The S&P 500 and the tech-focused Nasdaq have hit fresh record highs.

Trading has begun on Wall Street, and shares are up !

• S&P 500 up 15 points, or 0.4%, at 3,819
• Dow Jones up 91 points, or 0.29%, at 31,132
• Nasdaq up 81 points, or 0.62%, at 13,148

The global economy has just had its worst year of the modern age and 2021 has not got off to the best of starts either, writes the Guardian’s economics editor Larry Elliott. Yet stock markets appear impervious to bad news, with the MSCI world index of developed market shares 10% above its pre-crisis peak. There are a number of reasons why equity markets are so hot.

The US dollar erased gains made before the payrolls figures, and is now down 0.09% against a basket of major currencies.

Ayush Ansal, chief investment officer at the UK hedge fund Crimson Black Capital, says:

The dollar remained fairly resilient in the immediate aftermath of the print as such dire data will reinforce the prospect of the incoming administration reigniting the country with a major fiscal stimulus package.

The fact the Democrats now control the Senate, too, gives policymakers in the new administration carte blanche to supercharge the economy and try and move the country on from the unprecedented events on Capitol Hill.

Wall Street is now looking forward, to a time beyond Trump, but at the same time market watchers are acutely aware that this is still arguably the most tense time in American political history for decades.

In financial markets, European bourses are holding on to their gains, while the FTSE 100 index in London is flat at 6,852.

• Germany’s Dax up 0.61% at 14,053
• France’s CAC up 0.3% at 5,687
• Italy’s FTSE MiB up 0.14% at 22,775

Despite the weakness in the job market, the US economy is unlikely to fall back into recession, as a $900bn stimulus programme has been agreed by Congress and the incoming president Joe Biden is expected to expand spending further to prop up the economy.

Seema Shah, chief strategist at Principal Global Investors, said:

The December jobs report marks the first drop in payrolls since April, and an end to the labour market progress that’s been underway since the recovery from the pandemic began back in May. Given the accelerated rise in coronavirus cases recently and the associated drop back in activity, this was not entirely unexpected. Yet it will not go unnoticed by policymakers. With a Blue sweep controlling Congress, further fiscal stimulus is the name of the game and today’s data will only assist that agenda.

By contrast, the market reaction to today’s weak data is set to be muted. Investors are already looking through this temporary period of economic weakness and instead focusing on the brighter outlook where fiscal spending, monetary stimulus and mass distribution of the COVID-19 vaccines together ensure the US economy quickly returns to its pre-pandemic path.

Here is our full story on the weak US jobs numbers.

The recovery in the US jobs market collapsed in December, the last full month of Donald Trump’s presidency, as coronavirus infections soared across the country, writes Dominic Rushe in New York.

The US lost 140,000 jobs in December, down from a gain of 245,000 in November, according to the Bureau of Labor Statistics (BLS). The loss ended seven months of jobs growth with the leisure and hospitality sector once again bearing the biggest losses.

The unemployment rate stayed at 6.7%, close to twice as high as it was in February before Covid-19 hit the US. It is also three percentage points higher than the 4.5% rate Trump inherited from his predecessor Barack Obama.

In the leisure and hospitality sector, 498,000 jobs were lost in December, taking losses in this sector to 3.9 million since February, the US Labor Department said. Most of the latest loss (372,000) was at establishments serving food and drink.

Other areas fared better: Factory jobs increased by 38,000 after an upwardly revised rise of 35,000 in November. Jobs in construction and retail increased by 51,000 and 120,500 respectively.

It is the first decline in non-farm payrolls in eight months, and suggests the US jobs market recovery stalled in December. The fall was largely due to job losses at restaurants, bars, cafes and hotels.

Adam Button, chief currency analyst at Forex Live, says:

The headline was poor but the positive revisions over the last two months mitigated the damage. The earnings numbers are interesting but I’m inclined to think that’s due to lower wage workers losing their jobs.

Average hourly earnings rose by 0.8%, while economists had expected a 0.2% gain.

The US non-farm payrolls data comes out in a couple of minutes.

In other good news, the Covid-19 vaccine developed by BioNTech and Pfizer has been shown to work against a key mutation in the more contagious coronavirus variants discovered in the UK and South Africa.

A laboratory study by Pfizer and and the University of Texas, which has not been reviewed by peers yet, found that the vaccine can neutralise the virus with the so-called N501Y mutation of the spike protein. More here.

You can read more about the Moderna vaccine approval on our coronavirus live blog:

The health secretary, Matt Hancock, said:

We have already vaccinated nearly 1.5 million people across the UK and Moderna’s vaccine will allow us to accelerate our vaccination programme even further once doses become available from the spring.

Futures tracking Wall Street’s main indices have climbed to new highs ahead of the US jobs data at 1:30pm GMT. The Dow Jones futures are up nearly 0.3%, the S&P 500 is 0.4% higher and the Nasdaq 0.5% ahead.

All three indices hit record highs yesterday and the S&P closed above 3,800 points for the first time amid expectations of a bigger stimulus package and infrastructure spending once Joe Biden takes office, triggering buying of financial, industrial and material stocks.

Oil prices continue to climb and have touched 11-month highs today, boosted by Saudi Arabia’s voluntary output cut and rising stock markets. Brent crude has rallied 1.73% to $55.32 a barrel while US crude has gained 1.5% to $51.59.

And the European Medicines Agency, the EU regulator, said it may decide on the Oxford University/AstraZeneca coronavirus jab by the end of this month. AstraZeneca is expected to file for approval in the EU next week.

At the moment, two coronavirus vaccines are available in the UK: the mRNA one developed by German biotech firm BioNTech and US drug giant Pfizer, and a more traditional vaccine from Oxford University and British drugmaker AstraZeneca.

A third Covid vaccine, from the American biotech firm Moderna, could be approved by the UK regulator for emergency use as soon as today, Bloomberg is reporting. It has already been given the green light by regulators in the EU (earlier this week) and the US. The Moderna vaccine is similar to the Pfizer/BioNTech jab and has produced equally strong results in late-stage clinical trials, with efficacy of 94%.

This is certainly exciting news, but unfortunately Britain has ordered just 7m doses of the Moderna vaccine while the European Commission has ordered 160m doses for member states.

The Moderna shot was not part of the portfolio of vaccines bought by the UK until those results were released – and UK approval won’t make much of a difference to the UK’s goal of vaccinating the most vulnerable by mid-February.

Shares in Reach, the publisher of titles including the Daily Mirror, Daily Express and Manchester Evening News, soared by a quarter after the publisher significantly upgraded its profit forecast for 2020.

Reach, which was forced to cut 550 jobs last year to weather the pandemic, said that its forecast of £130m to £135m in underlying profits followed a record digital performance. Analysts had estimated full year profits of about £122m.

The company, which like all publishers struggles against giants such as Facebook and Google for digital income, said that digital revenue grew by 25% year on year in the fourth quarter last year. This compared to a 13% rise in the third quarter.

Despite the boost in digital income the company, which remains heavily dependent on print income, newspaper sales were down 11.7% in the fourth quarter. The rise in digital revenues helped limit the fall in total revenues to 10.2% in the quarter. This is a significant improvement over the 14.8% fall in total revenues in the third quarter last year.

Malcolm Morgan, media analyst at Peel Hunt, says:

Even though the shares have regained all of their Covid price fall, we expect the progress shown today to boost the share price further.

In contrast, Marks & Spencer’s clothing sales have been hammered by the pandemic. Here is our full story:

Britain’s biggest housebuilder, Barratt, has lifted its forecast for home sales in the current year.

The housing market has been surprisingly strong despite the pandemic, but is now slowing, according to Halifax, one of the UK’s biggest mortgage lenders.

The FTSE 100 index is back in positive territory, just about, at 6,857.

Pets at Home is the biggest riser on the FTSE 250 index, with the shares up 7.1%, after the retailer lifted its annual profit forecast for the second time in five months following strong Christmas sales.

It has benefited from a surge in demand for pet food, toys and accessories as more people than usual have been buying puppies and kittens during the pandemic.

The company, which has been allowed to stay open during Covid-19 lockdowns because it has been deemed an essential retailer, now expects to make a profit at last £77m this year.

Sterling is also having a good day. It has extended gains against the euro to 89.94p, up 0.6% on the day.

The dollar has risen slightly ahead of the non-farm payrolls report at lunchtime, the latest data on the US jobs market which should give some indication as to how much more stimulus will be needed to boost the economic recovery.

Against a basket of major currencies the greenback is up 0.13% this morning, after its biggest gain in over two months yesterday – but is still on track for a weekly decline.

The housing market has been surprisingly strong in recent months, despite the Covid-19 pandemic. Mortgage approvals rose in November to 104,9696, the highest level in more than 13 years, according to the latest Bank of England figures.

But many forecasters expect the market to slow this year as the stamp duty holiday expires at the end of March, the help to buy programme for new-build homes becomes more restricted, and crucially, unemployment is expected to rise sharply, once the government’s job retention scheme ends in April.

Jeremy Leaf, north London estate agent and a former residential chairman at the Royal Institution of Chartered Surveyors, says:

Not surprisingly, the pace of house price rises started to slow in December, which is exactly what we found in our offices, as home movers were deterred by further lockdown restrictions and seasonal distractions.

However, we recorded very few abortive sales, other than when chains had broken down or price renegotiations in response to reduced activity. Therefore, looking forward we expect the pattern to be repeated and the overwhelming majority of transactions to proceed to completion, followed by more balance between supply and demand as rollout of the vaccinations hopefully accelerates.

Other European stock markets are also pushing higher in early trading.

• Germany’s Dax up 1%
• France’s CAC up 0.8%
• Spain’s Ibex up 0.4%
• Italy’s FTSE MiB up 0.8%

Shares in London have opened higher. The FTSE 100 index has risen 26 points, or 0.42%, to 6,885 after the opening bell. The housebuilders Barratt and Taylor Wimpey are the biggest risers, trading 4.5% and 2.4% higher respectively, after Barratt issued an upbeat trading update.

Barratt, Britain’s biggest house builder, sold 9,077 homes in the six months to December, up from 8,314 a year earlier. It said demand was lifted by the introduction of the stamp duty cut and the help to buy programme, ahead of the end of March when the stamp duty holiday is due to end and help to buy becomes more restricted.

Barratt now expects to sell between 15,250 and 15,750 homes in the current year – more than the 14,500 to 15,000 completions it had forecast in October.

The housing market has bounced back strongly since the end of the first lockdown last spring when it ground to a halt, with property viewings and moves banned, and construction sites shutting. Many office workers are now working from home and no longer commuting to work every day, so some have moved out of London and other cities, in search of bigger houses and greener surroundings.

Marks & Spencer said this morning that its clothing sales dropped by a quarter over the key Christmas trading period as the retailer was hammered by the closure of non-essential shops because of Covid 19, reports our retail correspondent Zoe Wood.

The restrictions on socialising over Christmas – no Christmas parties this time – meant that party dresses didn’t sell. But pyjamas and jogging bottoms were big sellers as people snuggled up at home.

The outlook for trading “remains very challenging” because the latest lockdown could last until Easter, M&S said. Sales of clothing and home slumped by 24.1% in the 13 weeks to 26 December. The figure reflected a near halving of store sales which was partially offset by a similar sized surge in online sales.