Good morning, and welcome to our rolling coverage of business, financial markets, and the global economy. In a dynamic start to the week, global stocks have surged to unprecedented levels during Asian trading sessions, while energy giant BP has disclosed a significant downturn in its annual earnings.
Global Stocks Soar to New Heights
Global equities have achieved a fresh milestone, with the MSCI All-Country World Index climbing 0.2% to set a new record. This upward momentum was primarily fuelled by a robust three-day rally in Tokyo, where the Nikkei index soared 2.3% to an all-time peak. The surge follows a decisive electoral victory for Japan's conservative governing coalition, the Liberal Democratic Party (LDP), led by Sanae Takaichi, which secured a comprehensive win in Sunday's election, bolstering investor confidence in the region.
Concurrently, the yen strengthened for a second consecutive day, reflecting positive market sentiment. In currency markets, the US dollar experienced a slight decline in Asian trade and is now trading flat against a basket of other major currencies, indicating a shift in global financial flows.
Analyst Insights on US Economic Data
Ipek Ozkardeskaya, a senior analyst at Swissquote, provided commentary on the week ahead. She noted that the US dollar has begun the week on a weaker footing, with upcoming economic data poised to influence its trajectory. Key indicators include US retail sales for December, expected to show slowing growth, which could dampen festive season optimism. On Wednesday, the official jobs report is anticipated to reveal soft figures, with approximately 70,000 non-farm job additions, a steady unemployment rate, and slower wage growth at 3.6%. By Friday, the consumer prices index is projected to ease to 2.5% from 2.7% previously.
Ozkardeskaya emphasised that if soft labour data combines with cooling inflation, US bond yields and the dollar may remain under pressure. This scenario could support assets such as gold, other metals, Bitcoin, and equities, particularly favouring small-cap, mid-cap, and value stocks.
BP Reports Sharp Decline in Annual Profits
In corporate news, BP has announced a 16% drop in annual profits for 2025, with earnings severely impacted in the final quarter due to sharply lower oil prices. The FTSE 100-listed company reported underlying replacement cost profits—its preferred metric—of $7.5 billion (£5.5 billion) for the year, down from $8.9 billion in 2024. This decline was exacerbated by a 30% quarter-on-quarter plunge in fourth-quarter profits to $1.5 billion.
In response to these challenges, BP has decided to suspend its share buyback programme. The move aims to accelerate the strengthening of its balance sheet, as the company navigates a volatile energy market. Interim Chief Executive Carol Howle outlined strategic adjustments, stating that BP is reducing capital expenditure for 2026 to the lower end of its guidance range while continuing to drive down its cost base.
Howle further explained that decisive actions are being taken to high-grade the company's portfolio and reinforce its financial position. This includes executing a $20 billion disposal programme and fully allocating excess cash to the balance sheet, rather than proceeding with share buybacks.
Today's Key Agenda Items
Looking ahead, several significant events are scheduled for today:
- 9.45am GMT: The UK Treasury committee will question Treasury and housing ministers on the affordability of home ownership.
- 1.30pm GMT: US retail sales data for December will be released.
- 2.45pm GMT: The UK Business and Trade committee will hold a hearing on the US-UK trade deal.
These developments underscore a day of mixed fortunes in global markets, with record-breaking stock performances juxtaposed against corporate earnings pressures in the energy sector.
