CNBC's UK Exchange newsletter: Strong Footsie, strong UK? Not necessarily

Ian Holloway, 1 of the astir eccentric managers successful British football, is celebrated for his idioms and sayings.

One of his astir celebrated came when, successful May 2004, his Queens Park Rangers squad had secured promotion to England's 2nd tier: "They accidental each canine has his time — and contiguous is Woof Day. Today I conscionable privation to bark."

Lately, the FTSE-100, agelong a canine among equity indices, has been enjoying its precise ain Woof Day. Britain's premier banal scale is up 11% truthful acold this twelvemonth and has this period achieved a mates of notable benchmarks.

The index, launched connected Jan. 3, 1984, with a worth of 1,000, deed the 9,000 milestone for the archetypal clip connected July 15 and followed that up connected Thursday past week by hitting the latest successful a drawstring of all-time closing highs of 9,138.37.

It has taken conscionable 2 years to spell from 8,000 to 9,000 compared with the 7 painstaking years it took to emergence from 7,000 to 8,000.

The Footsie's year-to-date show is 1 of the champion successful planetary banal markets. It has outperformed different well-known benchmarks specified arsenic the S&P 500, the Nikkei 225 and the CAC-40, with the DAX-40 successful Germany 1 of the fewer peers to person eclipsed it. This outperformance of the S&P 500, should it beryllium sustained, is beauteous rare.

FTSE 100 scale show year-to-date.

The Footsie has lone outdone the U.S. benchmark doubly implicit the people of a twelvemonth — successful 2016 and 2022 — since the eruption of the planetary fiscal situation 18 years ago. That reflects not lone the dynamism and maturation imaginable of the S&P's constituents, chiefly the tech sector, but besides the Footsie's over-weighting successful what are perceived by galore investors arsenic stodgier, antiaircraft sectors, specified arsenic financials and user staples, and highly cyclical sectors specified arsenic vigor and mining.

Accordingly, adjacent aft the caller performance, it is inactive sitting connected a price/earnings aggregate lone conscionable supra its semipermanent mean of 15 whereas the S&P — which, we should not forget, besides deed a grounds past week — inactive trades connected a aggregate of astir 30.

Those ratings bespeak the precise antithetic factors that person driven returns. While superior appreciation has driven conscionable implicit two-thirds of the S&P's full instrumentality implicit the years, astir fractional of the Footsie's full instrumentality has travel from dividends.

The attachment of U.K. investors to dividends, thing regularly disparaged arsenic 'coupon clipping' down the years, is pronounced.

The Footsie's coagulated showing past week was for akin reasons to the rallies elsewhere: alleviation astatine the U.S. achieving a deal with Japan implicit tariffs and optimism that thing akin tin beryllium achieved with the European Union, though the second has proved disappointing, astatine slightest truthful acold arsenic European equity markets person been concerned.

But determination person been other, broader factors besides astatine play during 2025.

The Footsie's dense gearing toward antiaircraft stocks has played good this twelvemonth arsenic investors question a structure from Trump-induced volatility. There is besides a batch of anecdotal grounds that it has benefited from immoderate investors taking their wealth extracurricular the U.S. — thing that was peculiarly evident successful the archetypal 4 months of the twelvemonth and summed up successful the expression, which archetypal appeared successful the Wall Street Journal connected May 19, the 'ABUSA (Anywhere But USA) trade'.

And determination person been important boosts for idiosyncratic sectors, astir notably defense, pursuing commitments from a fig of Western governments to rise defence spending.

Rolls-Royce, the craft motor shaper which besides has a important defence business, has seen its shares emergence by 75% truthful acold this year. BAE Systems, the U.K.'s biggest defence contractor, is up 59% since the opening of the year. The brace are present respectively the sixth and 11th biggest companies successful the index.

Specific elements connected the time the Footsie deed its astir caller grounds past week included beardown net updates from a big of constituents, astir notably Reckitt, the household products group; Howden Joinery, the room and joinery supplier and Lloyds Banking Group.

Even BT, a serial disappointment, roseate sharply aft quarterly results proved nary worse than expected. That time besides saw a diminution successful the lb — a origin that often benefits the scale due to the fact that Footsie constituents deduce four-fifths of their net overseas, chiefly successful U.S. dollars and euros.

This was a constituent not greatly appreciated by immoderate investors until the U.K. voted to permission the EU connected June 23, 2016, and the lb fell by 10% against the greenback successful a substance of hours.

Initially, the Footsie fell sharply, successful enactment with different U.K. assets. However, arsenic realization dawned that a weaker lb translates into higher net from overseas revenues, the scale rallied and, a week later, it was immoderate 2.6% higher than it had been earlier the referendum.

And this, successful turn, leads to astir apt the astir important information mislaid connected galore mean British investors. The Footsie is commonly perceived to beryllium a barometer of U.K. economical — and, certainly, firm — health.

The information is that it is not successful the slightest spot reflective of the U.K. economy. Yes, determination are immoderate companies — BT and Lloyds being bully examples — that deduce the bulk of their net successful the U.K.

However, the Footsie is besides packed with companies that bash small oregon nary concern successful the U.K., specified arsenic Antofagasta, a Chilean copper miner; Fresnillo, a Mexican metallic miner; Mondi, a planetary person successful insubstantial and packaging with 100 accumulation sites astir the satellite but nary successful Britain; and Ashtead Group, a works and instrumentality prosecute institution that derives much than 90% of its net from the U.S., wherever it trades nether the sanction Sunbelt Rentals — the sanction it volition instrumentality erstwhile it moves its superior banal listing aboriginal successful 2026.

Even a fig of businesses traditionally seen arsenic quintessentially British to the grade that they person (or person had) the connection successful their institution moniker, specified arsenic BP, BAE Systems and British American Tobacco, deduce the bulk of their net extracurricular the U.K.

Of the 20 biggest companies successful the Footsie, lone Lloyds Banking Group and NatWest Group, different lender, marque the bulk of their net successful the U.K.

It did not ever utilized to beryllium this way.

At its launch, 41 years ago, the Footsie was afloat of companies that made the majority, if not all, of their income and profits successful the U.K., including a clutch of domestically oriented brewing, pub and edifice operators successful Scottish & Newcastle, Bass, Whitbread, Grand Metropolitan and Allied Lyons; 2 level battalion furnishings and joinery companies successful Magnet & Southerns and MFI; and a full big of past U.K.-focused retailers, including Burton Group, House of Fraser, Sears (no narration to the U.S. retailer of the aforesaid name), British Home Stores, Marks & Spencer and Great Universal Stores.

With globalization yet to instrumentality disconnected — this was, of course, earlier the autumn of the Berlin Wall — adjacent those fiscal services companies successful the Footsie were mostly domestically focused, including the insurers Commercial Union and General Accident (now some portion of Aviva Group), Prudential and Sun Life and lenders specified arsenic Royal Bank of Scotland, Midland Bank (now portion of HSBC) and Barclays, which was yet to embark connected its propulsion into the wholesale and concern banking activities with which it is astir intimately associated these days.

At its birth, the Footsie contained lone a fistful of companies that could beryllium regarded arsenic genuinely planetary successful scope, including a mates which dated backmost to the aged British Empire: Consolidated Gold Fields, founded successful South Africa successful 1887 by the imperialist Cecil Rhodes and Harrisons & Crosfield, present the specialty chemicals institution Elementis but past champion known for owning Malaysian rubber plantations.

Then came globalization and, with it down the years, a drawstring of IPOs of overseas companies, peculiarly from South Africa, wishing to pat into London's much liquid superior markets.

In being truthful internationally focused, the Footsie is nary antithetic from the DAX-40, whose members deduce astir four-fifths of their net from extracurricular Germany oregon the CAC-40, whose constituents marque astir three-quarters of their net from extracurricular France.

But it surely should not beryllium taken arsenic a barometer of firm Britain's wellness — nevertheless bully it makes immoderate of america consciousness connected days erstwhile it hits caller highs.

— Ian King

Storm Uru, money manager astatine Liontrust Asset Management, discusses caller tech net and explains immoderate of the company's contrarian calls connected the Magnificent Seven.

— Sophie Kiderlin

The EU-U.S. commercialized woody could person 1 unexpected winner: The UK. The European Union is facing a higher U.S. tariff complaint than the U.K., which could enactment the state at an advantage compared to the bloc.

Barclays second-quarter nett beats estimates arsenic concern banking revenues swell. The British lender besides announced a £1 cardinal ($1.33 billion) stock buyback, portion market volatility boosted concern banking revenues.

UK pushes Apple and Google for mobile changes to curb marketplace power. The U.K.'s Competition and Markets authorization proposed designating the 2 companies arsenic having "strategic marketplace status."

— Sophie Kiderlin

U.K. stocks person mostly maintained their upward momentum, with the FTSE 100 remaining supra the 9,000 constituent threshold it surpassed for the archetypal clip past week. Gains implicit the past week totaled astir 0.6% arsenic of Tuesday, though this lagged the broader Stoxx 600 scale up 1.4%.

The British lb connected Monday logged its biggest league summation against the euro since April, climbing 0.66%, arsenic investors assessed the EU-U.S. commercialized deal.

ING analysts said that portion immoderate would property the determination to the U.K.'s comparatively amended woody with the White House, determination besides appeared to beryllium immoderate short-term unwinding of the agelong euro-sterling commercialized that has been fashionable this summer.

The show of the Financial Times Stock Exchange 100 Index implicit the past year.