UPDATE: The FTSE 100 has just hit 10,000 points for the first time in history on January 2, 2026, reflecting a significant recovery from its pandemic low of nearly 5,000 points. This milestone raises urgent questions about the index’s sustainability in the coming year amid ongoing market volatility.
Analysts are buzzing with predictions following this breakthrough. A recent aggregation of forecasts from firms like JP Morgan suggests that the index could climb to between 10,500 and 10,700 points by year-end. Given the FTSE 100’s historical compound annual growth rate of 3.6% over the past 25 years, this projection is both ambitious and plausible.
However, the question remains: will the FTSE 100 maintain this level? The market’s current atmosphere is fraught with challenges, including heightened speculation around artificial intelligence (AI) and a concentration of wealth among the top companies in the sector. Today, the top ten S&P 500 companies, including Nvidia, Apple, and Alphabet, account for an astonishing 45% of its market value, echoing the conditions leading up to the dotcom crash.
The City of London Investment Trust (LSE: CTY), a fund invested in the UK’s leading stocks, serves as a telling example. Known for its consistent dividend growth, the trust has increased payouts for 59 consecutive years. Its current 4.3% yield and attractive price-to-earnings (P/E) ratio of 7.6 make it a compelling option for income and value investors alike.
Yet, historical performance illustrates the potential pitfalls. Between 1996 and 1998, the trust’s share price nearly doubled, but it took nearly a decade to surpass the 300p mark. Today’s investors need to be cautious; if AI speculation leads to another market crash, the FTSE 100 could struggle to hold above 10,000 points.
Interestingly, many of the FTSE 100’s top companies, such as Unilever, AstraZeneca, and British American Tobacco, generate nearly 45% of their revenues from the US. Should the US market face turbulence, the consequences could ripple through the UK index.
Fortunately, the FTSE 100 is not without its defensive stocks. Companies like Tesco, National Grid, and GSK could provide stability amid market fluctuations. Investors looking to mitigate risk in a downturn should closely monitor these companies.
As market dynamics continue to evolve, all eyes are on the FTSE 100. With the index’s recent surge, the focus now shifts to whether it can maintain its momentum or if external pressures will cause a retreat. Investors and analysts alike will be watching closely as 2026 unfolds.
What’s Next? As we look ahead, the sustainability of the FTSE 100 at this new level will depend on a variety of factors, including global market conditions and investor sentiment. The coming months will be crucial in determining whether the index can solidify its position above 10,000 points.
