significantly as Iran demanded that the US drop its "excessive demands" to reach a deal, dampening optimism from recent talks aimed at averting conflict. This followed threats from US President Donald Trump and a major military build-up in the region. Brent crude traded at $72.71 per barrel on Friday afternoon, up from $70.00 at the New York equity close. The surge in oil prices bolstered energy giants BP and Shell, which rose 0.7% and 1.6%, respectively. Conversely, geopolitical uncertainty lifted gold prices, benefiting miners like Fresnillo and Endeavour Mining.
However, airlines faced pressure from the rising oil prices and US-Iran worries. British Airways owner IAG fell 7.4% despite strong annual results, and easyJet declined 2.6%. Gold firmed to $5,235.52 per ounce, reflecting its safe-haven appeal.
Currency and Bond Market Movements
In currency markets, the pound weakened to $1.3458, while the euro strengthened to $1.1818. The dollar traded lower against the yen at 156.05. Bond yields saw slight narrowing, with the US 10-year Treasury yield at 3.98% and the 30-year at 4.64%.
Notable Stock Performances
London Stock Exchange Group led blue-chip risers with a 4.2% gain, as Bank of America alleviated fears of AI disruption to its business. Rightmove advanced 4.3% after announcing a higher-than-expected dividend and share buyback programme. In contrast, Melrose Industries plummeted 12% following its annual earnings, with analysts debating cash flow figures.
On the FTSE 250, Senior surged 20% after confirming receipt of cash bids, while Hays fell 9.6% amid declining earnings and leadership changes. Wizz Air nosedived 8.7% after a major shareholder sold a £125 million stake.
Top Gainers and Losers
The biggest risers on the FTSE 100 included Diageo, Rightmove, BT, London Stock Exchange Group, and Fresnillo. The largest fallers were Melrose Industries, IAG, Hikma Pharmaceuticals, Barclays, and Intercontinental Hotels Group.
Upcoming Economic and Corporate Events
Looking ahead, Monday's global economic calendar features manufacturing PMI reports and UK mortgage approvals data. Corporate results are expected from Bank of Ireland, Bunzl, and Smith & Nephew, contributing to ongoing market dynamics.
