Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s the first day of trading in London today, as UK stock markets were shut for the New Year’s bank holiday yesterday. Stock trading will start in about half an hour.
Oil prices rose slightly this morning before dipping 0.3%, ahead of the Opec oil cartel’s monthly meeting.
China’s factory activity grew at its fastest pace in six months in December, indicated by the latest Caixin/Markit manufacturing purchasing managers’ index. The overall index rose to 50.9 in December, from 49.9 in November. Other Asian indices also pointed to expansion. Many Asian stock markets rose, with Japan’s Nikkei up 1.77% while Hong Kong’s Hang Seng dipped 0.3%.
In Germany, retail sales rose unexpectedly in November, according to official figures released at the crack of dawn. Sales were up 0.6%, beating expectations of a 0.5% drop. Germany’s Federal Statistical Office said turnover in retail trade recorded a new record high in 2021, although clothing retailers suffered losses for the second year of the pandemic.
European shares bounced to record highs on their first day of trading yesterday, with traders betting on steady economic recovery despite the surge in Covid infections caused by the Omicron variant.
Europe’s benchmark index, the Stoxx 600, hit a record intraday high of 491.73 points and later closed at 489.99, up 0.45%. It recorded a 22.4% rise last year, its second-best annual performance in more than a decade.
The US, French and German stock markets all had a stellar year in 2021 and outpaced the UK’s FTSE 100 index, which rallied 14.3%, its best year since 2016, as UK stocks recovered from the pandemic shock of 2020. Despite the recovery, the FTSE 100 ended the year 6.5% below its peak of 7,903 points, which was set in May 2018. On Wall Street, the S&P 500 index jumped by 27% in 2021, achieving 70 record closing highs.
Apple became the first US company to be valued at over $3tn on Monday as the tech company continued its phenomenal share price growth, tripling in value in under four years. Tesla jumped 13.5% after reporting breath-taking car sales last quarter and last year.
Ipek Ozkardeskaya, senior analyst at Swissquote, says:
Globally, there is a lot of news regarding the rising omicron cases, but there is also a lot of news that the omicron cases are not as deadly as the previous variants of Covid. And investors prefer focusing on a glass half full rather than a glass half empty at the start of the year.
However, many market strategists are cautious about 2022, predicting measly increases of 4% to 7% for the FTSE 100. Inflation has jumped to 5.1% in the UK and 6.8% in the US and is set to go even higher, meaning interest rates are on the rise, while China is expected to spoil the party with tighter credit and regulations.
In the US, Elizabeth Holmes, founder of Theranos, has been found guilty on four of 11 charges of fraud, concluding a high profile trial that captivated Silicon Valley and chronicled the missteps of the now-defunct blood testing startup.
- 7.45am GMT: France inflation for December (forecast: 2.9%)
- 8.55am GMT: Germany unemployment for December
- 9.30am GMT: Bank of England mortgage approvals and consumer credit for November
- 9.30am GMT: UK Markit/CIPS manufacturing PMI for December
- 3pm US ISM Manufacturing PMI for December