Rate cut expectations and boost mineral stocks are expected to push the UK's FTSE 100 index to its strongest annual performance in 16 years.

On Thursday, in the final few trading days of 2025, the UK's FTSE 100 index hovered near record highs, poised to record its strongest annual gain in 16 years within a shortened trading session. As of the time of writing, the UK's FTSE 100 index was essentially flat, closing at record levels the previous day. The FTSE 250 index of mid-cap stocks, focused on the domestic market, fell by 0.3%. With markets expecting an early closure at 12:30 on December 31st before the New Year holiday, trading activity was relatively subdued. After years of lackluster performance, the UK's blue-chip FTSE 100 index is poised to outperform major global markets in 2025. Driving factors include expectations of further interest rate cuts by the Bank of England, strong performance in the financial and mining sectors, and the attractiveness of the index as a relatively cheap diversified investment tool during global volatility. The index has risen by over 21% for the year, poised to achieve annual gains for the fifth consecutive year and deliver its strongest annual performance since 2009. In comparison, the pan-European STOXX 600 index rose by 16.6% and the US S&P 500 index climbed by 17.2%. In early December, the Bank of England cut interest rates by 25 basis points for the fourth time in the year in a finely balanced vote, while hinting at a potential further slowdown in the already gradual easing pace. The FTSE 100 index, with a significant weighting in resource stocks, received support from miners Fresnillo, Endeavour Mining, and Antofagasta. These companies benefited from the surge in gold, silver, and copper prices this year. In contrast, Bunzl and Diageo both plunged by around 37%, making the commercial supplies distributor and the world's largest spirits producer among the worst-performing constituents of the index.