Global markets at new highs as new year rally continues
Global stock markets are continuing their new year rally, as indices around the world hit fresh record highs.
Investors are shrugging off geopolitical worries following Donald Trump’s capture of Venezuela’s president, Nicolás Maduro, and pushing up equities.
The pan-Europe Stoxx 600 hit a new record high this morning, after posting its steepest gain since 2021 last year. Yesterday it hit 600 points for the first time.
The UK’s FTSE 100 is continuing to rally, after its best year since 2009, rising further above the 10,000 point mark this morning to as high as 10,066 points.
This follows gains on Wall Street last night, where the Dow Jones industrial average hit a record high lifted by oil company Chevron, which may profit from the Venezuela situation.
Goldman Sachs has added to market optimism by lifting its 12-month forecasts for the Stoxx 600 and the FTSE 100 this morning. It now predicts the Footsie will reach 10,400 points by the end of this year, a near 4% increase.
Shares in weapons makers are continuing to rise today, adding to Monday’s gains after the US attack on Venezuela. BAE Systems are up 1.5% in London.
Mohit Kumar of investment bank Jefferies says:
It is difficult to trade geopolitics. However, some investment themes should benefit over the coming days.
1) Defense stocks should continue to perform as we see increased spending on defense globally. Defense spending is also positive for copper and iron ore which should benefit;
2) we should see steeper curves on increased fiscal spending and
3) diversification away from USD [the dollar] as a theme should gain further ground and gold should be the main beneficiary.
Key events
Japan’s stock market has strongest start to a year in decades
Japanese stocks made their strongest start in several decades.
The Topix index and the Nikkei 225 climbed further today, bringing their two-day gains to 3.8% and 4.3% respectively.
That rally was the strongest for the first two trading days of a new year since at least 1990, Bloomberg reports.
Both indices ended today at record closing highs, following last night’s gains on Wall Street.
Japan’s stock market boom of the 1980s ended in 1989, followed by a long slump:
The Nikkei rallied last year on hopes that Japan’s new prime minister, Sanae Takaichi, would push through looser fiscal policy to stimulate the economy.
Global markets at new highs as new year rally continues
Global stock markets are continuing their new year rally, as indices around the world hit fresh record highs.
Investors are shrugging off geopolitical worries following Donald Trump’s capture of Venezuela’s president, Nicolás Maduro, and pushing up equities.
The pan-Europe Stoxx 600 hit a new record high this morning, after posting its steepest gain since 2021 last year. Yesterday it hit 600 points for the first time.
The UK’s FTSE 100 is continuing to rally, after its best year since 2009, rising further above the 10,000 point mark this morning to as high as 10,066 points.
This follows gains on Wall Street last night, where the Dow Jones industrial average hit a record high lifted by oil company Chevron, which may profit from the Venezuela situation.
Goldman Sachs has added to market optimism by lifting its 12-month forecasts for the Stoxx 600 and the FTSE 100 this morning. It now predicts the Footsie will reach 10,400 points by the end of this year, a near 4% increase.
Shares in weapons makers are continuing to rise today, adding to Monday’s gains after the US attack on Venezuela. BAE Systems are up 1.5% in London.
Mohit Kumar of investment bank Jefferies says:
It is difficult to trade geopolitics. However, some investment themes should benefit over the coming days.
1) Defense stocks should continue to perform as we see increased spending on defense globally. Defense spending is also positive for copper and iron ore which should benefit;
2) we should see steeper curves on increased fiscal spending and
3) diversification away from USD [the dollar] as a theme should gain further ground and gold should be the main beneficiary.
UK services sector growth remains ‘lacklustre’
The UK’s services sector grew more slowly than forecast last month, despite some signs that budget anxiety eased.
Data firm S&P Global has reported that the expansion in business activity remained marginal in December, despite a renewed upturn in new orders.
Its UK services PMI business activity index has risen to 51.4 in December, up fractionally from 51.3 in November, a level that shows modest growth. That is weaker than the ‘‘flash” reading of 52.1 recorded during December, suggesting a slowdown towards the end of last month.
🇬🇧 United Kingdom S(and)P Global Composite PMI (Dec) $GBP
Actual: 51.4 🔴
Expected: 52.1
Previous: 51.2— PiQ Newswire (@PiQNewswire) January 6, 2026
Servce sector firms continued to report challenging business conditions, sales headwinds from subdued UK economic prospects, and constrained client spending linked to domestic political uncertainty.
But some firms did flag “tentative signs” of a recovery in client confidence, following the budget on 26 November. This included a pick- up in new business during the month.
Tim Moore, economics director at S&P Global Market Intelligence, says:
“Lacklustre business activity growth continued across the UK service sector at the end of 2025. Moreover, the speed of expansion was softer than signalled by the earlier ‘flash’ survey in December and lower than seen on average in the second half of the year.
The most positive development was a renewed upturn in new business intakes, following a slight decline during November. Modest growth of incoming new work was attributed to tentative signs of a recovery in client confidence after an extended period of pre-Budget gloom. Order books were also supported by a marginal rebound in export sales.
However, survey respondents still noted sales headwinds linked to weak UK economic prospects, alongside challenging operating conditions due to factors such as sharply rising business costs and soft demand in major overseas markets. Worries about squeezed margins and broader growth prospects contributed to another marked reduction in service sector employment during December.
Meanwhile, inflationary pressures across the service economy strengthened at the end of the year. Input prices rose to the greatest extent for seven months, and output charge inflation rebounded from November’s recent low, despite the subdued demand backdrop.”
Euro zone growth slows in December but completes strongest quarter since 2023
The eurozone economy has posted its strongest quarterly growth performance in two and a half years.
Data provider S&P Global has reported that the eurozone economy continued to expand in December, rounding off “a solid quarter of growth”, although growth did slow in the month.
Its HCOB eurozone composite PMI output index has dipped to 51.5 for December, down from November’s 52.8. That’s a three-month low, but still shows growth (above the 50-point mark signifying stagnation).
Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says:
“The eurozone services sector has grown for seven months in a row. The pace of expansion slowed in December, but overall, the picture looks good. Companies have even increased their staffing levels more strongly, and new business indicates that they remain on a growth path. Overall, the recovery in services gained momentum in the fourth quarter, which is a good basis for starting the new year with confidence.”
Nestlé shares drop after infant formula recall
Shares in consumer goods maker Nestlé have dropped by almost 1% this morning, after it announced a recall of its infant formula due to the presence of a toxin.
Nestlé said last night it is recalling specific batches of its SMA infant formula and follow-on formula due to the potential presence of a toxin that could lead to nausea, vomiting and abdominal cramps.
The company said:
The safety and wellbeing of babies is our absolute priority. As a precautionary measure, Nestlé is voluntarily recalling specific batches of its SMA infant formula and follow-on formula.
This is due to the potential presence of cereulide in the batches concerned.
Cereulide is a toxin produced by some strains of Bacillus cereus, which can cause nausea, vomiting and abdominal cramps.
The recall affects a range of products, including: SMA Advanced First Infant Milk, SMA Advanced Follow-on Milk, SMA First Infant Milk, SMA LITTLE STEPS First Infant Milk, SMA Comfort, SMA Lactose Free, SMA Anti Reflux and ALFAMINO. Full details here.
The Food Standards Agency says:
Even if you have not identified ill-health in your baby as a result of consumption of this product, it is essential to stop using it. If the infant formula or follow-on formula was prescribed by a health professional for your infant, consult a pharmacist or other medical professional before changing formula.
UK supermarket shares rise after Christmas sales boost
Shares in UK grocers have jumped after Worldpanel by Numerator reported that their sales rose over Christmas.
Today’s report shows that take-home sales at the grocers reached a record £13.8bn in the four weeks to 28 December 2025, up 3.8% year on year.
Ocado’s shares have jumped by 7.4% this morning; it was the fastest growing grocer, with sales increasing by 15% over the 12 weeks to 28 December 2025, year-on-year.
Tesco (+1.75%) and Sainsbury’s (+1.5%) are also among the top risers on the FTSE 100, which has now risen to a fresh record high of 10,065 points.
Victoria Scholar, head of investment at interactive investor, sums up the situation this morning:
“The FTSE 100 has opened higher, hitting fresh all-time highs, outperforming the DAX and CAC 40 with UK retailers Tesco, Next and Sainsbury’s at the top of the basket thanks to an improved profit outlook from Next. Adding to the sense of optimism, Worldpanel reported robust supermarket sales with Tesco revenue rising 4.3% in the 12 weeks to December. It also said UK grocery inflation eased in December.
Price target upgrades are helping to lift other UK stocks like Lloyds and Barclays. And Prudential is staging gains thanks to the launch of a $1.2 billion share buyback programme.
On Monday the FTSE 100 closed above 10,000 for the first time gaining over 0.5% driven by mining stocks and defence companies. Goldman Sachs has now raised its 12-month target on the FTSE 100 from 10,300 to 10,400, suggesting that after a strong year, there could be more room to run for the UK index.
UK grocery inflation slowed in December
UK grocery inflation eased slightly last month, new data shows.
Worldpanel by Numerator have reported that grocery inflation fell to 4.3% in December, down from 4.7% in November.
Shoppers spent £476 on average at the supermarkets during the festive month – an additional £15 in comparison to December 2024 – they add.
Spending on promotions and deals reached 33.3%, up from 32% last year, the highest proportion of overall sales since December 2019.
Fraser McKevitt, head of retail and consumer insight at Worldpanel by Numerator, says:
“Easing inflation helped to take the edge off the cost of Christmas this year, giving households a little more room to spend.
It was a Christmas of smart savings and considered choices – almost every household bought into supermarkets’ premium ranges, while price remained front of mind. Discounters enjoyed their biggest-ever Christmas share, and shoppers leaned on their loyalty cards to get the best deals.”
Reuters: India probe finds Tata Steel, JSW Steel, SAIL breached antitrust law
India’s competition watchdog has ruled that a swathe of the country’s steelmakers have breached antitrust rules, Reuters reports.
They say that market leaders Tata Steel, JSW Steel, state-run SAIL and 25 other firms breached antitrust law by colluding on steel selling prices, a confidential document shows, putting the companies and their executives at risk of hefty fines.
Reuters adds:
The Competition Commission of India (CCI) has also held 56 top executives, including JSW’s billionaire Managing Director Sajjan Jindal, Tata Steel CEO T.V. Narendran and four former SAIL chairpersons, liable for price collusion over varying periods of time between 2015 and 2023, according to a CCI order dated October 6, which has not been made public and is being reported for the first time.
JSW declined to comment, while Tata Steel, SAIL, and the executives did not respond to Reuters queries. The CCI also did not respond to requests for comment.
The CCI investigation – the most high-profile case involving the steel industry – started in 2021 after a group of builders alleged in a criminal case brought to a state court that nine companies were collectively restricting the supply of steel and increasing prices.
Nvidia unveils ‘reasoning’ AI technology for self-driving cars
Overnight, chip giant Nvidia has announced a tech platform which it says will help self-driving cars think like humans.
Nvidia’s CEO Jensen Huang told the annual CES technology conference in Las Vegas that the Alpamayo platform would allow autonomous vehicles to reason their way through complicated scenarios, drive safely, and explain their decisions.
Huang said:
“The ChatGPT moment for physical AI is here — when machines begin to understand, reason and act in the real world.
Robotaxis are among the first to benefit. Alpamayo brings reasoning to autonomous vehicles, allowing them to think through rare scenarios, drive safely in complex environments and explain their driving decisions — it’s the foundation for safe, scalable autonomy.”
Huang also told CES that Nvidia’s next generation of chips is in “full production”…
Next lifts FTSE 100 to new record high
Next’s shares have jumped at the start of trading after it raised its profit forecasts this morning, lifting London’s stock market to a new peak.
Next are the top riser on the FTSE 100 index, up 2.8% at £139.75 each.
That has helped to push the FTSE 100 to a new intraday high of 10,056 points at the start of trading in the City, with mining companies also among the risers.
That’s slightly higher than last Friday’s previous peak, when the index rose over the 10,000-point mark for the first time.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, says:
“Next’s Christmas trading update gave investors plenty to be jolly about, capping a solid year 2025 for the UK fashion powerhouse. In the nine weeks to 27 December, full-price sales rose by 10.6%, ahead of the group’s previous upgraded guidance for 7.0% growth. The better-than-expected finish to 2025 saw the UK fashion powerhouse upgrade its profit guidance once again. Full-year pre-tax profits are now expected to come in at around £1.15bn, marking the third profit upgrade in a little over five months.
Unwrapping some of the headline figures, sales growth continues to be driven by its online channel, which already accounts for more than half of group sales. Within that, overseas sales have continued to grow at an eyewatering pace, up 38.3% over the festive period, helping to buoy the more sluggish growth of just 1.4% in its retail stores.
Next also gave a sneak peek into its outlook for the new financial year, with pre-tax profits forecast to grow by 4.5% to around £1.2bn. The slowdown comes as this year’s numbers have benefitted heavily from both favourable summer weather and major disruption at M&S. But with Next’s track record of under-promising and over-delivering, this growth target looks a touch conservative. Next remains one of the brightest sparks in the UK retail scene, and there’s potential for more success if it can continue nailing its overseas expansion.”
FTSE 100 CEOs earn more than average worker’s yearly pay by noon today
Lauren Almeida
The bosses of FTSE 100 companies will have made more money in 2026 before midday than the average worker will all year, according to figures laying bare the yawning income gap.
Median annual pay for FTSE 100 chief executives is £4.4m, the High Pay Centre thinktank calculated, 113 times higher than the £39,039 earned by the median full-time worker.
That means UK bosses will exceed the average annual pay of staff in less than 29 hours of work, or by about 11.30am on Tuesday if they started work on Friday 2 January.
The median salary for FTSE 100 chief executives equates to £1,353.23 an hour, or nearly £23 a minute. The High Pay Centre assumed that those bosses work about 62.5 hours a week.
UK car sales top 2m in 2025 as Chinese brands boom
Jasper Jolly
A rise in the popularity of Chinese brands pushed total car sales in the UK above the 2m mark last year for the first time since 2019, figures reveal.
Chinese companies accounted for 9.7% of the 2m new car registrations in the UK in 2025, or 196,000 vehicles, according to preliminary figures from the Society of Motor Manufacturers and Traders (SMMT), a lobby group. That was nearly double the 4.9% market share achieved by the country’s carmakers in 2024.
Electric car sales rose by nearly a quarter year on year to a record of 473,000, making up 23.4% of the overall market, four percentage points higher than last year. That helped the average emissions of new cars sold in the UK to fall by 10% compared with the year before.
Mike Hawes, the SMMT chief executive, said 2025 sales represented a “reasonably solid result amid tough economic and geopolitical headwinds”.
Next: Pressures on UK employment will hit consumer economy
Next have also warned that UK consumer spending in 2026 could be hit by rising unemployment.
In today’s financial statement they give several reasons why growth in the next finanial year will slow, including:
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In the UK, growth in the current year was boosted by very favourable summer weather, competitor disruption and improved stock levels. So we will face tough UK comparatives, particularly in the first half.
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Continuing pressures on UK employment are likely to filter through into the consumer economy as the year progresses.
Next beats expectations over Christmas
UK retailer Next has beaten expectations over the crucial Christmas trading period.
Next has reported that its full-price sales rose by 10.6% in the the nine weeks to 27 December, ahead of its own guidance for the quarter of +7.0%.
Next says UK sales in those weeks were up 5.9%, a slowdown on earlier in the year, while international sales jumped by 38.3%.
With sales £51m higher than expected, Next has raised its guidance for full year profit before tax this financial year by £15m to £1,150m.
Tata Motors shares fall
Shares in Tata Motors have fallen by 2% today, as traders digest the drop in JLR’s sales in the last three months of 2025.
Introduction: JLR sales hit by cyber attack disruption
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
India’s Tata Motors Passenger Vehicles has lifted the bonnet on the impact of the cyber attack which disrupted Jaguar Land Rover’s factories last autumn.
JLR’s retail sales tumbled by a quarter in the October-December period – down 25.1% year-on-year to 79,600 units – new data shows, following the hack at the end of August.
Wholesale production saw an even greater fall – it fell by 43%, compared with a year ago, to 59,200 units.
Tata states that JLR’s sales were “impacted by cyber incident as previously indicated”, adding:
Production returned to normal levels only by mid‑November post the cyber incident. Due to this and also the time required to distribute vehicles globally once produced, wholesale and retail volumes reduced on a quarter‑on‑quarter and year‑on‑year basis.
The cyber attack forced production to be suspended across JLR’s factories through September, and pushed the carmaker into a quarterly loss of almost £500m.
But the hackers weren’t the only problem facing JLR – its sales to the US were also hit by “incremental US tariffs impacting JLR’s US exports, continued to impact volumes”.
As a result, retail sales to North America fell by 37.7%. They were also down 13.3% in the UK, by more than a quarter in Europe, and by 18.4% in China.
Sales volumes were also hit by the planned wind down of legacy Jaguar models ahead of the launch of the new Jaguar design which prompted a backlash at the end of 2024.
The agenda
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8am GMT: UK grocery inflation data for December
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9am GMT: Eurozone service sector PMI report
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9.30am GMT: UK service sector PMI report
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2.45pm GMT: US service sector PMI report