The FTSE 100's modest five per cent gain in the first half of 2026 has seen it narrowly miss eclipsing its record high, closing at 10,497.12 on 30 June. However, this performance pales in comparison to the remarkable gains made by its US counterparts, which have surged to fresh peaks.
The index's trajectory was affected by early-year optimism, which gave way to caution following the outbreak of war in Iran in February. Geopolitical instability and a resultant surge in oil prices ignited inflationary pressures, sending ripples through global markets and impacting the FTSE 100's growth. This marked a significant divergence from the US, where the S&P 500 advanced by 9.3 per cent to close at 7,499.3 points.
The tech-heavy Nasdaq Composite led this surge in the US, benefiting from intense investor interest in AI-related stocks and recording an impressive 12.8 per cent gain. This index notably recovered from early losses following the Iran conflict, jumping 15 per cent in April – its best monthly performance in five years – driven by strong earnings from chipmakers.
The FTSE 100's lack of a substantial technology sector hindered its ability to capitalise on the AI-driven rally. Instead, the index's performance was bolstered by major mining stocks, which benefited from improved global sentiment following a peace deal between the US and Iran. Deal-making activity also contributed to the index's uplift, with prominent companies such as Schroders, Beazley, Segro, Intertek, and DCC involved in transactions valued at approximately £150 billion.
However, analysts noted that these takeovers often represented international buyers perceiving UK firms as undervalued rather than a resounding vote of confidence in the broader London market. Dan Coatsworth, head of markets at AJ Bell, commented on the prevalence of bids, stating that the UK market was effectively "on sale." Domestically focused sectors within the UK economy, particularly housebuilders, faced significant headwinds due to persistently high mortgage costs sparked by inflation. The mid-cap FTSE 250 also saw gains, rising 3.1 per cent to 23,013.4 points.