The FTSE 100 Index ended February at a record high, closing over 10,900 points for the first time ever. Performance was driven by stocks in the defence and mining sectors, which were boosted by escalating tensions in the Middle East, and by the UK’s relatively low exposure to companies in the technology sector.
- US tariffs moved back into the spotlight
- The UK economy expanded by 1.3% in 2025
- Schroders’ share price surged 30% following an agreed bid from Nuveen
“There should be scope for some further easing in monetary policy” (BoE Governor Andrew Bailey)
FTSE hits a fresh record: the FTSE 100 Index ended February at a record high, closing over 10,900 points for the first time ever. Performance was driven by stocks in the defence and mining sectors, which were boosted by escalating tensions in the Middle East, and by the UK’s relatively low exposure to companies in the technology sector. Meanwhile, an agreed bid for asset manager and FTSE 100 constituent Schroders from US investment group Nuveen propelled Schroders’ share price up by 30% over the month. Over February, the FTSE 100 Index rose by 6.7%, while the FTSE 250 Index climbed by 2.2%.
Tariff trouble: the thorny issue of trade tariffs resurfaced during the month following the US Supreme Court’s decision to strike down President Donald Trump’s Liberation Day tariffs. President Trump subsequently announced a 10% worldwide tariff, with plans to increase it to 15%. In response, the British Chambers of Commerce warned: “This will be bad for trade, bad for US consumers and businesses and weaken global growth.”
Rate cuts ahead? The Bank of England (BoE) maintained its key interest rate at 3.75% during February, although the decision was closely run with policymakers voting by five to four in favour of no change. The BoE expects UK inflation to ease to 2.1% in the first half of 2026, and BoE Governor Andrew Bailey commented: “There should be scope for some further easing in monetary policy in the period ahead.” The annualised rate of inflation dropped from 3.4% in December to 3% in January, reaching its lowest level since March 2025.
A mixed economic picture: the UK economy expanded by 0.1% over the final three months of 2025. Although activity in the manufacturing sector rose slightly, the services sector stagnated over the quarter. Over 2025 as a whole, the economy grew by 1.3%, compared with 1.1% in 2024. However, the rate of unemployment reached 5.2% over the three months to December, hitting its highest level since 2020, and unemployment amongst young people aged from 16 to 24 rose to 16.1%. Elsewhere, the Office for National Statistics reported stronger-than-expected UK retail spending in January, boosted by “unprecedented” sales volumes from online jewellers that were underpinned by surging prices for gold and silver.
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