The FTSE 100 index has climbed above 10,000 points for the first time, passing a significant stock market milestone, on the first trading day of the year.

Shares included in the index performed strongly in 2025, leaving the benchmark more than 21% higher than a year ago, when it stood at just over 8,260.

Rising share prices are good news for investors, including anyone with a pension or other savings that are invested in the stock market.

But the London index is dominated by large international companies, so is not a direct reflection of the UK economy's performance.

The FTSE 100 tracks the performance of the the 100 largest companies on the London Stock Exchange. That includes mining firms Antofagasta, Rio Tinto and Peers Endeavour which have been boosted by surging metals prices.

Defence firms also performed strongly, with Bae Systems, Babcock and Rolls-Royce all saw their value increase, as did large banks, including Lloyds, Barclays, Standard Chartered and HSBC.

Dan Coatsworth, head of markets at AJ Bell, said crossing the 10,000-point was a "historic moment" and a New Year's gift for the chancellor, Rachel Reeves, who has been calling for more people to invest in the share market.

"She has been banging the drum about the merits of investing over parking cash in the bank.

"The FTSE 100's achievements just go to show what's possible when buying UK shares," he said.

The FTSE 100's had outperformed US's S&P index in 2025, he added.

While some London-quoted companies were sometimes considered "old and boring" its mix of industries, including mining and banking, appealed to investors seeking stability during uncertain times, he said.

"Investors often seek solace in companies whose goods and services should be in demand no matter what's happening in the world.

"For example, we all need to pay insurance or water bills, or those in the habit are still likely to buy cigarettes or vapes, and the FTSE 100 has plenty of companies playing on these themes on offer."