Strong FTSE, strong UK? Not necessarily: CNBC’s UK Exchange newsletter

This report from the newsletter for this week from CNBC for exchange by Ian King. Like what you see? You can subscribe here.

Recently, FTSE-100Long a dog between the stock indicators, had his own day. The leading stock index in Britain has increased by 11 % so far this year and this month has achieved some prominent standards.

The index, which was launched on January 3, 1984, achieved 1000, 9000 milestones for the first time on July 15, and this was followed on Thursday last week by hitting a newer in a series of closure levels ever from 9138.37.

It took only two years to move from 8000 to 9000 compared to the seven strenuous years that rise from 7000 to 8000.

Footsie’s general performance is one of the best in global stock markets. It surpassed other known standards such as S&P 500, Nikkei 225 and CAC-40, with Dax-40 in Germany and one of their few peers who dismantled it. This superior performance on the S&P 500, if continuing, is rare.

Footsie outperformed American measurement only twice throughout the year – in 2016 and 2022 – since the global financial crisis eruption 18 years ago. This not only reflects the dynamic and growth capabilities of the S&P components, especially the technology sector, but also on the weight gain in Fotsi in what many investors imagine as more amazing sectors and defense, such as financial statements and basic materials for consumers, and the two academic sectors such as energy and mining.

Accordingly, even after the last performance, it still sits on the price/profit of only complications higher than its average in the long run only while the S&P-which, should not be forgotten, remains a record last week-is still trading on a double of approximately 30.

These classifications reflect the various factors that have paid returns. While the capital estimate has paid slightly more than two -thirds of the total S&P revenue over the years, nearly half of the total return of Footsie has come from stock profits.

The association of investors in the UK with profit distributions, which applies regularly as “cutting a voucher” over the years, is pronounced.

The Fotsi steel show was last week for similar reasons for gatherings elsewhere: relief in the United States to achieve a deal With Japan’s tariff and optimism that there is something similar that can be achieved with the European Union, although the latter has Fear disappointmentAt least for European stock markets.

But there were other wider factors in playing during 2025.

The heavy gears in Fotsi played well towards defensive stocks this year as investors seek a shelter of fluctuations from Trump. There is also a lot of anecdotal evidence that it benefited from some investors who take their money outside the United States – which was especially clear in the first four months of the year and summarized in the expression, which first appeared in the Wall Street Journal on May 19, “Abusa”Anywhere but the United States) commerce’.

There were important reinforcements for individual sectors, most notably the defense, after the obligations from a number of Western governments to raise defense spending.

Rolls RoyceThe aircraft engines manufacturer, which also has major defense works, has witnessed its 75 % increase so far this year. BAE systemsThe largest defensive contractor in the UK has increased by 59 % since the beginning of the year. The couple is now in a row, respectively, the largest companies in the sixth and 11 index.

Specific elements included the day that Fuzi achieved its last record last week strong profits from a set of components, most notably ReckittHome products collection; Howden CarpentryAnd the supplier of the kitchen and carpentry and Lloyds Banking Group.

Even BT, a serial disappointment, rose sharply after the quarterly results have proven worse than expected. That day also witnessed a decrease in the pound-a factor that often benefits the index because the ingredients of the foot derives four of their profits abroad, especially in the US dollar and the euro.

This was a point that was not very appreciated by some investors until the UK voted to leave the European Union on June 23, 2016, and the pound fell by 10 % against Greenback within hours.

Initially, Fotsi decreased sharply, in line with other UK origins. However, with dawn aware that the weakest pound translates into higher profits of outpatient revenue, the index rose, and after a week, it was 2.6 % higher than it was before the referendum.

This, in turn, leads to the most important fact that has lost many ordinary British investors. Fotsi is usually seen as a measure of economic health in the UK – and certainly companies -.

However, Footsie is full of companies that do small or non -existent in the United Kingdom, such as AntofagastaCheving Copper mine worker; FreissiloMexican silver mine worker; MondiA global pioneer in paper, packaging and packaging with 100 production sites around the world, but nothing in Britain; and Ashtead collectionFactory and rental company company that derives more than 90 % of its profits from the United States, where it is traded under the name Sunbelt Rentals – the name that it will take when it transmits the basic stock list early in 2026.

Even a number of companies traditionally seen as a British are perfect to the extent that they (or have) have the word in the company’s title, like BPAnd BaE Systems and British American tobaccoThe majority of their profits are derived from outside the United Kingdom

Among the 20 largest companies in Fuzi, only Lloyds Banking Group Natwist GroupAnother lender, make the majority of their profits in the United Kingdom

It was not always this way.

In its launch, 41 years ago, Footsie was full of companies that made the majority, if not all, of its sales and profits in the United Kingdom, including a set of fermentation, pub and hotels in Scottish and Newcastle, Bass, Whitbread, Grand Metropolitan and Allied Lyons; Two Furniture and Carpentry Company in Magnet & Southerns and MFI; A complete group of retailers focused on the UK at the time, including Burton Group, House of Fraser and Sears (has nothing to do with the United States’ retail of the same name), Home British, Marks & Spencer and Great Universal Stores.

With globalization that has not yet been taken – this was, of course, before the fall of the Berlin Wall – even the financial services companies in Fotsi were largely focused locally, including the Commercial Insurance Companies Union and a general accident (now part of the Aviva Group), PRUDENTial, Sun Life and Linders like Royal Bank of Scotland, and Midland Bank (now part part From HSBC). Which is closely related to these days.

Upon birth, Footsie contained a handful of companies that can be truly considered international, including the couple who return to the ancient British Empire: the unified gold fields, which were founded in South Africa in 1887 by the imperialism Cecil Rhodes and Harrisons & Crosfield, which is now a dedicated chemical company, but it was known after that funded. Maliber.

Then, globalization, and with it in the years, came a series of general subscriptions for foreign companies, especially from South Africa, and wants to benefit from liquid capital markets in London.

In its international concentration, Footsie is not different from Dax-40, whose members derive about four fifths of their profits from outside Germany or CAC-40, whose components make about three quarters of their profits from outside France.

But it is certain that it should not be considered a measure of the health of Britain companies – no matter how good, it makes some of us feel days when it strikes new levels.

Ian King

The European Union’s commercial deal can have one unexpected winner: UK. The European Union faces a higher American tariff rate than the United Kingdom, which can place the country In the advantage Compared to the mass.

Barclays in the second quarter of profit beats estimates with flatulence of investment banking revenue. The British lender has also announced a billion pounds of a billion pounds ($ 1.33 billion), while Market fluctuations have strengthened investment banking services revenues.

The UK pushes Apple and Google for portable changes to energy curbing on the market. the The proposal of the competition and markets authority in the United Kingdom The two companies are appointed as “strategic market mode”.

– Sophie Kiderlin

UK’s shares have mainly maintained their upward momentum, with FTSE 100 It remains over the threshold of 9000 points exceeding the first time last week. The total gains during the past week reached about 0.6 % as of Tuesday, although this is behind the wider Stoxx 600 An index reaches 1.4 %.

On Monday, the British pound recorded the largest gain for the session against the euro since April, as it increased by 0.66 %, as investors evaluated the commercial deal of the European Union.

Analysts said that although some will attribute the transition to the UK deal relatively better with the White House, there is also some relaxation in the short term for long trade in the euro that was common this summer.