Market snapshot: FTSE 100 takes early lead in 2026
After trading above 10,000 each session this year so far, the next milestone is a close above the big figure. ii's head of markets looks at UK stocks leading the way and market moving events overseas.
5th January 2026 08:21
by Richard Hunter from interactive investor
US markets trod water on the first day of the trading year, having ridden the tsunami of 2025 to end in fine shape.
- Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts
The main indices were largely flat, unable to put much water between a year which saw gains of 13%, 16.4% and 20.4% for the Dow Jones, S&P500 and Nasdaq respectively. The AI tech trade will continue to be a major focus this year, with increasing concerns around overvaluation finely balanced with revenue numbers which have, to date, vindicated a rally which has stretched over the last couple of years.
In any event, a feature towards the end of the year was an increasing rotation into other sectors and smaller cap stocks, based on investors’ desire both to hedge their exposure as well as reaping the benefit of lower interest rates. The current indications are that the Federal Reserve will leave rates unchanged this month, although the non-farm payrolls figure at the end of this week will feed into the central bank’s thinking.
The consensus is that 57,000 jobs will have been added in December, compared to 64,000 the previous month, with a further uptick in the unemployment rate to 4.7%, following a rise to 4.6% in November against expectations of 4.4% and compared to 4.2% a year earlier.
- Investment outlook: expert opinion, analysis and ideas
- Share tip review of 2025 and what I’d do with them now
Alongside inflation, the jobless rate will be key in deciding whether further stimulus is required, particularly for the vitally important consumer, without reigniting the trend towards higher prices, where the previous White House tariff manoeuvres played against bringing inflation down.
Meanwhile, the surprising capture of the Venezuelan President by the US over the weekend left the oil price lower as investors mulled the implications for global supply and where OPEC made no moves over the weekend. The dip adds to the decline of 18.5% last year, as oversupply and weakening demand weighed on the price. In contrast, the gold price rallied yet again, adding to its own strong gains, as the haven trade proved to be alive and well amid the further geopolitical tensions.
In Asian markets, stocks were for the most part higher, with Japan’s Nikkei 225 adding to its record closing high at the end of last year with a further 3% boost on its opening day of 2026 trading as manufacturing activity stabilised, despite some cautionary words from the Japan Exchange Group on the outlook in its customary New Year opening ceremony.
On the global stage, the FTSE100 has taken an early lead in another sign that the eclectic mix within the index continues to appeal to the investor zeitgeist.
Its exposure to a number of sectors which have captured the imagination drove the index 21.5% higher last year, let alone the additional bonus of an average 3% dividend yield, with the likes of resource, defence and banking stocks on a tear, as well as some strong performances in the pharmaceutical and utilities sectors.
A strong open tipped the index over the 10,000 level for the second time in the two trading days this year before slipping slightly back. The top of the leaderboard was dominated by the familiar sight of Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES) responding to the gold price jump, with defence leaders BAE Systems (LSE:BA.) and Babcock International Group (LSE:BAB) attracting interest given the most recent geopolitical moves over the weekend.
- The UK stock market outlook for 2026
- Watch our ii expert tips’ videos for 2026
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
The remainder of the week will be dominated by retailers reporting on trading over the festive period.
Bellwether Next (LSE:NXT) will kick off the updates season, with Marks & Spencer Group (LSE:MKS) then straddling both clothing and food, where the major supermarkets Tesco (LSE:TSCO) and Sainsbury (J) (LSE:SBRY) will add to the mix. With expectations low for a muted period of trading in comparison to previous years given the parlous state of the domestic economy, there will be opportunities for share price outperformance if any or indeed all of these major names deliver strong results.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.