Here’s why the FTSE 100 Index jumped by ~22% in 2025

The FTSE 100 Index jumped by nearly 22% this year, confirming a strong bull run that started in March 2020 when it crashed to a low of £4,892.

Its surge to a record high happened even as the UK faced major challenges of higher tariffs from the United States, higher taxes and inflation, and slow economic growth. 

FTSE 100 Index rally boosted by higher commodity prices 

One main reason why the blue-chip FTSE 100 Index jumped by over 20% was the strong performance of top commodities during the year.

The top gainers in the index were in the commodity sector. Fresnillo’s stock price jumped by 446% this year as gold and silver jumped to their record highs. The Mexican company is one of the biggest players in the silver market globally.

Endeavour Mining stock rose by 170% as it benefited from the elevated gold prices. The company, which operates large gold mines in Africa, continued doing well as its mining production coincided with the rising prices.

Meanwhile, Antofagasta’s share price jumped by 106% this year as copper experienced its best performance in years. Antofagasta is one of the biggest players in the copper mining business, delivering over $6.6 billion in annual revenue last year.

Other mining companies like Rio Tinto, Glencore, and Anglo American were also in the green during the year. RIO rose by 26%, while the other two jumped by 15% and 12.8%, respectively. Anglo American made headlines when it announced that it would acquire Canada’s Teck Resources.

READ MORE: Here’s why this FTSE 100 Index stock jumped ~380% in 2025

UK banks contributed to the FTSE 100 surge 

Meanwhile, UK banking companies were also among the best performers during the year, a performance that mirrored that of other European banks like Unicredit, Société Générale, and Banco Santander.

Standard Chartered stock jumped by 85%, while Lloyds, Barclays, NatWest, and HSBC rose by 80%, 79%, 63%, and 51%, respectively.

UK banks continued rising as they benefited from the relatively higher inflation rate, which pushed the Bank of England to maintain higher interest rates for longer.

Banks benefit from higher interest rates because they normally lead to higher net interest margin. Additionally, the companies benefited from the strong earnings growth during the year, helped by their cost cuts during the low-interest rate era.

Most recently, the companies did well after Rachel Reeves announced her budget in which she avoided implementing windfall taxes as some analysts and think tanks had proposed.

In addition to UK banks, other companies in the financial services industry were among the top gainers during the year. Prudential, an emerging market-focused insurance company, rose by 81%. St. James Place stock rose by 60%, while Aviva, M&G, and Phoenix Group rose by over 50%.

Defense contractors jumped amid resilient spending 

Babcock International’s stock price rose by 147%, while Rolls-Royce jumped by 102%, making some of the best-performing companies in the FTSE 100 Index. BAE Systems, another top company in the index, rose by 50%.

These manufacturing giants benefited as demand for their products rose, essentially in Europe. The UK and other countries like Germany and Spain have all boosted their spending in the past few years amid signs that the US was pulling back.

Rolls-Royce share price rose as the management boosted the forward guidance amid strong demand from its airline companies. Also, it benefited from the Small Modular Reactor (SMR) business, which is expected to continue growing over time.

On the other hand, the top laggards in the index were companies like Bunzl, Diageo, Auto Trader Group, Mondial, and London Stock Exchange Group. All these companies dropped by over 20% this year.

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