- FTSE 100 up 19 points at 9,951
- Index earlier broke above 10,000 for first time
- Last year was Footsie's best year in over a decade
4.45pm: FTSE pulls back from earlier highs
The FTSE 100 added 19 points to finish Friday’s session at 9,951, retreating from earlier highs above 10,000.
Over on Wall Street, stocks were little changed to kick off the first trading day of 2026, with the Nasdaq down 0.2%, the S&P 500 down 0.1%, and the Dow Jones adding 0.2%.
4.03pm: FTSE set to finish below 10,000
It looks like the FTSE should be able to hold onto a solid gain for the first trading day of 2026 and could also bag a new record closing high, having notched a new intraday record of 10,046.25 this morning.
Aeroplane parts and trenchcoats are leading the way, ie Rolls-Royce, Melrose Industries and Burberry Group.
Utilities and defence companies are also well represented.
Meanwhile, across t' pond, it's an uneven scene.
The Dow Jones is just above flat and the Russell 2000 small cap index is up 0.5% but the S&P 500 is down 0.1% and the Nasdaq is 0.3% lower.
2.46pm: Next week theme is retail updates
While this week has been stop-start for financial markets, next week things get into the swing of a normal working week/grind.
After all the Christmas shopping and Boxing Day sales, January is the time when retailers put out trading updates.
The first big one will be from Next PLC (LSE:NXT) on Tuesday, then we hear from Marks and Spencer Group PLC (LSE:MKS) and Tesco PLC (LSE:TSCO) on Thursday, and J Sainsbury PLC (LSE:SBRY) on Friday.
Sausage roll supremo Greggs PLC (LSE:GRG) is also expected to serve up a statement on Thursday, and student accomodation developer Unite Group PLC (LSE:UTG) on Friday.
Clothing chain Next helped lift its shares to an all-time high in the autumn after reporting a third quarter with full-price sales growth of 10.5%, well ahead of the group’s 4.5% guidance.
Boss Simon Wolfson nudged up full-year pre-tax profit guidance to £1.135 billion, based on expected 7.0% sales growth in the fourth quarter.
A track record of conservative forecasting means investors will not be surprised to see another upgrade to the outlook.
As for M&S, investors will be hoping for a strong Christmas performance to draw a line under a mixed year, when the shares reached their highest in almost a decade but an April cyberattack threw a large spanner in what had been an impressive turnaround.
This crippled online sales, leading to a sharp decline in first-half profits.
"Operations are expected to return to full flow by March, sparking hopes that second-half pre-tax profits can rebound above last year’s £468 million," says analyst Aaron Chiekrie at Hargreaves Lansdown.
He says underlying trends in the business "remain positive", with both food and general merchandise continuing to grab market share.
"With near-term profit expectations reset, the worst looks to be behind M&S now. But the group has some work to do to rebuild investors’ confidence, starting with delivering a solid performance in next week’s festive update."
As for Sainsbury's, Chiekrie says a good set of first-half results in November, with sales growth of 4.8% ahead of expectations, also come with the group gaining market share.
A cost-cutting program is helping offset higher employment costs, with savings partly reinvested to keep food prices down.
He thinks investors should have "plenty for Sainsbury’s to be jolly about when it releases its third-quarter trading update next week", with upgraded retail operating profit guidance of more than £1 billion for the full year looking "within reach".
1.25pm: Wall Street heading higher
US tech stocks are set to get Wall Street off to a good start to 2026.
Nasdaq futures are up 0.9% ahead of the first trading day of the year.
Futures for the S&P 500 and Dow Jones are pointing to gains of 0.5% and 0.4%, respectively.
Volumes are likely to remain light today, with many investors still on holiday and algo-driven trading expected to dominate.
The important question for market analyst Kenny Polcari at SlateStone Wealth, is what’s in store for 2026. He says the main themes to ponder as the year goes are as follows:
"Midterm elections mean headline risk. History suggests midterm years can bring more chop and sharper pullbacks, even if the longer-term trend can remain constructive.
"It could be a potentially landmark year for tech IPOs - with names like SpaceX, OpenAI, Anthropic and Kraken being discussed as 2026 candidates (as usual timing will depend on markets and regulators). We are talking ‘trillions’ in money raised.
As AI moves from 'promise' to needing to demonstrate 'payoff', Polcari says investors "will start demanding proof – who is monetizing and who is just spending".
A new Fed chair is a certainty, with Jerome Powell’s term ending in May. However, policy "remains an uncertainty", says Polcari, "and the succession plan will be a real market variable — and that will shape the conversations around rates, inflation, growth, and policy."
Stock valuations are no longer cheap, he adds, with the S&P is trading around 22 times forward earnings, above longer-term averages, "which means fundamentals matter more".
He also mentions "real assets" like energy, precious metals, and alternatives as investors potentially look to diversify from tech, while also paying attention to geopolitical risk.
12.30pm: FTSE milestone a reminder of UK market's attractions
The FTSE 100 breaking through the 10,000 mark is a "powerful reminder that the UK market has been more resilient than many give it credit for," says Dan Moczulski, UK MD at eToro.
"It shows that British equities are far from stagnant, with a number of domestically listed companies delivering strong results after years of scepticism."
"Investors tend to get excited about the next big thing: whether it’s AI, robotics, or digital assets. But a lot of the brands we come across, or even use ourselves on a daily basis, and perhaps think nothing of, are smashing expectations and deserve a closer look."
He points to an eToro retail investor survey showing that just 16% of respondents globally hold exposure to the UK stock market, compared with 44% who are invested in the US.
11.28am: Powerful signal for UK markets
The FTSE 100’s early rally above the 10,000 milestone is "a powerful signal for UK markets", says analyst Axel Rudolph at IG.
It reflects "ongoing confidence in earnings resilience, attractive valuations and the growing appeal of UK equities to international investors at a time when policy headwinds are beginning to ease", he says.
He expects the outperformance to continue but be "choppier" in 2026, as it "remains fundamentally supported by globally diversified earnings, strong cash generation and the prospect of a more accommodative Bank of England, suggesting the trend is sustainable even if gains moderate compared to 2025's over 20% advance".
"Key catalysts for UK equities in 2026 include continued progress on inflation, measured rate cuts and ongoing productivity improvements, while the main risks centre on heightened geopolitical tensions, an unexpected resurgence in inflation, a sharper slowdown in global growth or a breakdown in earnings delivery that could unsettle sentiment."
10.53am: Footsie gains whittled down
The FTSE 100's early gains have been whittled away to 37 points, with the index standing at 9,968.
Rachel Reeves (or one of her minions) has celebrated the UK index breaking through 10,000 points for the first time as "a vote of confidence in Britain’s economy and a strong start to 2026", via a tweet.
But the index is back below 10,000, with fallers on the index led by British Land and Auto Trader, both down 1.8%, followed by DCC and Coca-Cola Europacific Partners, down 1.7% and 1.6%.
While Fresnillo is topping the risers, Endeavour Mining is down 1.45%.
The gold price hit a new record at arpimd $4,550 an ounce on Boxing Day before dropping below $4,300 on New Year's Eve.
It's back up to $4,398/oz today, up 1.8% on the day.
Silver, which is Fresnillo's bigger focus, is up 4.55% to $74.5 per oz today, having hit a high of just under $83 on Boxing Day.
For stock market indices it's a similar story in Europe and with US futures.
The Footsie is up 0.4% compared to gains of 0.1% for both the German DAX and French CAC 40, down from 0.6% and 0.8% earlier.
Across the pond, S&P 500 futures have been up around 0.6% all morning.
10.37am: Grounds for optimism in UK manufacturing
The rise in the manufacturing PMI to a 15-month high in December provides grounds for optimism, says economist Elliott Jordan-Doak at Pantheon Macroeconomics.
Support came from easing policy uncertainty, the continued phased return to activity after the JLR cyberattack, and improving external demand.
Most of the sub-indices of the manufacturing PMI improved in December, notes Jordan-Doak, "providing grounds for optimism that activity can continue to improve over the course of Q1."
Export orders drove a chunk of the improvement in December, rising to the highest since July 2024.
Details of forward-looking were "mixed", the economist says, with the new orders balance ticking up above 50, while the future output balance dropped slightly but remains high at 72.2.
"The gradual improvement in activity appears to be feeding into a recovery in hiring sentiment, with the manufacturing PMI’s employment balance rising," he says, hitting its highest since October 2024.
"All told, we think the PMI paints a picture of stability within the manufacturing sector. December’s PMI was likely boosted by some temporary factors such as the phased reopening of businesses following the cyber attack, which will dissipate.
"But business confidence amongst manufacturers has improved in recent months in any case, with the trend in the PMI looking upward since Spring 2024.
"That said, we think that still-high borrowing costs and ongoing tariff uncertainty will continue to weigh on activity in the sector in 2026, so the PMI will likely hit a ceiling soon. So, we expect output will continue to rise slowly over the coming year."
10.10am: Manufacturing sector sees headwinds ease
The UK manufacturing PMI for December came in at a 15-month high of 50.6, up from 50.2 in December but below the 51.2 'flash' reading mid-month.
A PMI reading above 50 is generally indicative of growth compared to the previous month.
Rob Dobson, director at S&P Global Market Intelligence, which carries out the PMI survey, said it show evidence of "further signs of growth", with output rising for the third successive month and new order intakes improving slightly for the first time since September 2024.
"The domestic market remained a positive spur to growth while new export business, despite having now fallen for almost four consecutive years, took a sizeable stride towards stabilising."
He said the month benefited from reduced uncertainty following the Budget, plus further recovery after the Jaguar Land Rover cyberattack.
"The start of 2026 will show if growth can be sustained after these temporary boosts subside."
Across the Channel, the eurozone manufacturing PMI for December was 48.8, also down from the 49.2 flash reading, mainly due to a similar reading for Germany at 47.0 versus a flash reading of 47.7. France's manufacturing PMI of 50.7 was little changed.
9.45am: FTSE record breaker
It’s been 171 days since the FTSE 100 hit 9,000 back in July and the previous thousand milestone was back in February 2023.
Previously, the fastest jump in blocks of 1,000 was between 5,000 and 6,000, which took 229 days in the late 90s, according to some quick calculations by market analyst Dan Coatsworth at AJ Bell.
He says it's "time to break out the champagne as UK stock markets have delivered a New Year’s treat" by hitting what he calls the "10,000 jackpot".
"This is a historic moment and already makes 2026 one of the most significant years for the blue-chip index since its launch in 1984."
He feels breaking through the 10,000 level is a gift for Chancellor Rachel Reeves as she has been banging the drum about the merits of investing in her latest Budget.
"The FTSE 100’s achievements just go to show what’s possible when buying UK shares. It also proves to cynics that the UK market is not stuck in the mud, and that the US stock market is not the only place to make money."
Coatsworth says the FTSE 100 has beat the flagship US S&P 500 last year thanks to its diverse range of industries, "offering a tonic to investors who started to get the jitters about tech stocks", while also offering value for investors looking for cheaper areas of the market.
"We’ve seen increased interest from foreign investors looking to diversify their holdings and the FTSE 100 has also shone during the more tumultuous periods thanks to its plethora of defensive-style companies."
Gold and silver prices hitting record levels has benefited the likes of Fresnillo and Endeavour Mining, while geopolitical worries and European governments pledging to step up investment in national security has lifted the defence sector, with both sectors key in today's gains.
"Lots of people have criticised the UK for being an old economy market, full of boring companies in the banking and natural resources sector," says Coatsworth.
"Yes, it lacks the excitement of go-go-growth stocks omnipresent in the US, but boring can also be beautiful when it comes to investing.
"The UK is a rich hunting ground for dividends, and it is also full of companies that have slow but steady growth and which are underappreciated engines for wealth creation."
9.10am: FTSE breaks above 10,000
The FTSE 100 has smashed past the 10,000 milestone this morning, rising more than 100 points to record a new all-time high at just over 10,046 a few minutes ago.
Precious metals miners and aerospace and defence shares are driving the gains this morning.
Fresnillo, Rolls-Royce, Melrose, Babcock and BAE Systems are the top risers, followed by other miners and financials.
8.35am: Intercontinental drift?
The FTSE 'heat map' today is showing a glowing red spot at one end, with shares in Intercontinental Hotels Group PLC (LSE:IHG) apparently down over 98%.
Even on the company's page on the LSE website, the shares are down not far off 99% at $147.30.
But this is becuase in October, the Holiday Inn and Crown Plaza owner announced that it would be changing the currency in which its shares are traded in London from GBP to USD, taking effect from 8am on 2 January 2026, ie today.
"The change does not impact the nominal currency of IHG's shares, which will remain in GBP. The change does not impact IHG's London listing in any other way, and has no impact on IHG's ADR listing in New York," it said.
8.10am: FTSE starts 2026 higher
The FTSE 100 has started the new year on the front foot, but with markets still largely in holiday mode.
Early deals saw the index gain 39 points to just over 9,971, setting a new all-time high and approaching the five-digit milestone.
Precious metals miner Fresnillo PLC (LSE:FRES), up 4.5%, is top of the early risers, followed by aerospace parts makers Melrose Industries PLC (LSE:MRO, OTC:MLSPF) and Rolls-Royce Holdings PLC (LSE:RR.), both up just over 2%.
The London equity benchmark closed out 2025 at 9,931.38 points, down 9.3 points on New Year's Eve but up over 1,600 points or 21.51% over the course of the year.
There's barely any RNS news out from FTSE companies, though there will be some economic data later this morning in the form of the manufacturing PMI survey for the UK and several other major economies.
To summarise the market backdrop, here's a helpful update from analyst August Hyldgaard at Danske Bank.
In geopolitics, he notes that US President Trump said the US has escalated attacks on Venezuela with a strike inside the country on a building allegedly connected to drug trafficking. The US also said it struck vessels allegedly carrying drugs in international waters and imposed sanctions on four oil traders.
"Following the meeting between US President Trump and Israeli President Netanyahu, Trump said that the United States would back Israeli strikes on Iran if Iran continued with its ballistic missile and nuclear weapon program."
Trump said he has heard Iran is "behaving badly" and is looking to restart its nuclear program, while Iranian president Masoud Pezeshkian said that Iran was in an "all-out war" with the US, Israel and Europe.
After China began military drills around Taiwan at the start of the week, Hyldgaard noted that Taiwanese markets "reacted very calmly as the drills appear similar to what we have seen several times in the past", though they followed just weeks after the US announced $11.1 billion of arms sale to Taiwan.
For the first time, China publicly stated that the goal of the drills is to serve as a warning not only to "separatist forces" within Taiwan, but also for "external interference forces".