You've probably heard newsreaders mention it right before the weather. Or maybe you've seen those red and green numbers scrolling across a screen at the bottom of a financial news channel. It's the "Footsie." Formally known as the Financial Times Stock Exchange 100 Index.
But what is the FTSE 100, exactly?
Honestly, it's just a list. A list of the 100 largest companies sitting on the London Stock Exchange (LSE) by market value. Think of it like a "Who's Who" of corporate Britain, though ironically, many of these companies barely do any business in the UK.
The 10,000 Point Breakthrough: Why It’s Not Just a Number
In early January 2026, something happened that traders have been waiting decades for. The FTSE 100 finally smashed through the 10,000-point barrier.
On January 5, 2026, the index closed at a historic 10,004.57. By mid-January, it even flirted with an intraday high of 10,257.75.
Why does this matter? Well, for years, the UK market was kinda the "forgotten middle child" of global finance. While the US tech giants were flying, London felt a bit... stagnant. Old school.
Hitting five figures is a massive psychological shift. It took only 171 days to jump from 9,000 to 10,000—the fastest 1,000-point leap in the index's history. This isn't just a spreadsheet error; it’s a sign that global investors are finally looking at British assets again, especially after a stellar 2025 where the index returned over 21%.
How the "Footsie" Actually Works
The FTSE 100 is a market-capitalization-weighted index.
Basically, the bigger the company, the more it moves the needle. If AstraZeneca (the current heavyweight champion of the index) has a bad day, the whole index feels it. If a smaller company at the bottom of the list—say, one of the housebuilders like Barratt Redrow—has a nightmare, the index barely shrugs.
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The Calculation Logic
The index started on January 3, 1984, with a base level of 1,000.
It’s calculated using a "free-float" method. This means they only look at shares that are actually available for the public to trade. They don't count shares held by governments or company founders that aren't for sale.
$I_t = \frac{\sum (P_{i,t} \times Q_{i,t})}{\text{Divisor}}$
The "Divisor" is a magic number they use to make sure things like company mergers or share splits don't mess up the index value. Without it, the number would jump around for no reason, and everyone would be very confused.
Who Are the Big Players?
When people ask what is the FTSE 100, they often expect a list of very British companies.
You’ll find Tesco, Next, and Marks & Spencer in there. But the real power resides in the global giants. As of early 2026, the "big three" sectors—Financials, Energy, and Health Care—make up over half of the entire index's value.
- AstraZeneca: Currently the most valuable company on the index.
- HSBC: A banking titan that does way more business in Hong Kong than London.
- Shell and BP: The oil and gas majors that keep the index sensitive to global energy prices.
- Rolls-Royce: The 2024 and 2025 comeback kid, recently trading at record highs near 1,200p.
- Airtel Africa: A surprising top performer that has seen its price skyrocket recently.
The Great Misconception: The FTSE 100 is NOT the UK Economy
This is where people get tripped up.
If the FTSE 100 hits a record high, does it mean the British high street is booming? Not necessarily. In fact, roughly 80% of the revenue earned by FTSE 100 companies comes from overseas.
When the British Pound gets weaker, the FTSE 100 often goes up. Why? Because those global companies sell things in Dollars or Euros, and when they bring that money home, it’s worth more in Sterling.
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If you want to know how the "actual" UK economy is doing—the builders, the local shops, the mid-sized tech firms—you should probably look at the FTSE 250. That’s the next 250 companies on the list, and they are much more "domestic."
Why Investors Love (and Hate) It
The FTSE 100 is basically the "Value Menu" of the investing world.
It's famous for dividends. While US companies like Amazon or Alphabet often reinvest every penny back into growth, FTSE 100 companies like British American Tobacco or Rio Tinto are more likely to cut you a check. For 2026, analysts expect a record £85.6 billion in total dividend payments.
However, the "hate" part comes from its lack of tech.
If you're looking for the next AI revolution, you won't find much of it here. Information Technology makes up less than 1% of the index. It’s heavy on "old economy" stuff: banks, miners, and oil.
How to Get Involved
You don't need to buy shares in all 100 companies. That would be a paperwork nightmare.
Most people use an Exchange-Traded Fund (ETF) or a tracker fund. These are cheap, automated tools that mirror the index.
- Vanguard FTSE 100 UCITS ETF (VUKG)
- iShares Core FTSE 100 (ISF)
- HSBC FTSE 100 Index Fund
These funds just buy a slice of everything in the index for you. If the index goes up 1%, your investment goes up roughly 1% (minus a tiny fee).
The 2026 Outlook: What’s Next?
Analysts at AJ Bell have forecast that the FTSE 100 could hit 10,750 by the end of 2026.
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The "twin pillars" of this growth are resilient corporate earnings and a Bank of England that is slowly starting to ease interest rates. Plus, there’s the "valuation gap." Even at 10,000 points, UK stocks are still trading at a massive discount compared to the S&P 500 in the US.
Whether it stays above 10,000 depends on global stability. Because the index is so international, a trade war in Asia or a spike in oil prices in the Middle East will hit the London market just as hard as a change in UK tax policy.
Actionable Steps for Your Portfolio
If you're looking to act on this, don't just jump in because of the 10,000-point hype.
Check your exposure. If you already own a global index fund, you likely already have a piece of these companies. If you’re looking for income, the FTSE 100’s 3.4% forward dividend yield is hard to beat in the current climate.
Start by looking at the sector weightings. If you’re already heavy on banks and oil in other investments, adding a FTSE 100 tracker might make your portfolio a bit lopsided. Diversification is still the only "free lunch" in finance.
Keep an eye on the quarterly reviews. Every three months, the "relegation zone" gets active. Companies that have shrunk get kicked out to the FTSE 250, and rising stars from below get promoted. It’s basically the Premier League for billionaires, and the next reshuffle is always just around the corner.
Next Steps for Investors:
Review your current brokerage account to see if you have a "Home Bias." Many UK investors hold too much of the FTSE 100 and miss out on global growth. Conversely, if you've been 100% in US Tech, the 2026 rotation toward "value" and dividends in the UK might be a useful hedge for your retirement pot. Compare the expense ratios of the top three FTSE 100 trackers—0.07% vs 0.1% might not seem like much, but over 20 years, it's a holiday in the Maldives.