In just the first 20 days of 2025 the FTSE 100 index of blue-chip stocks has equaled its gains for the entirety of 2024, in the process closing at an all-time high of 8,505 points on 17 January.

A better-than-expected inflation report for December together with weaker-than-expected retail sales for the same month appeared to open the door to faster Bank of England rate cuts, pushing the index to its best level since May 2024 and a new record.

Also sending the benchmark higher was a fall in sterling, which hit a new 12-month low of $1.2160 against the all-powerful dollar, as three quarters of companies in the FTSE 100 generate their earnings overseas, and the relative value of those foreign earnings is boosted when the pound weakens.

Leading the gainers in percentage terms was Bill Ackman’s investment vehicle Pershing Square (PSH), which proposed a merger with real estate developer Howard Hughes (HHH:NYSE) on the one hand and the sale of part of its stake in Universal Music Group (UMG:AMS) on the other if the record label behind Taylor Swift agreed to a secondary listing in the US.

Driving the benchmark higher in points terms first and foremost, however, were energy stocks BP (BP.A) and Shell (SHEL), which together account for more than 10% of the index by market cap and whose shares rallied more than 12% apiece after Brent crude touched a six-month high above $82 per barrel.

Other notable points contributors were heavyweights Barclays (BARC) and Lloyds (LLOY), which gained 10% and 8% respectively following strong results from their US counterparts and on margin hopes as five-year mortgage rates squeezed higher.

Miners also helped lift the index, with Antofagasta (ANTO) among the top 10 gainers, while Glencore (GLEN) and Rio Tinto (RIO) – who it was revealed had held tentative merger talks late last year – chipped in with gains of around 8% each.

At the bottom of the pile, after its near-40% rally last year, is high-street stalwart Marks & Spencer (MKS) whose shares are down 11% this year despite record Christmas sales.

The worst sector year-to-date is housebuilders, with Barratt Redrow (BTRW), Berkeley Group (BKY) and Taylor Wimpey (TW.) all in the red despite losses of around 20% each last year suggesting investors see little prospect of an upturn in the new-build market.

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