The FTSE 100 closed at a record high of 9,446 on Wednesday, 1st October 2025, finishing just over 1% higher on the day. Pharmaceutical stocks surged after news from the United States eased concerns over potential 100% tariffs on imported medicines.
AstraZeneca led the gains, rising around 11% and regaining its crown as the largest company listed in London, overtaking HSBC by market value. GlaxoSmithKline also advanced strongly, with healthcare’s overall performance driving the index to its new peak.
The record came despite weak domestic signals and the official start of the U.S. government shutdown at 12:01 a.m. Eastern time. UK manufacturing data showed output falling at its fastest pace in five months, but global healthcare stocks provided enough momentum to offset those concerns.
Regulation and Market Confidence
As investors digest record equity levels, the role of regulatory frameworks in maintaining market confidence becomes increasingly relevant. The pharmaceutical sector’s performance partly reflects trust in established oversight structures, including clinical trial standards, drug approval processes, and pricing transparency mechanisms.
This principle of regulatory oversight, building confidence, extends across different sectors of the UK economy. The Financial Conduct Authority maintains strict standards for investment platforms and pension providers, ensuring consumer protections remain robust. Energy companies operate under Ofgem’s regulatory framework, which sets standards for pricing and service reliability. In the leisure industry, platforms such as UK casino sites operate under strict Gambling Commission oversight, demonstrating how regulatory compliance builds consumer trust in consumer-facing services.
Whilst these sectors serve vastly different purposes, they share a common thread: rigorous regulation helps maintain market stability and public confidence. For investors assessing record equity valuations, understanding how regulatory frameworks function across industries provides useful context for evaluating long-term sustainability.
Pharma Stocks Rally After U.S. Policy Shift
Healthcare stocks gained sharply after Pfizer reached an agreement with the White House to reduce certain Medicaid drug prices in exchange for tariff relief. The deal eased fears that proposed 100% tariffs on branded drug imports would significantly damage the sector. Whilst limited in scope, investors interpreted the agreement as a signal that broader punitive measures might be avoided.
The White House also announced plans for a government-run drug pricing website, known as “TrumpRx,” targeted for 2026. The combination of conditional tariff relief and future pricing transparency efforts boosted sentiment towards drugmakers with significant U.S. exposure.
The FTSE healthcare subindex rose about 4.5% on the day, according to Reuters. AstraZeneca’s gains lifted its market capitalisation above £190 billion, ahead of HSBC, reaffirming the sector’s importance to London’s benchmark index.
Narrow Market Breadth Raises Concerns
Analysts cautioned that the record close was driven by a relatively small group of large companies. The FTSE 250, which has greater exposure to the UK economy, slipped 0.2% on Wednesday, reflecting ongoing pressure on domestically focused businesses.
Some notable risers emerged outside healthcare. Greggs shares climbed around 7% after its third-quarter update reported total sales growth of 6.1% and like-for-like sales growth of 1.5%. The figures marked a slowdown from the first half, but the company maintained its outlook, supporting investor confidence.
Other sectors, including energy and consumer discretionary, lagged behind, limiting the breadth of the overall rally. Market observers noted this concentration of gains could make the index vulnerable if sentiment towards pharmaceuticals were to shift.
AstraZeneca’s Strategic Positioning
AstraZeneca’s advance also reflected ongoing developments in its global strategy. The company recently confirmed it would replace its American depositary receipts with a direct listing on the New York Stock Exchange, whilst retaining its primary listing and headquarters in the UK. The decision aims to deepen liquidity and expand access to U.S. investors.
Whilst executives stressed that the firm remains committed to London, the move highlighted the competitive pull of U.S. exchanges for internationally active companies. Some market analysts suggested AstraZeneca’s Wednesday performance would bolster confidence in London’s relevance but acknowledged that competition for listings remains a long-term challenge.
Economic Headwinds Persist
The record high came against a backdrop of economic uncertainty. The UK manufacturing PMI showed the sharpest contraction in output for five months, according to the latest S&P Global data, underscoring pressure from high borrowing costs and weaker demand. Simultaneously, the U.S. government shutdown created fresh uncertainty for global markets.
Investors are now watching for upcoming UK inflation data and signals from the Bank of England. A weaker inflation trend could support expectations of interest rate cuts, whilst persistent price pressures might delay monetary easing.
Healthcare stocks also face potential risks. Drug pricing remains politically sensitive, and further changes in U.S. or European regulation could affect earnings forecasts. For now, however, the sector has been buoyed by reduced tariff fears and greater policy clarity.
Looking Ahead
The FTSE 100’s new record close demonstrates how globally diversified companies can shield London’s market from domestic weaknesses. AstraZeneca’s return to the top position underscores the role of pharmaceuticals in driving performance when many UK-focused stocks remain under pressure.
Analysts noted the gains highlight how defensive, international sectors can deliver outperformance in volatile conditions, but warned that reliance on a handful of large names carries risks. Whether the rally broadens to include other industries will determine how sustainable the FTSE’s latest milestone proves to be.
