Key Takeaways
- The FTSE 100 index surged past the 10,000-point mark for the first time, kicking off 2026 with a significant rally driven by strong performance in 2025 and renewed investor confidence.
- Eurozone manufacturing activity deepened its contraction in December, with the Purchasing Managers' Index (PMI) falling to 48.8, indicating a challenging end to 2025 for the sector.
- The Eurozone M3 Money Supply saw a year-on-year increase of 3.0% in November, surpassing expectations and suggesting a healthier liquidity environment.
- Geopolitical tensions escalated as Iran's Supreme Leader Adviser Ali Larijani warned that U.S. interference in Iran's ongoing protests would lead to chaos across the entire region.
Global financial markets presented a mixed picture at the start of the new year, with the UK's benchmark index achieving a historic milestone while the Eurozone's manufacturing sector continued to struggle. Geopolitical concerns also resurfaced with a stern warning from Iran regarding regional stability.
The FTSE 100 index (UKX) reached an unprecedented high, topping 10,000 points for the first time on Friday as trading resumed after the New Year's Day holiday. The blue-chip index climbed 1.1% to 10,039.05 points by 04:12 ET (09:12 GMT). This rally extended momentum from a robust 2025, during which the index gained over 1,750 points, ending the year at 9,931.38 points and delivering an annual gain of 21.51%—its strongest yearly performance since 2009. Mining stocks, benefiting from higher precious metals prices, and aerospace manufacturers like Fresnillo (FRES), Melrose Industries (MRO), and Rolls-Royce (RR) were among the top performers contributing to the surge.
In contrast, the Eurozone's manufacturing sector concluded 2025 with a deeper contraction. The HCOB Eurozone Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 48.8 in December from 49.6 in November, marking its lowest reading in nine months and falling short of the preliminary estimate of 49.2. A reading below 50.0 indicates contraction in activity. The decline was attributed to slowing demand, accelerating declines in new orders, and a decrease in production for the first time in 10 months. Germany, the bloc's largest economy, recorded the weakest performance, while France surprisingly saw its manufacturing PMI jump to a 42-month high.
Despite the manufacturing downturn, the Eurozone M3 Money Supply demonstrated resilience, increasing by 3.0% year-on-year in November. This figure exceeded both the estimated 2.7% and the previous month's 2.8%. The M3 money supply is a broad measure of liquidity, including currency in circulation, deposits, and short-term marketable instruments.
On the geopolitical front, Iran's Supreme Leader Adviser Ali Larijani issued a stark warning to the United States. He stated that any U.S. interference in Iran's ongoing protesting issue would be "equivalent to chaos across the entire region". This statement followed President Donald Trump's warnings that Washington would intervene if Iran used lethal force against peaceful demonstrators amidst widespread protests over economic hardship.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.