FTSE 100 Records Strongest Year Since 2009 with Significant Sector Gains and Corporate Actions in 2025
The FTSE 100 index rose by 21.5% in 2025, marking its best 12-month performance since 2009. Although it neared the 10,000 level, it did not reach this milestone.
The gains were largely driven by strength in the defence, mining, and energy-related sectors, supported by widespread share buybacks. The index reflects overseas revenues of its constituents, which account for about three-quarters of the total.
Rolls-Royce notably benefited from NATO spending, with its shares rising to above £11 from under £1 in 2022. Fresnillo, a Mexico-based silver miner, was the top performer on the index, increasing almost fivefold. AstraZeneca shares rose about 30%, and banks experienced gains supported by low defaults and falling rates. National Grid and SSE benefited from regulatory funding for transmission upgrades.
Corporate buybacks were significant, with 55% of large UK companies repurchasing at least 1% of their shares in the past 12 months, compared to 40% in the US. Over the past three years, the average annual return including dividends has been about 14% per year, totaling a cumulative 48%.
Several notable corporate restructurings occurred: Unilever demerged Magnum in 2025; GSK split off Haleon in 2022; Smiths Group is pursuing a breakup; BP is pivoting away from renewables; and the Anglo American-Teck Resources merger was valued at about $50 billion. Additionally, Associated British Foods is considering spinning off Primark.
The market currently appears cheap and cash-rich, with less emphasis on AI and technology sectors. Ownership patterns also shifted, with US funds now holding a larger share of the FTSE 100 than UK investors.
