The surge, which takes the FTSE 100’s gains for 2025 to over 10%, is being hailed as a significant achievement that is helping the UK market shake its long-held “unloved” reputation.

Analysts attribute the milestone to a confluence of factors, both domestic and international. The index’s composition, once a brake on its progress, is now providing a tailwind. John Moore, wealth manager at RBC Brewin Dolphin, points to “strong earnings momentum in the banking and defence sectors”, supported by consumer giants like Next and Tesco. This has been bolstered by a wave of corporate “self-help” measures, with companies such as Oxford Instruments and Hiscox refining their portfolios and launching share buyback programmes.

Globally, the London market has benefited as some investors diversify away from US shares due to concerns over Donald Trump’s economic policies. A weaker dollar has also made UK earnings more competitive. Mr Moore explained: “If UK earnings grow by, say, 7-8%, but the pound moves 2-4% relative to the dollar, then you can meet or exceed what you might reasonably expect from the US market with the added benefit of sectoral and stylistic diversification in your investments.

“At the same time, the UK still offers robust income and optionality. That may have been out of favour in recent years, but the cash flow can be helpful in terms of managing a portfolio and providing a form of income beyond cash yields and bonds. And, while resource companies – which often produce a reasonable level of income – haven’t been working out recently, that could turn and provide some cyclical upside along with some indirect exposure to China.”

He added: “Finally, the UK offers relative political stability compared to other parts of the world at present.

“While there may be tax increases to come, which was part of the reason for the sell-off of the pound in early June, the government has a clear mandate and tenure for the next few years. That compares favourably to other parts of Europe, even, where coalition governments are having a tough time.”