FTSE-100 finally tests 10,000

EU mid-market update: FTSE-100 finally tests 10,000; European equities continue bullish momentum from strong 2025; Chip names up on Samsung and China AI IPO hype; Tesla to drop Q4 deliveries figures.

Notes/observations

- European equities opened the year broadly higher, led by semiconductors, banks, defense and industrials. FTSE100 passed 10,000 level for the first time.

- Liquidity remains thin as holiday vibes linger. Strategists expect conditions to normalize next week alongside a fuller data slate, including US labor market releases and ISM surveys, key inputs for the Fed’s policy outlook.

- PMIs were mixed to soft, underscoring uneven industrial momentum. Downside final revisions for EU, Germany and UK, while Italy and Spain missed estimates. France a bright spot with upside final revision.

- AI-related names outperformed as IPO momentum builds in China; Kunlunxin’s planned listing is seen as a potential catalyst for its parent Baidu.

- Oil traded near three-month averages amid oversupply concerns, with analysts flagging a $55-65/bbl range for 1Q26 and watching signals from the OPEC+ meeting this Sunday. Gold and silver rebounded on renewed Middle East tensions and safe-haven demand; Silver also recovered from late-2025 margin-related volatility.

- Bitcoin edged higher on improved risk appetite but remained below the $90k level, still well off its October peak amid disappointment over regulatory momentum for digital assets.

- On trade, the US scaled back proposed Italian pasta tariffs and delayed certain Section 232 increases, citing productive talks.

- Watching tensions in Iran after several days of protests leading to dozens of deaths. Pres Trump verbally warned Iran via a Truth Social post, suggesting US will ‘rescue’ peaceful protestors, but it is unclear what that means in actuality.

- Tesla has broken precedent by publishing its own compilation of consensus forecasts ahead of Friday's Q4 delivery report, about 5% lower than all analysts' consensus - a move widely interpreted as an attempt to manage expectations for a sales decline.

- Asia closed higher with Hang Seng outperforming +2.8%. EU indices +0.3-0.6%. US futures +0.4-1.1%. Gold +1.8%, DXY +0.2%; Commodity: Brent -0.1%, WTI -0.1%; Crypto: BTC +1.9%, ETH +2.1%.

Asia

- Australia Dec Final PMI Manufacturing: 51.6 v 52.2 prelim (confirmed 2nd month of expansion).

- South Korea Dec PMI Manufacturing: 50.1 v 49.4 prior [1st expansion in 3 months].

- Taiwan Dec PMI Manufacturing: 50.9 v 48.8 prior [1st expansion in 10 months].

- Singapore Q4 Advance GDP Q/Q: 1.9% v 2.7%e; Y/Y: 5.7% v 6.4%e.

- China Pres Xi New Year speech noted that China GDP was expected to have reached CNY140T in 2025. Urged confidence in 2026 development. Stressed that Chinese culture shined with even greater brilliance.

- China to adjust currency weighting in CFETS RMB Index: To cut euro and US dollar weightings (**Note: USD weighting to be cut from 18.90% to 18.3%; EUR weighting to be cut from 17.90% to 17.86%).

Europe

- ECB chief Lagarde’s pay said to be 50% higher than disclosed by ECB. Earned a total of about €726,000 in 2024 compared to than the “basic” salary of €466,000 in ECB annual report (**Insight: earns nearly four times more than the chair of the Fed Chair Powell).

- Finland Police stated that it seized vessel suspected of cable sabotage sailed under St Vincent and Grenadines flag.

Americas

- Financial firms borrowed $74.6B [record] from NY Fed SRF amid year-end liquidity needs.

Trade

- President Trump: signed a Proclamation invoking Section 232 of the Trade Expansion Act of 1962 (Act) to delay increases in tariffs for upholstered furniture, kitchen cabinets, and vanities for another year.

- US retreated from Trump pasta tariffs on Italy. US had agreed to lower a proposed 92pc duty on several well-known Italian pasta brands. Tariffs would now be “far below” the level previously announced.

- China to impose a 55% tariff on beef imports exceeding newly set quotas from January 1, 2026, under a three-year safeguard regime.

Energy

- US sanctions Chinese Companies, Tankers with Venezuela links.

- Venezuela started shutting wells in the Orinoco Belt due to a blockade by the Trump administration. Oil production in the Orinoco Belt drops 25% in last two weeks.

- Russia said to have asked the US to stop its pursuit of an oil tanker that was heading to Venezuela and is now fleeing the U.S. Coast Guard in the Atlantic Ocean.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.42% at 595.28, FTSE +0.56% at 9,987.06, DAX +0.29% at 24,562.11, CAC-40 +0.34% at 8,177.19, IBEX-35 +0.44% at 17,384.04, FTSE MIB +0.64% at 45,230.50, S&P 500 Futures +0.63%].

Market focal points/Key themes: The global trading year began with a flourish of "risk-on" sentiment, most notably in London where the FTSE 100 breached the 10,000-point milestone for the first time in its history. This European enthusiasm, mirrored by a 0.6% rise in the STOXX 600, was fueled by a rebound in mining stocks and precious metals, as well as chip names that tracked record-breaking performances in Asian chip giant Samsung. However, seasoned investors may temper their optimism with the knowledge that a buoyant first day is a notoriously unreliable harbinger for the year’s ultimate trajectory.

Equities

- Consumer discretionary: Michelin [ML.FR] -0.5% (acquisitions).

- Industrials: Skanska [SKAB.SE] +1.0% (several contracts).

- Technology: ASML [ASML.NL] +3.5% (follows Samsung rally; US Dept of Commerce grants TSMC Nanjing an annual export license for controlled items).

- Telecom: Prysmian [PRY.IT] +2.0% (CEO interview).

Speakers

- Pres. Trump posted on social media that if Iran shot and violently killed peaceful protesters, which was their custom, the United States of America would come to their rescue. Were locked and loaded and ready to go.

- Iran Supreme Leader Advisor Larijani stated that Trump should know that US interference in Iran's protesting is equivalent to chaos across entire region.

- OPEC+ expected to keep production steady at upcoming meeting on Sun, Jan 4th.

Currencies/fixed income

- USD beginning the 2026 trading year with some minor gains against the majors.

- EUR/USD at 1.1730 as the major PMI Manufacturing readings continued to suggest sluggish growth at best.
GBP/USD at 1.3460 as UK House price growth saw its weakest reading April 2024.

- USD/JPY edged higher to probe the 157 level in quiet trade. Japanese markets remained closed for new year trading.

- 10-year German Bund yield last at 2.87%, France 10-year Oat at 3.58% and 10-year Gilt yield at 4.48% 10-year Treasury yield: 4.16%; 10-year JGB: 2.05%.

Economic data

- (NL) Netherlands Dec Manufacturing PMI: 51.1 v 51.8 prior.

- (TR) Turkey Dec Manufacturing PMI: 48.9 v 48.0 prior (21st month of contraction).

- (UK) Dec Nationwide House Price Index M/M: -0.4% v +0.1%e; Y/Y: 0.6% v 1.2%e.

- (SE) Sweden Dec PMI Manufacturing: 55.3 v 55.5e.

- (PL) Poland Dec Manufacturing PMI: 48.5 v 49.3e.

- (CZ) Czech Q3 Final GDP Q/Q: 0.8% v 0.8% prelim; Y/Y: 2.8% v 2.8% prelim.

- (ES) Spain Dec Manufacturing PMI: 49.6 v 51.2e (1st contraction in 9 months).

- (CZ) Czech Dec Manufacturing PMI: 50.4 v 48.0e (1st expansion in 6 months).

- (HK) Hong Kong Nov Retail Sales Value Y/Y: 6.5% v 8.6%e; Retail Sales Volume Y/Y: 4.4% v 6.7%e.

- (NG) Nigeria Dec PMI (whole economy): 53.5 v 53.6 prior.

- (IT) Italy Dec Manufacturing PMI: 47.9 v 50.1e (moved back into contraction, lowest since Mar 2025).

- (FR) France Dec Final Manufacturing PMI: 50.7 v 50.6 prelim (confirmed 1st expansion in 5 months).

- (DE) Germany Dec Final Manufacturing PMI: 47.0 v 47.7 prelim (confirmed 42nd month of contraction, lowest since Feb 2025).

- (EU) Euro Zone Dec Final Manufacturing PMI: 48.8 v 49.2 prelim (confirmed 2nd month of contraction).

- (GR) Greece Dec Manufacturing PMI: 52.9 v 52.7 prior.

- (EU) Euro Zone Nov M3 Money Supply Y/Y: 3.0% v 2.7%e.

- (UK) Dec Final Manufacturing PMI: 50.6 v 51.2 prelim (confirmed the 2nd month of expansion).

- (GR) Greece Nov Unemployment Rate: 8.2% v 8.6% prior.

Fixed income issuance

- (IN) India sold INR320B vs,. INR320B indicated in 2035 bonds; Avg Yield: 6.6147%.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (PT) Portugal Dec Consumer Confidence: No est v -15.2 prior; Economic Climate Indicator: No est v 3 prior.

- 06:30 (CL) Chile Nov Economic Activity Index (Monthly GDP) M/M: 0.5%e v 0.7% prior; Y/Y: 2.2%e v 2.2% prior.

- 06:30 (IN) India Forex Reserve w/e Dec 26th: No est v $693.3B prior.

- 08:00 (BR) Brazil Dec Manufacturing PMI: No est v 48.8 prior.

- 08:00 (SG) Singapore Dec Purchasing Managers Index: No est v 50.2 prior; Electronics Sector Index: No est v 50.6 prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Net Export Sales.

- 09:30 (CA) Canada Dec Manufacturing PMI: No est v 48.4 prior.

- 09:45 (US) Dec Final S&P Manufacturing PMI: 51.8e v 51.8 prelim.

- 10:00 (MX) Mexico Central Bank (Banxico) Dec Minutes.

- 10:00 (MX) Mexico Nov Total Remittances: $5.4Be v $5.6B prior.

- 10:00 (CO) Colombia Dec PMI Manufacturing: No est v 54.0 prior.

- 10:00 (MX) Mexico Dec Manufacturing PMI: No est v 47.3 prior.

- 13:00 (MX) Mexico Dec IMEF Manufacturing Index: No est v 45.5 prior; Non-Manufacturing Index: No est v 50.3 prior.

TTN chart of the day: Any Supreme Court defeat for the Pres Trump's "emergency" tariffs will not reopen America’s ports. It will merely activate a dormant, redundant and far more lethal network of trade laws - some dating back to the Great Depression.