The FTSE 100 had a spring in its step on Friday as UK economic data offered a rare opportunity to be optimistic about the domestic economy, boosting sentiment.
Despite FTSE 100 companies earning most of their revenue overseas, an improved mood helped London’s leading index higher to 10,689. This would be a fresh record closing high if maintained. Intraday record highs sit at 10,715.
Chancellor Rachel Reeves will breathe a sigh of relief that at least one of her policies has resulted in a positive outcome – her action on tax has led to the largest government surplus on record. A more direct impact on company earnings came from better-than-expected UK retail sales, which will go a long way toward pacifying the doomsayers.
“For context, the UK government almost always runs a budget surplus in January, but this year’s £30.4bn was the largest on record, well ahead of market expectations and more than double the prior year’s level of £14.5bn,” explained Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“The 1.8% month-on-month uplift in retail sales volumes was also well ahead of forecasts for 0.2% growth, driven by gains across all major categories except department stores. That leaves sales volumes at their highest level since August 2022. But with employment growth flagging and wage growth slowing, households likely won’t be able to maintain this level of spending for long.”
85 of the FTSE 100 constituents were higher at the time of writing, reflecting the broad uptick in sentiment.
Diageo and Burberry were the two top risers, up between 2% and 3%, as the impact of better retail sales appeared to lift the sector, although the pair generates a lot of its cash overseas.
Other consumer-facing stocks were higher, with Games Workshop adding 1.5% and JD Sports rising 1%.
The upbeat economic data filtered into the market’s favourite FTSE 100 proxies for the UK economy, the housebuilders. Barratt Redrow gained 1.4%, and Berkeley Group rose 1.3%.
Anglo American was the standout corporate story of the day, as its 2025 results wrapped up a busy week for mining stocks. Anglo American EBITDA rose to $6.3 billion from $6.3 billion, but it’s hard not to think they could have done better.
“What is likely to be the last set of full-year numbers before Anglo American becomes Anglo Teck – barring a last-minute regulatory hitch – revealed a key reason why the deal is being pursued,” said AJ Bell investment director Russ Mould.
“There is a scramble for copper in the sector to rival the clamour among pre-teens for Labubu dolls last year. The metal’s crucial role in the rollout of AI data centres, electric vehicles and renewable energy infrastructure and kit is driving prices to new record highs.
“While profit from Anglo’s copper operations was up, production was down 10%. This underlines why a tie-up with Teck might be needed to build out scale in production of the metal.”