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Graeme Wearden (until 2pm) and Nick Fletcher

FTSE 100 closes at new peak, eurozone jobless rate hits near nine-year low - as it happened

Fireworks over the city skyline in Berlin.
Fireworks over the city skyline in Berlin. Photograph: Odd Andersen/AFP/Getty Images

European markets end higher

With Wall Street roaring ahead again, European markets have ended the trading day on a positive note. The positive German economic data has helped sentiment in the eurozone, while the FTSE 100 has hit a new closing high thanks in no small part to a rise in retail shares. The final scores showed:

  • The FTSE 100 finished up 34.51 points or 0.45% at 7731.02
  • Germany’s Dax rose 0.13% to 13,385.59
  • France’s Cac closed up 0.67% at 5523.94
  • Italy’s FTSE MIB was 0.7% better at 23,004.98
  • Spain’s Ibex ended up 0.27% at 10,426.5
  • In Greece, the Athens market added 0.5% to 841.28

On Wall Street, the Dow Jones Industrial Average is currently 122 points or 0.49% higher.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

Healthcare and banking stocks are leading the way on Wall Street ahead of what is expected to be a strong reporting season. JP Morgan is the first big bank to report later this week.

Updated

FTSE 100 closes at record high

The UK’s leading index has made it, closing at a new record high if not quite reaching an intra-day peak.

The FTSE 100 finished up 34.51 points or 0.45% at 7731.02, beating last Friday’s record close of 7724.22. The intra-day peak of 7733.39 was reached on Monday. David Madden, market analyst at CMC Markets UK, said:

The London market has been helped along by the supermarkets as Marks and Spencer, Sainsburys and Morrisons are in demand on the back of the report from Nielsen which stated all of the ‘big four’ had a positive Christmas period.

One of the main reasons for stock markets recovering so well since the financial crisis, of course, is the massive support provided by central banks in the form of low interest rates and quantitative easing. Now this support is being gradually and cautiously withdrawn, but could the process speed up, and what effect will it have on share prices? Chris Beauchamp, chief market Analyst at IG, says:

Markets continue to make gains even as investors begin to consider the possibilities of more central bank tightening over the coming year and beyond. There are those wondering whether the Bank of Japan’s moves overnight to ease back on bond purchases portends a bigger shift in global markets; if the world’s most assiduous user of quantitative easing is itself easing back on the use of the proverbial punchbowl, will this mean that the others, especially the Fed and the ECB, will start to shift into a higher gear earlier than previously thought?

At least it must be for the right reasons – only signs of real recovery would get the BoJ to move in the direction of tighter policy, and so for now stocks should remain the best way to play the global economic recovery.

Meanwhile as the UK trading day enters its final straight, the FTSE 100 is tantalisingly near another record closing high.

It is currently at 7725 which would not be an intra-day peak but would mark a new record close, just. Connor Campbell, financial analyst at Spreadex, said:

While the FTSE ummed and ahhed over hitting new highs, the Dow Jones wasn’t as shy, opening at a fresh record peak.

The Dow wasn’t that explosive after the bell rang on Wall Street. Yet, a 70 point rise left it tickling 25350, continuing its remarkable, seemingly unending climb. As for the afternoon’s meagre data offerings, just like its non-farm cousin last Friday, the latest JOLTS job openings reading came in below estimates, at 5.88 million compared to the downward revised 5.92 million seen the month previous.

The FTSE rose a half a percent throughout the day, fuelled by the Morrisons-led gains in the supermarket sector, sterling’s 0.4% and 0.1% declines against the dollar and euro respectively, and a healthy set of commodity stocks. This once again leaves the UK index around the 7720 to 7730 mark, tantalisingly close to another record high – hopefully Sainsbury’s Christmas update tomorrow will help the FTSE maintain the momentum it seems to have found today.

Over in the Eurozone the DAX and CAC varied in their enthusiasm. The former nudged just 0.1% higher despite a far better than forecast German industrial production figure; the latter, meanwhile, found itself trading at a 2 month peak after jumping half a percent.

Bitcoin is on the slide despite the earlier comments from JP Morgan chief executive Jamie Dimon that he regrets calling the cryptocurrency a fraud last September.

Bitcoin is currently down nearly 2% at $14,708. On Monday two US companies withdrew proposals to launch bitcoin exchange-traded funds, citing concerns by the Securities and Exchange Commission.

Wall Street opens at record high

If the FTSE 100 is not quite there, US markets have opened at new high.

Bolstered by hopes of strong economic growth, the Trump tax reforms and the expectation of a positive reporting season which starts this week, the Dow Jones Industrial Average has climbed 0.26% to 25,345. The S&P 500 opened up 0.13% at a record 2751 while the Nasdaq Composite is 0.24% better at a new peak of 7174.

Oil prices continue to move higher, shrugging off reports that Iran’s oil minister had said that Opec did not want to see crude much above $60 a barrel.

At the moment, Brent crude is up 0.43% at $68.07 a barrel while West Texas Intermediate is up 0.68% at $62.15. But the rally in oil prices to their highest level since May 2015 might fizzle out before too long, says Fawad Razaqzada, technical analyst at Forex.com:

Overnight saw the price of WTI crude hit its best level since May 2015, before falling back a little. Oil prices have hit the ground running at the start of this year, continuing their recovery from the middle of 2017, as global crude stockpiles fell from record high levels and due to good compliance with the production cuts by OPEC and Russia. Given that the production agreement has been extended to the end of 2018 at OPEC’s last meeting, the market clearly expects crude inventory levels to drop further.

But with OPEC set to review the duration of oil output cuts based on fundamentals at its next meeting in June, there is a possibility they could end the agreement sooner than expected. What’s more, oil prices are now at levels many regard as being high enough for US shale producers to accelerate drilling and production in the coming months. This could discourage OPEC and Russia to maintain their oil supply collusion until the end of the year, as many producers within OPEC itself won’t be happy to lose further market share to the US. Thus, there is a risk that the agreement could end prematurely, potentially resulting in another supply war.

Updated

Leading UK shares are edging to within a hair’s breadth of a new intra-day peak, with the FTSE 100 up 0.47% at 7733.12.

That would beat the record of 7733.39 set as long ago as .... yesterday. Retailers are leading the way after the better than expected Christmas trading update from Morrison while technology group Micro Focus has recovered some of the ground lost following disappointment with Monday’s half year results.

If it stays at this level it will manage a new closing high. The previous level is 7724.22, set last Friday.

Updated

More retail news: troubled burger chain Byron’s is reportedly planning to shut stores in a bid to cut its rental bill and keep operating.

Sky News’s Mark Kleinman reports:

Sky News has learnt that the company will launch a so-called company voluntary arrangement (CVA) on Wednesday that will require the approval of creditors including landlords.

The CVA is critical to Byron’s future because a new injection of cash into the business, agreed last month, will only take place if the restructuring of its property interests is voted through.

Sources close to the deal, which is being handled by KPMG, said the proposals were likely to involve the closure of around 15 poorly performing restaurants and a reduction of rental payments at approximately 20 others.

CVA’s are a popular way for struggling companies to ditch their worst-performing outlets and trim costs, making them financially viable.

But if Byron’s landlords reject the plan, the burger vendor could soon be out of the grill and into the fire....

Aid and development charity Oxfam has also had a good Christmas - and people in the poorest parts of the world should benefit

My colleague Angela Monaghan explains:

Oxfam proved a Christmas hit with UK shoppers as vintage designer party clothing and first-edition books helped drive a sharp rise in online sales over the festive season.

The charity said Burberry, Barbour, Gucci, Whistles and Boden were among the most popular clothing brands searched for on its online shop, where sales jumped by a third in the eight weeks to 23 December. Cameras, blankets and throws were also sought-after items.

Oxfam’s total sales over the period were £16.9m, up 1.2% on the same period in 2016. The charity said the extra money raised was enough to provide clean, safe water for almost 200,000 people in an emergency.

More here:

Dimon regrets bitcoin comments, and backs tax reforms

JP Morgan’s CEO, Jamie Dimon, seems to have eaten some bitcoin humble pie.

Dimon has told Fox News that he ‘regretted’ labelling bitcoin as a fraud last September - a comment that enraged (or amused) cyber-currency supporters.

But while he acknowledges that the blockchain that underpins bitcoin has real uses, he insists he still isn’t very interested in the whole issue of digital currencies.

As Dimon put it:

“The blockchain is real. You can have crypto yen and dollars and stuff like that. ICO’s [initial coin offerings - or new digital coins] you have to look at individually.

The bitcoin to me was always what the governments are gonna feel about bitcoin as it gets really big, and I just have a different opinion than other people. I’m not interested that much in the subject at all.”

Dimon also backed Donald Trump’s new tax reforms -- arguing that the president was right to almost halve US corporation tax to 21%.

The old 40% tax rate was a “huge disadvantage” to America, Dimon argued, driving capital and skilled labour overseas.

In the long run, the cut will help firms to grow their businesses and invest in research and development, Dimon insists.

Critics of the tax reforms, though, argue that they will mainly benefit high-earners, and end up costing middle-class Americans in the long term.

And here’s a reminder of how bitcoin shrugged off Dimon’s warning:

Technology site The Register has a good scoop -- apparently Britain’s City watchdog has (perhaps accidentally) banned workers across the financial services industry from using their own phones and computers for work.

It’s all to do with the new MIFID II directive; designed to prevent market abuse which came into force this week. The FCA seems to have enforced the new rules with excessive zeal.

The Reg’s Gareth Corfield explains:

The UK’s Financial Conduct Authority has quietly transposed an EU rule without including a crucial bit of detail, thus effectively banning BYOD [bring your own device] policies in all financial services organisations across Blighty.

The UK version of the rule, which came into force on January 1, prohibits any business regulated by the FCA from letting its employees communicate with each other or the outside world “on privately owned equipment which the firm is unable to record or copy”.

However, the original version of the rule, contained in the European Union’s Market In Financial Instruments Directive (MIFID II), restricted this only to investment firms – not applying it to the entire financial sector.

The FCA regulates financial services firms ranging in size from behemoths such as Goldman Sachs right down to independent financial advisers who tell ordinary folk where best to put their savings and investments.

The body uses powers contained in the Financial Services and Markets Act 2000 (FSMA) to implement conduct and prudential rules, among these directives received from EU. It then sets out these rules in its handbook.

This is how what should have been a BYOD rule affecting only part of the market has been turned into a blanket ruling on BYOD affecting everyone – right down to self-employed advisers.

But before you chuck your phone in the bin, the FCA has since clarified that individuals can bring their own devices to work after all. However, bosses must take all reasonable steps to prevent them using them to send or receive unrecorded messages or calls.

Another headache for the IT manager.....

Updated

Germany’s government is optimistic about growth prospects in 2018:

The decline in eurozone unemployment will please the European Central Bank.

ECB president Mario Draghi has often cited falling joblessness as a defence of his stimulus policies, which cut interest rates to record lows and pumped trillions of euros into the economy.

Dennis de Jong, managing director at UFX.com, reckons Draghi can feel vindicated, in the face of criticism from some politicians (particularly in Germany). But there could be more challenges ahead....

“Lower unemployment sets the field for wage growth and ultimately higher inflation, so the euro should be in demand with traders today.

“Draghi has successfully navigated the eurozone through a particularly tricky period, and its economic prospects look strong. However, with further political instability brewing in both Spain and Germany, not to mention uncertainty surrounding Brexit, some continue to ask what lies beneath this millpond?”

This is an significant moment:

Unemployment among young people across the eurozone has also fallen, but the job isn’t finished yet.

The euro-area jobless rate dropped to 18.2% in November, down from 20.5% a year ago.

But again, some countries are in much better shape than others:

In November 2017, the lowest rates were observed in the Czech Republic (5.0%) and Germany (6.6%), while the highest were recorded in Greece (39.5% in September 2017), Spain (37.9%) and Italy (32.7%).

The unemployment rate across the wider European Union has fallen to a nine-year low of 7.3%, down from 7.4%.

Over the last 12 months, unemployment in the EU has dropped by 2.133 million people, and by 1.561 million in the euro area.

But before anyone gets carried away, there are still 18.116 million men and women unemployed in the EU, including 14.263 million in the eurozone.

Updated

Eurozone jobless rate hits lowest since 2009

Newsflash: Unemployment across the eurozone has hit its lowest rate on almost nine years.

The euro-area jobless rate fell to 8.7% in November, down from 8.8% in October. That’s the best reading since January 2009, when the global economy was crashing into recession.

But... there are still sharp differences between euro-area members.

The lowest unemployment rates were recorded in the Czech Republic (2.5%), and Malta and Germany (both 3.6%).

While in Greece, more than one in five people (20.5%) are out of work, followed by Spain with a 16.7% jobless rate.

Eurozone unemployment figures
Eurozone unemployment figures Photograph: Eurostat

More to follow....

City analysts are welcoming today’s strong German economic data, particularly the 3.4% jump in industrial production in November.

Jennifer McKeown of Capital Economics says German seems to be ending 2017 “with a bang”.

She writes:

“November’s surge in German industrial production is a welcome confirmation that the economy approached the end of 2017 in very good health and the surveys point to further strength to come.

Mark Ostwald of ADM Investor Services agrees, saying:

Better than expected German Trade and Production data affirmed what is already well known, i.e. that the German economy is in rude health.

It’s great to see Majestic Wine and Morrison’s bosses praising their hard-working employees this morning. But a cynic might wonder whether they’re partly motivated by a fear of losing them.

Recruitment firms say that UK companies are finding it harder and harder to find skilled staff - putting a real premium on retaining workers.

Kevin Green, chief executive of the Recruitment and Employment Confederation, says it’s the worst situation in at least a decade.

“We have lists where recruiters cite the jobs they are currently finding it hard to fill, in permanent jobs there used to be six or seven areas. Now there are 50 or 60. It goes on and on and on.

“It is comprehensive, you would have to say the skill and talent shortages are pervasive across the economy at the moment.”

This tightening labour market is good news for employees, as they should be able to negotiate significant pay rise. Warm words in the Christmas trading updates won’t be enough!

The Telegraph has the details:

Britain’s FTSE 100 is on the brink of a new all-time high.

The blue-chip index has gained 33 points to 7,729 points, just 4 point shy of yesterday’s intraday peak.

Majestic: Our 'delightful' staff got us though tough times

Majestic Wine CEO Rowan Gormley.
Majestic Wine CEO Rowan Gormley. Photograph: Guy Bell/Majestic Wine/PA

Majestic Wine is also highlighting its staff’s cheerful nature in the face of customers seeking the perfect Pinot Grigio or Pomerol for the Christmas festivities.

Britain’s largest wine retailer grew its like-for-like sales by 4.1% over the 10-week Christmas period, including a 1.3% rise at its retail outlets.

CEO Rowan Gormley says Majestic, which also owns online retailer Naked Wines, is on track to hit City forecasts:

“The team performed brilliantly.

The fact that we have been able to grow sales and maintain margins shows that our winning formula of fabulous customer service from delightful people and delicious wines at fair prices works even when times are tough.

15 months ago, Majestic Wine hit its shareholders with a profits warning, so Gormley hopefully enjoyed a better Christmas this time around.

Updated

Christmas can be a stressful time for shoppers and shop-workers alike.

So it’s interesting that Morrisons reckons its staff’s cheery demeanour boosted its sales over the festive period.

It says:

Customer satisfaction again improved year-on-year − we had more tills open, shorter queues, and customers noticed our colleagues’ friendliness even at the busiest times.

The Evening Standard’s Alex Lawson doesn’t sound convinced:

Morrisons: What the experts say

Neil Wilson of ETX Capital is impressed by Morrisons’ sales growth over Christmas.

He suspects that investors who bet against Britain’s fourth-largest supermarket will soon have burned fingers, following this morning’s financial results.

“The market has not really been buying into Morrisons’ recent run of form, but yet another very impressive trading statement that has beaten expectations comfortably could turn the tide of opinion. Eight straight quarters of sales growth, yet shares were last trading c8% off the highs last February. That may change now and the shorts could face a big squeeze this morning.

Short interest is quite high so this share could pop if they throw in the towel and finally buy into David Potts and co’s strategy, which is clearly paying off.

Connor Campbell of SpreadEx says Morrisons has a “mega” Christmas:

For the 10 weeks to 7th January the smallest of the Big Four supermarkets smashed expectations, posting a 2.8% surge in like-for-like sales (excluding fuel) against the 1.7% rise forecast

Breaking down the figures further and Morrisons had plenty to smile about; its Best premium range jumped 25%, suggesting savvy branding on the supermarket’s behalf, while online sales, which include those made through Amazon Fresh, were up 10%.

These figures sent the Northern favourite nearly 4.5% higher to a 3 month peak, and set a high bar to clear for Sainsbury’s, Tesco and Marks & Spencer, all of whom report this week.

Updated

Morrisons beats Christmas forecasts

A Morrisons store.

Supermarket chain Morrisons has smashed City forecasts for the crucial Christmas period, sending its shares jumping.

Morrisons grew its like-for-like sales by 2.8% over the last 10 weeks, beating expectations of 1.7% growth.

The Christmas and New Year period was particularly strong, with sales surging by 3.7%

CEO David Potts says his turnaround plan is bearing fruits:

“More and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas. The hard work and friendliness of our colleagues continues to be key in delivering our strengthening performance, and I would like to thank them for everything they do for our customers.”

Shares have jumped by 4% in early trading, as Morrison’s cements its place as a Christmas winner.

More reaction to follow....

Updated

European stock markets have opened higher, with the jump in German industrial production cheering traders.

European stock markets this morning
European stock markets this morning Photograph: Thomson Reuters

Naeem Aslam of Think Markets says:

European markets are trading higher as investors have reacted to positive German industrial data. The number was simply astonishing, and it printed the reading of 3.4% when the market was expecting a number of 1.8%.

But Maxime Sbaihi of Bloomberg is a little more cautious:

Germany’s factory sector has staged a “strong comeback”, says analyst Carsten Brzeski of ING.

He points out that these industrial production figures have been volatile - but the trend is positive, suggesting Germany isn’t being held back by pick-up in the euro exchange rate.

Brzeski writes:

  • German industry has gone through a small rollercoaster ride since the start of the summer. Disappointing numbers were followed by impressive rebounds. Behind the vacation and weather driven white noise of monthly data, however, there is a clear upward trend. Up to now, 2017 industrial production has had its best year since 2011. Contrary to earlier cycles, industrial production has been a lagging, rather than a leading indicator for the German recovery.
  • The strengthening of the euro exchange rate since April 2017 has left the German export sector unharmed. The geographic diversity of German exports once again seems to be the key to success. Particularly, Germany’s close and distant neighbours in the East have safeguarded this year’s export revival. Germany currently exports as much to Hungary, Poland and the Czech Republic as it does to the Netherlands, Belgium and Luxembourg. Exports to China have also rebounded this year. At the same time, the US remains the single most important export destination, while exports to the UK are becoming less important.

More here:

German trade figures beat forecasts

We also have new German trade figures - and they’re also stronger than expected.

German companies grew their exports by a sparkling 4.1% in November, well ahead of forecast of a 1.2% gain.

Imports also rose too, by 2.3%, ahead of forecasts of a 0.8% rise.

The seasonally adjusted data suggests that German manufacturers and service companies benefitted from the growing global economy, and that domestic demand was also solid.

Germany’s foreign trade balance swelled to a surplus of €23.7bn in November 2017, up from €22.0bn a year earlier. It ran a surplus with its fellow EU members, and with the rest of the world.

Here’s the details:

  • In November 2017, Germany exported goods to the value of €67.9bn to the Member States of the European Union (up 8%), while it imported goods to the value of €62.1bn from those countries (up 9.5%)
  • Exports of goods to countries outside the European Union (third countries) amounted to €48.5bn in November 2017 (up 8.4%), while imports from those countries totalled €30.7bn euros (up 5.9%).

On an annual basis, German industrial output growth hit a six-year high.

German industrial output surges

Germany’s economy has smashed forecasts this morning, with a big jump in factory output.

German industrial production rose by 3.4% in November, new figures from statistics body Destatis show. That’s the biggest monthly rise since September 2009, suggesting Europe’s largest economy picked up pace late last year.

Factories reported a surge in demand for heavy-duty machinery, vehicles and other equipment (capital goods), with consumer products also in demand.

Destatis explains:

Within industry, the production of capital goods increased by 5.7% and the production of consumer goods by 3.6%. The production of intermediate goods showed an increase by 3.0%.

Energy production was down by 3.1% in November 2017 and the production in construction increased by 1.5%.

German industrial output

Oliver Rakau of Oxford Economics is impressed:

The agenda: Eurozone unemployment; retail results

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today, we’ll find out if supermarket chain Morrisons, drinks business Majestic Wine and floorings business Topps Tiles were festive winners and losers, as they report their Christmas trading figures. Housebuilder Persimmon is also updating the City.

New eurozone jobless figures are due this morning, which may show that unemployment in Europe has hit a new eight-year low of 8.7%.

Otherwise there’s not much on the economic calendar.

Stock markets remain at record levels again this morning, as the global rally in shares continues.

City investors will also be digesting yesterday’s cabinet reshuffle, which frankly looks like a mess after health secretary Jeremy Hunt dug his heels in and refused to move, and education secretary Justine Greening quit rather than take a new role.

It wasn’t exactly an exhibition of prime ministerial authority from Theresa May, says Robin Bew of the Economist Intelligence Unit.

The agenda:

  • 10am: Eurozone unemployment rate for November.

Updated

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