The FTSE 100 has done something many investors thought might never happen: traded comfortably above 10,000 points. That milestone was crossed for the first time in the index’s history at the start of 2026, according to Yahoo Finance and Morningstar UK, and has since held. Trading Economics data showed the benchmark closing at around 10,297 on 13 May 2026 with subsequent sessions trading higher.

So what is driving the rally? The short answer is: several things at once. Strong dividends, a constructive macro backdrop, sector rotation, a weaker pound for parts of the year and a structural Revaluation of UK blue chips have all played a role. This article looks at the drivers in detail and what they could mean for the next leg of London’s recovery.

Key takeaways

  • The FTSE 100 broke 10,000 points for the first time in early 2026 (Yahoo Finance, Morningstar UK).
  • Mining shares — including Antofagasta, Anglo American, Rio Tinto and Glencore — have been among the strongest performers, per Hargreaves Lansdown’s daily risers data.
  • UK banks rebounded in mid-May 2026 after political tax speculation eased (Yahoo Finance).
  • FTSE 100 Ordinary Dividends forecast at about £88bn in 2026 (AJ Bell).
  • HSBC alone is projected at around £10.7bn in dividends (AJ Bell).
  • The rally is real but not without risk: Commodity cycles, fiscal politics and sterling moves can unwind gains.

Stocks mentioned in this article

HSBC (HSBA), Shell (SHEL), BP (BP.), Rio Tinto (RIO), Glencore (GLEN), Anglo American (AAL), Antofagasta (ANTO), AstraZeneca (AZN), GSK (GSK), Rolls-Royce (RR.), BAE Systems (BA.), Barclays (BARC), Lloyds (LLOY), NatWest (NWG), Standard Chartered (STAN), Unilever (ULVR), Diageo (DGE), Tesco (TSCO), Legal & General (LGEN), Aviva (AV.), RELX (REL), LSEG, National Grid (NG.).

Driver one: a structural rerating of UK blue chips

For years, the FTSE 100 traded at a discount to global peers — partly because of sector mix (heavy in energy, banks and miners), partly because of post-Brexit caution. In 2026, that discount narrowed. Several global investors moved overweight UK equities, citing relative value and strong cash returns. According to commentary cited in major financial media, this rotation has been incremental rather than dramatic, but persistent.

LSEG and FTSE Russell data show that roughly three-quarters of FTSE 100 Revenue is generated outside the UK. That makes the index a play on the global economy as much as on Britain itself, helping explain why a London index could rally even amid mixed UK macro headlines.

Driver two: mining strength

Mining shares have been at the heart of the rally’s strongest single sessions. Hargreaves Lansdown’s daily risers tables for mid-May 2026 highlighted Antofagasta up more than 8%, with Anglo American gaining around 4.6%, Rio Tinto 4.2% and Glencore 3.3%. Expectations of structural tightness in copper and other base metals — linked to electrification, infrastructure spending and grid Investment — have underpinned the move.

Mining is, however, cyclical. Falls in Chinese Demand or in commodity prices have historically reversed gains quickly. Investors watch FTSE Russell sector data, company production updates and commodity benchmarks.

Driver three: banks rebound after political headlines

UK banks rallied in mid-May 2026, with Yahoo Finance reporting HSBC up more than 1% and Lloyds, Barclays, NatWest and Standard Chartered gaining between 0.8% and 2.3% in a single session. The rebound followed a brief sell-off linked to political speculation about possible tax changes under a potential left-leaning political shift.

The Bank of England’s rate policy and Credit conditions remain the primary drivers of bank Earnings. Bank of England statistics and each bank’s trading updates remain the most reliable references for net interest margins, Capital ratios and credit cost trends.

Driver four: dividends, Buybacks and capital returns

AJ Bell research suggests FTSE 100 ordinary dividends could hit a record £88bn in 2026. HSBC alone is projected at around £10.7bn, with Shell, the major UK banks, AstraZeneca and miners contributing meaningfully. Buybacks have added to total Shareholder returns.

For investors hunting Yield in a world where bond yields have fluctuated, the FTSE 100’s forecast 3.4% forward yield (AJ Bell) has provided a benchmark for income, helping draw capital back to UK blue chips.

Driver five: defence and industrials

Rolls-Royce Holdings has been one of the most-discussed re-ratings in the FTSE 100, with management flagging improving free Cash Flow across civil aerospace, defence and power systems. BAE Systems has benefited from elevated defence spending across NATO members and a record order Backlog at its latest results.

These industrial themes have provided pockets of genuine earnings growth, complementing income-rich sectors.

Driver six: sterling and global earnings

A weaker pound through some of the recent cycle has supported the translated earnings of FTSE 100 multinationals. With LSEG data showing that the index earns most of its revenue overseas, sterling moves can influence reported results materially.

A Reversal — a stronger pound — would partially unwind that tailwind.

Driver seven: rotation away from US tech

Some global investors have rotated from richly valued US large-cap technology into perceived value markets, including the UK. According to broker commentary cited in major financial media, this rotation has been partial rather than dramatic. But it has been enough to push UK blue chips higher when combined with strong fundamentals.

What this means for UK investors

A rally driven by multiple factors is, in principle, healthier than one driven by a single theme. UK investors with FTSE 100 exposure — whether through trackers or individual shares — have benefited from the rerating, particularly when distributions are reinvested.

Inside a Stocks and Shares ISA or SIPP, qualifying dividends and capital gains avoid further UK tax within HMRC allowances. Tax rules can change.

Risks to watch

  • Commodity reversal: Miners and energy stocks can correct quickly when prices fall.
  • Political and fiscal risk: UK tax policy and political uncertainty remain in focus, with Prime Minister Keir Starmer facing a Leadership challenge in mid-May 2026 according to media reports.
  • Sterling strength: A stronger pound erodes overseas earnings.
  • Bank cycle: Credit conditions and net interest margins can shift quickly.
  • Concentration: Index gains have been concentrated in a few sectors and names.
  • Global slowdown: Any major slowdown in China, the US or the eurozone would weigh on UK blue chips.