Britain’s benchmark stock index surged to unprecedented heights on Wednesday, climbing above 10,650 for the first time in its history.
The Ftse 100 advanced 1.1 per cent to reach 10,670 during morning trading, propelled by encouraging inflation figures released earlier in the day.
Defence giant BAE Systems proved the standout performer, with shares jumping 3.6 per cent on the session.
Mining companies and banking stocks also contributed meaningfully to the rally.
The domestically-oriented Ftse 250 simultaneously reached its highest level in four years, reflecting broader optimism across British equities.
The softer inflation reading has bolstered expectations that the Bank of England will reduce borrowing costs at its March policy meeting.
Cooling price growth boosts expectations for Bank of England rate cuts as defence and mining stocks drive rally
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Many economists now anticipate rates falling to 3.5 per cent next month, with the possibility of two further cuts bringing them down to three per cent by year’s end.
Supporting the case for monetary easing is the labour market’s deterioration.
Unemployment has climbed to 5.2 per cent, representing the highest level in a decade outside the pandemic period.
ING economist James Smith characterised the inflation data as “a bit of a mixed bag,” observing that food price increases have moderated sharply whilst services inflation remains more persistent.
The Bank are expected to reduce the interest rate
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Smith noted that “the real action will come in April” when updated figures could make policymakers “more comfortable with the inflation outlook.”
British equities have dramatically outpaced their American counterparts this year, with the Ftse 100 gaining more than seven per cent whilst the S&P 500 has slipped 0.5 per cent.
This marks a continuation of the trend established in 2025.
Investors are increasingly treating UK blue-chip companies as a haven from the turbulence surrounding artificial intelligence.
Many market participants have grown wary of technology and software stocks, placing them in what the late Charlie Munger termed the “too hard” bucket.
The Ftse 100, by contrast, comprises businesses largely insulated from AI disruption.
Companies such as Glencore, GSK and National Grid cannot simply be replicated through new technology, and their shares have each risen more than 20 per cent this year.
Tesco has surged 20 per cent in under a month alone.
BAE Systems announced an increased dividend following a year of record defence orders, buoyed by heightened military expenditure across Europe and the United States.
The Ftse continued to surge today
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The company recommended a final dividend of 22.8 pence, lifting the total annual payout to 36.3 pence, a 10 per cent rise on the previous year.
Additionally, the firm repurchased 30 million shares at a cost of £502million during the period.
Glencore delivered a more mixed performance, with full-year earnings declining despite copper prices reaching historic highs.
The mining giant’s adjusted Ebitda fell six per cent to $13.5billion as weakening coal profits offset gains elsewhere.
Revenue nonetheless increased seven per cent year-on-year to $247.5billion, though adjusted Ebit dropped 14 per cent to $6billion.