FTSE 100 Reaches Record High Above 8,600

The FTSE 100 closed above 8,600 for the first time on 7 February 2026, surpassing its previous record set in May 2024. The index, which tracks the 100 largest companies listed on the London Stock Exchange by market capitalisation, has gained approximately 8% over the past 12 months.

What Drove the Rally

Several factors combined to push the FTSE 100 to new highs. The most significant has been the cycle of interest rate cuts from the Bank of England. Since August 2024, the MPC has cut Bank Rate from 5.25% to 3.75%, with markets expecting further reductions in 2026. Lower rates boost equity valuations by reducing the discount rate applied to future company earnings and by making bonds and savings accounts less attractive relative to shares.

A weaker pound has also been a tailwind for the FTSE 100. Because approximately 75% of FTSE 100 revenue comes from outside the UK — from multinational companies such as Shell, Unilever, AstraZeneca, and HSBC — a fall in sterling boosts reported earnings when overseas profits are converted back into pounds. Sterling fell from around $1.34 in mid-2025 to approximately $1.26 by early February 2026.

Sector Breakdown

The rally has not been uniform across all sectors. The main contributors to the index's gains include:

FTSE 100 vs FTSE 250

It is worth noting the contrast with the FTSE 250, which tracks mid-cap companies that are more domestically focused. The FTSE 250 has underperformed the FTSE 100 over the past year, reflecting the slower pace of UK economic growth. While the FTSE 100 benefits from global revenue streams and a weak pound, the FTSE 250 is more sensitive to domestic consumer spending, business investment, and UK-specific policy decisions.

Context for Investors

While a record high makes headlines, the FTSE 100 has historically been a relatively modest performer compared to US indices. The S&P 500, for example, has significantly outperformed the FTSE 100 over the past decade, driven by the dominance of large US technology companies. However, the FTSE 100 offers a higher dividend yield — currently around 3.6% — making it attractive for income-focused investors.

It is also important to note that the FTSE 100 is a price index. When dividends are reinvested (the total return), the long-term performance is substantially better. The FTSE 100 Total Return Index, which includes reinvested dividends, has significantly outpaced the headline price index over time.

For a broader view of UK economic indicators, visit the UK Economy Dashboard. To understand how different investment wrappers compare, see our Pension vs ISA guide or ISA Guide.