- The FTSE 100 loses ground, after a positive open.
- China’s manufacturing data disappoints, showing a slowdown in factory activity.
- Energy stocks head higher as Brent Crude gains ground to trade just under $75 a barrel.
- Futures indicate higher open on Wall Street as optimism for US economy remains buoyant.
Susannah Streeter, head of money and markets. Hargreaves Lansdown:
‘’The FTSE 100 has fallen flat on first trading day of New Year. There was a pulse of positivity initially as markets opened but optimism seems to have waned as the session has progressed. The FTSE 100 initially climbed higher, continuing the mini rally which saw out the end of 2024, while the Dax and CAC 40 also opened in the green. But the mood has turned flat with little to push sentiment dramatically higher. Investors have been assessing more disappointing data from China, highlighting weakening factory activity, and it’s dampened the mood. The Caixin General Manufacturing PMI showed another slowdown in November. There are expectations for further promised stimulus for the economy, to boost confidence and kick start orders. But the snapshot of the sector shows how much work needs to be done. Mining stocks were on the front foot in initial trade but lost some ground. The waiting game is on for more proactive steps to propel growth in world’s second largest economy.
Energy stocks are pushing higher, helped by a climb in oil prices amid increased demand for energy in the United States and expected fresh economic stimulus in China. Industry data from API showed crude stocks fell by 1.4 million barrels last week, the third weekly fall in a row. Optimism about the strength of the mighty US economy remains buoyant for 2025. Already growth has kept outpacing forecasts as consumers and companies have shrugged off the impact of high interest rates, with the unemployment rate remaining low. The S&P 500 is set to open higher, with investors are hopeful that a goldilocks scenario will be the story of 2025, amid promises of lower taxes and the deregulation under a second Trump presidency. But with fresh trade wars looming, if the worst of the tariff threats are imposed, the bears could be back to disrupt what has been a fairytale performance for the US stock market.”
