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I FTSE 100 effortlessly blowing over 10,600 for the first time today (18 February). As I write mid-morning, it is up 1.1% to 10,670, boosted by miners, banks and BAE Systems (+3.6%).
As of 2025, the blue-chip index hits the S&P 500 so far this year. In fact, the difference is stark, with the US index down 0.5% year to date while the Footsie is up more than 7%.
It would take another 3.1% increase to reach 11,000 points. Given the strong momentum here, I’d be surprised if the FTSE 100 isn’t higher before the World Cup this summer.
Could 12,000 be on the cards by the end of 2026?
The rate decreases ahoy
News boosting the index today is that inflation eased to 3% in the year to January. The Office of National Statistics said this was helped by the cost of bread and petrol.
As a result, many economists are predicting that the interest rate will be reduced to 3.5% next month. Rates may be cut twice again this year, bringing the figure down to 3%.
This will be good news for inflation-weary consumers. And we can see this reflected in the home focus FTSE 250 index, now at a four-year high.
Adding weight to the case for a rate cut is rising unemployment. At 5.2%, this is the highest rate in a decade outside of the pandemic. So prices will be lowered to support the economy.
Things are getting weird
Another thing that happens is that things get weird very quickly with AI. And as we know, uncertainty is the market’s worst enemy.
Last summer, I wrote that “The AI is getting so disruptive that it may be difficult in the future to successfully pick the final winnersIn other words, technology lowers barriers to entry and can threaten the economic viability of many digital companies.
Therefore, many investors are selling tech/software/data stocks and investing in what the late Charlie Munger called “very hard“bucket. Great, go ahead.
But if we look at the FTSE 100, it is full of firms that are less vulnerable to AI disruption. You can’t just ‘vibe-code’ your opponent Glencore, GSK or National Grid. These resilient businesses must benefit from AI to drive efficiencies.
Shares in Glencore, GSK and National Grid have gained more than 20% in 2026. Tesco up 20% in less than a month!
Is 12,000 real?
Rather than picking individual stocks, investors can consider Vanguard FTSE 100 UCITS An ETF (LSE: VUKG). This low-cost tracker fund reinvests dividends from Footsie stocks – the collection yields 2.9% – to compound returns.
The top of the ETF reflects the FTSE 100, which has the five largest stocks HSBC, AstraZeneca, A shell, Unileveragain Rolls-Royce. Obviously none of these are AI stocks.
The biggest risk with this fund is that investors suddenly move away from the value and back to it Nasdaq stock growth. But with AI spending and the fear of disruption reaching fever pitch, I don’t see that happening in 2026.
In fact, this trend in the FTSE 100 may have some way to go, especially with prices likely to fall. An increase of another 12.5% to reach 12,000 may be a long shot, but I think 11,500 is possible by 2026.
