Have you ever watched a stock market index climb day after day and wondered, “Is this my moment to jump in?” That’s exactly what’s been happening with the UK’s FTSE 100, which just wrapped up its longest winning streak in eight years. Twelve consecutive days of gains—pretty impressive, right? But after such a run, the big question is whether now’s the time to invest in UK equities or if you’re better off waiting for the dust to settle.
Why the FTSE 100 Is Making Waves
The FTSE 100, the UK’s flagship stock market index, has been on a tear, posting gains for 12 straight trading sessions before leveling off. This is the kind of streak that turns heads, and it hasn’t happened since 2017. So, what’s fueling this rally? Let’s break it down.
A Break From Tariff Tensions
Earlier this year, global markets took a hit when new trade tariffs sparked fears of economic slowdown. The UK, however, seems to have dodged the worst of it. Unlike other regions facing steeper levies, the UK’s trade relationship with the US has kept it relatively insulated. A 10% baseline tariff applies to most regions, but the UK hasn’t been singled out for harsher measures.
“The tariff storm has calmed for now, and investors are feeling optimistic again.”
– Financial market analyst
This sense of stability has given the FTSE 100 a boost. Investors are betting on the UK as a safe haven compared to markets facing bigger trade disruptions, like parts of Asia or the EU. Could this be a sign that UK stocks are poised for long-term growth?
Corporate Earnings Surprise on the Upside
Another driver of the FTSE’s hot streak? Companies are delivering better-than-expected results. From retail to energy, a wide range of sectors have reported strong earnings, lifting the index higher. It’s not just one industry stealing the show—confidence is spreading across the board.
I’ve always found it fascinating how a few solid corporate reports can spark such widespread optimism. It’s like the market’s saying, “Hey, things aren’t as bad as we thought!” This broad-based rally suggests the UK economy might be more resilient than some give it credit for.
Valuation: A Bargain Compared to the US
Here’s where things get really interesting. The FTSE 100 is trading at a price-to-earnings ratio of about 12.5, which is a steal compared to the S&P 500’s lofty 23.8. In simpler terms, UK stocks are cheaper relative to their earnings. For value investors, this is like spotting a clearance sale at your favorite store.
| Index | Price-to-Earnings Ratio |
| FTSE 100 | 12.5 |
| S&P 500 | 23.8 |
This valuation gap has been around since Brexit, when UK stocks fell out of favor. But maybe it’s time for a comeback. With US equities looking pricey and facing their own uncertainties, investors might start rotating into undervalued markets like the UK.
Dividends: A Sweet Bonus for Investors
If you’re someone who loves a steady paycheck from your investments, the FTSE 100 has you covered. The index is packed with dividend stocks that offer reliable income, even when share prices wobble. In the first quarter of 2025, UK companies paid out £14 billion in dividends, and the market is expected to yield 3.7% over the next year.
Dividends are like a warm blanket during stormy market weather. They cushion your portfolio against volatility and keep cash flowing. For retirees or anyone building passive income, this is a big reason to consider UK equities.
Large-Caps vs. Small and Mid-Caps: Where’s the Opportunity?
The FTSE 100 is the big dog of UK markets, but it’s not the only game in town. Let’s talk about how it stacks up against smaller indices like the FTSE 250 and FTSE Small Cap. The FTSE 100 is heavily international—think global giants with revenue streams from every corner of the world. The FTSE 250 and smaller indices, on the other hand, are more tied to the UK economy.
Here’s the kicker: if the UK and US strike a trade deal, smaller companies could see a bigger boost. Why? They’re more exposed to domestic markets and could benefit from reduced tariffs. Analysts suggest that a deal might wipe out most of the current 10% tariffs, giving UK exporters a leg up.
“Small and mid-cap stocks could shine if trade barriers come down.”
– Investment research team
That said, smaller stocks come with risks. They’ve lagged behind large-caps in recent years and face headwinds like rising National Insurance contributions for employers. So, how do you play it?
Diversifying Across Market Caps
One way to hedge your bets is by spreading your investments across different market caps. A FTSE 350 tracker fund gives you exposure to both the FTSE 100 and FTSE 250, blending large and mid-cap stocks. Want to go broader? A FTSE All-Share tracker includes small-caps, covering 98-99% of the UK market.
- FTSE 350 Tracker: Balances large and mid-cap exposure for stability and growth.
- FTSE All-Share Tracker: Adds small-caps for a broader, riskier bet on the UK market.
- Individual Stocks: Pick specific companies for targeted investments, but do your homework.
I’m a fan of diversification—it’s like not putting all your eggs in one basket. By mixing market caps, you can capture the stability of blue-chip stocks and the growth potential of smaller firms.
Risks to Watch Out For
Before you dive headfirst into UK equities, let’s talk risks. No investment is a sure thing, and the FTSE’s recent run doesn’t mean it’s all smooth sailing. Here are a few things to keep an eye on.
- Trade Deal Uncertainty: Talks of a UK-US trade deal are promising, but nothing’s set in stone. If negotiations stall, markets could get jittery.
- Domestic Challenges: Rising taxes and costs for businesses could weigh on smaller companies, especially in the FTSE 250.
- Global Volatility: The FTSE 100’s international exposure cuts both ways. A global economic hiccup could drag it down.
Perhaps the trickiest part is timing. After a 12-day rally, some might worry the market’s overheated. My take? Focus on long-term value rather than chasing short-term gains.
How to Get Started with UK Equities
Feeling inspired to dip your toes into the UK market? Here’s a quick roadmap to get you started without losing your shirt.
- Research First: Look into sectors like energy, finance, or consumer goods that are driving FTSE gains.
- Consider ETFs: Exchange-traded funds tracking the FTSE 100 or 350 are a low-cost way to diversify.
- Check Dividends: Seek out companies with a strong track record of payouts for steady income.
- Stay Informed: Keep tabs on trade talks and economic data that could sway the market.
Starting small and scaling up as you learn the ropes is a solid approach. The UK market’s got a lot going for it, but patience is key.
Is Now the Right Time to Invest?
So, back to that big question: should you invest in UK equities now? The FTSE 100’s winning streak, attractive valuations, and dividend yields make a strong case. Add in the potential for a UK-US trade deal, and the outlook gets even brighter—especially for smaller stocks.
But don’t let the hype cloud your judgment. Markets can be unpredictable, and global risks haven’t vanished. My advice? Build a diversified portfolio, focus on value, and think long-term. The UK market might just be the underdog that delivers.
“Investing is about finding opportunities where others see uncertainty.”
– Seasoned investor
What do you think—ready to give UK stocks a shot? The FTSE 100’s recent run is a reminder that opportunities can pop up when you least expect them. Here’s to making smart moves and building wealth!
