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Introduction: FTSE 100 heads for best year since 2009
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The London stock market is ending its strongest year since the aftermath of the financial crisis at record levels.
2025 has been a very strong year for the FTSE 100 – the blue-chip index of UK stocks has climbed by over 21% since the start of January, which would be its best year since 2009.
Last night, the index ended the day at a new closing high of 9,940 points, after touching a new peak of 9,954 points, as a burst of ‘Santa rally’ excitement rippled through the City.
This year’s rally has been driven by mining stocks, precious metals producers, defence companies and banks – in a year in which the gold price has surged, and the dollar has weakened.
And for once, London has outperformed Wall Street – where the S&P 500 index has gained 17%.
Danni Hewson, head of financial analysis at AJ Bell, says:
“The global nature of the inhabitants of London’s top-flight index has helped it avoid the doldrums which have held back the more domestically focused FTSE 250…
“Investors have been looking beyond the usual suspects for value and diversification as the US dollar came under pressure and the world continued to be beset with geopolitical turmoil and fears of an AI bubble. An indication that further interest rate cuts are on the cards in the US could enable Wall Street to find a higher gear and minutes from the Fed’s last meeting of the year should also shed some light on that.
“But after that Liberation Day dip which now feels so long ago, European markets have delivered a strong annual performance and today’s surge should help maintain that momentum into the new year.”
The agenda
Key events
It’s probably going to be a limp end to trading on Wall Street this year.
The futures market is indicating that the S&P 500 share index will dip by 0.25%, with the tech-focused Nasdaq on track for a 0.35% drop.
US dollar on track for worst year since Trump 1.0
The US dollar is heading for its steepest annual drop since 2017, and Wall Street banks predict further weakness next year.
The dollar index, which tracks the greenback against a basket of currencies, has fallen by over 9% during 2025, as America’s economy was hit by the Trump trade war.
It is under pressure as investors anticipate cuts to US interest rates in 2026; Donald Trump is preparing to name a new head of the Federal Reserve who will lower borrowing costs.
Lee Hardman, senior currency economist at Japanese bank MUFG,
The dollar remains on track for a full-year decline of 9.4%, which would mark the largest calendar-year sell-off since 2017. Both periods coincided with the first years of President Trump’s two terms in office. The dollar regained some ground in 2018 when the index rose by 4.4%, but we do not expect a similar recovery in the year ahead. Instead, the weakening trend is likely to extend into 2026.
The dollar is no longer as overvalued following this year’s sharp sell-off, driven by heightened U.S. policy uncertainty under the Trump administration and the Fed’s decision to resume rate cuts.
Xi: China’s economy set to hit 5% growth goal in 2025
President Xi Jinping has declared China’s economy is set to hit its growth target for this year.
After what he called an “extraordinary year”, Xi told an annual gathering held by the country’s top political advisory body that China’s gross domestic product is expected to expand by around 5% during 2025.
According to the official Xinhua News Agency, Xi told the Chinese People’s Political Consultative Conference:
“China’s economy is forging ahead under pressure, moving toward innovation and quality, demonstrating strong resilience and vitality.
The growth rate is expected to reach around 5%, continuing to rank high among the world’s major economies.”
The pan-European Stoxx 600 share index is poised for its biggest annual gain since 2021, after hitting a record high yesterday.
The Stoxx 600 has gained over 16% this year, led by gains in Milan, Frankfurt and London.
Better-than-expected growth across Europe, and Germany’s plans for higher fiscal spending, have supported European stocks – banks have had their best year since 1997.
The London stock market has opened a little higher, on the final trading day of the year.
The FTSE 100 index has gained 9 points, or almost 0.1%, to 9,949 points, towards the intraday record high set yesterday.
Mobile phone operator Vodafone (+0.8%) is the top riser, followed by pharmaceuticals giant AstraZeneca (+0.6%).
Drinks company Diageo (+0.5%) is close behind; it’s lost a third of its value this year, after suffering weak sales and a supply problem in Latin America.
Oil is on track for a chunky fall in annual prices.
Brent crude futures are down nearly 18% in 2025, the biggest annual drop since 2020 when demand slumped during the Covid-19 pandemic.
That puts oil on track for a third straight year of losses, their longest-ever losing streak according to Reuters.
Supply of oil has outpaced demand in a year marked by wars, higher tariffs and OPEC+ output and sanctions on Russia, Iran and Venezuela.
Eurostar says train services resume, but warns of delays and cancellations
Eurostar has warned passengers could face delays and last-minute cancellations today, as services resume after a power supply failure caused widespread disruption on Tuesday.
Eurostar plans to run a full service today, and says:
“Services have resumed today following a power issue in the Channel tunnel yesterday and some further issues with rail infrastructure overnight.”
“We plan to run all of our services today, however due to knock-on impacts there may still be some delays and possible last-minute cancellations.”
Currently the 6.31am from St Pancras which was scheduled to arrive in Paris at 9.49am is expected to roll into the French capital at 10.24am.
The 8.42am from Paris Gare du Nord, which was due to arrive in London at 10am, is running around 30 minutes late too. The earlier 7.42am is 40 minutes late.
Introduction: FTSE 100 heads for best year since 2009
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The London stock market is ending its strongest year since the aftermath of the financial crisis at record levels.
2025 has been a very strong year for the FTSE 100 – the blue-chip index of UK stocks has climbed by over 21% since the start of January, which would be its best year since 2009.
Last night, the index ended the day at a new closing high of 9,940 points, after touching a new peak of 9,954 points, as a burst of ‘Santa rally’ excitement rippled through the City.
This year’s rally has been driven by mining stocks, precious metals producers, defence companies and banks – in a year in which the gold price has surged, and the dollar has weakened.
And for once, London has outperformed Wall Street – where the S&P 500 index has gained 17%.
Danni Hewson, head of financial analysis at AJ Bell, says:
“The global nature of the inhabitants of London’s top-flight index has helped it avoid the doldrums which have held back the more domestically focused FTSE 250…
“Investors have been looking beyond the usual suspects for value and diversification as the US dollar came under pressure and the world continued to be beset with geopolitical turmoil and fears of an AI bubble. An indication that further interest rate cuts are on the cards in the US could enable Wall Street to find a higher gear and minutes from the Fed’s last meeting of the year should also shed some light on that.
“But after that Liberation Day dip which now feels so long ago, European markets have delivered a strong annual performance and today’s surge should help maintain that momentum into the new year.”
The agenda
