Stock markets on both sides of the Atlantic have risen strongly, with French and Italian indices about 1.5% ahead while the German market has gained 1%, and the UK stock market is flat.

On Wall Street, the Dow Jones has gained more than 300 points, or 0.7%, while the S&P 500 is 1.1% ahead and the Nasdaq has jumped nearly 300 points, or 1.5%.

Crude oil prices have also climbed by more than 1%, boosted by colder than usual weather in Europe and the US. Brent crude is trading at $77.36 a barrel while US crude is at $74.87 a barrel.

Economists at ING said:

The dollar has sold off and then bounced back today on a Washington Post report that the new Trump administration may be more selective in its use of tariffs than first thought. Trump has since refuted the report, stating that its facts were wrong. As our traders say: welcome to the age of Trump 2.0.

Joe Biden has banned offshore drilling across an immense area of coastal waters, weeks before Donald Trump takes office pledging to massively increase fossil fuel production.

The US president’s ban encompasses the entire Atlantic coast and eastern Gulf of Mexico, as well as the Pacific coast off California, Oregon and Washington, and a section of the Bering Sea off Alaska.

A White House statement said the declaration protected more than 253m hectares (625m acres) of waters.

“As the climate crisis continues to threaten communities across the country and we are transitioning to a clean energy economy, now is the time to protect these coasts for our children and grandchildren,” Biden said in a statement.

“In balancing the many uses and benefits of America’s ocean, it is clear to me that the relatively minimal fossil fuel potential in the areas I am withdrawing do not justify the environmental, public health, and economic risks that would come from new leasing and drilling,” he added.

US Steel and Nippon Steel have filed a lawsuit against Biden’s order that blocked the $14.9bn buyout of the American steelmaker by the Japanese company, they said on Monday.

The lawsuit asked the court to set aside the review process of the committee on foreign investment in the US and Biden’s order, citing “violation of the constitutional guarantee of due process and statutory procedural requirements, as well as unlawful political influence”.

More than half of British companies are planning price rises in the next three months, according to research that found UK business confidence has slumped to its lowest since the chaos of Liz Truss’s brief stint as prime minister.

Of 4,800 businesses polled by the British Chambers of Commerce (BCC), 55% said they expected to increase prices by April, up from 39% in a similar survey in the second half of last year.

There was also a steep increase in concern about looming tax rises, after the government revealed a budget in October that relied heavily on business taxation to raise £40bn in extra revenues, including £25bn more in employer national insurance contributions (NICs).

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US services firms have recorded the biggest growth in output and new orders since March 2022, while employment increased for the first time in five months and business confidence hit an 18-month high, according to a closely-watched survey.

The latest US services PMI from S&P Global showed the headline business activity index rose for the second month running in December to a 33-month high of 56.8, compared with November’s 56.1.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

The US economy ended 2024 on a high according to the latest business surveys. Business activity in the vast services economy surged higher in the closing month of 2024 on fuller order books and rising optimism about prospects for the year ahead.

Expectations of faster growth in the new year are based the anticipation of more business-friendly policies from the incoming Trump administration, including favorable tax and regulatory environments alongside protectionism via tariffs.

The improved performance of the service sector has more than offset a continued drag on the economy from the manufacturing sector, meaning the survey data point to another robust expansion of the economy in the fourth quarter after the 3.1% GDP growth seen in the third quarter.

The strong service sector PMI reading for December sets the US economy up for a good start to 2025 but, with growth as strong as this, it’s understandable that policymakers are taking a more cautious approach to lowering interest rates. However, a key focus in the coming months will be the potential vulnerability of the economy to any major change in the interest rate outlook, especially as financial services activity has been an important engine of growth in late 2024, partly on the anticipation of a further lowering of borrowing costs.

Wall Street has opened higher after a newspaper report that the incoming Trump administration could adopt a less aggressive approach to US tariffs than thought.

The Washington Post reported that his advisers are considering applying tariffs only to critical US imports, rather than imposing blanket tariffs of 10% or 20% as previously mooted by Donald Trump.

The Dow Jones rose by nearly 190 points, or 0.4%, to 42,921 while the S&P 500 climbed by 62 points, or 1%, to 6,003 and the tech-heavy Nasdaq jumped by 303 points, or 1.5%, to 19,924.

HSBC has appointed Lisa McGeough as chief executive of its US operations, as part of sweeping changes announced by the bank’s new CEO Georges Elhedery.

McGeough is responsible for the UK-listed, Asia-focused bank’s growth in the US, including expanding its corporate and institutional banking division in North America.

She joined HSBC in 2021 and was most recently the co-head of global banking coverage. She previously held senior roles at US banks Morgan Stanley and Wells Fargo, among others, and was an analyst at Salomon Brothers/Citigroup in her early career.

A quick look at the markets: European stocks are roaring ahead, at the start of the first full week of trading in 2025.

• FTSE 100 index up 17 points, or 0.2%, at 8,241

• Germany’s Dax up 1.2% at 20,142

• France’s CAC up 1.8% at 7,411

• Italy’s FTSE MiB up 1.46% at 34,625

Oil prices are also trading higher as colder than usual weather spurred buying of crude, and amid a weaker US dollar and expectations of tighter sanctions on Iranian and Russian oil exports.

Brent and US West Texas Intermediate crude, the global benchmarks, hit their highest levels since mid-October, rising to over $77 a barrel and $75.66 respectively.

Sterling has rallied against the dollar, after a Washington Post report that incoming US president Donald Trump’s advisers are considering only applying tariffs to critical imports.

Trump has threatened big US tariffs on imports to try and boost the domestic economy. In November, he talked of imposing blanket 10% or 20% duties on all trading partners.

Sterling rose as high as $1.255 and is now trading at $1.254, up by nearly 1%.

Last week, the pound fell to $1.2353, its lowest since April, as the dollar rallied, boosted by expectations for strong US economic growth and higher tariffs this year.

Many analysts think widespread tariffs would hurt other countries and could lift US inflation, limiting the Federal Reserve’s scope for interest rate cuts and thereby supporting the dollar.

In Germany, Europe’s biggest economy, inflation rose more than expected to an annual rate of 2.9% in December.

This is up from 2.4% in November, according to preliminary data from the federal statistics office, and above economists’ forecast of 2.6%.

The core inflation rate, which excludes volatile food and energy prices, climbed to 3.1% from 3%.

Energy prices fell by 1.7% year on year while food prices rose by 2%.

In the eurozone as a whole, inflation is expected to accelerate to 2.4% in December from 2.2% in November. But the European Central Bank expects inflation to settle around its 2% target this year.

Joe Biden is moving to ban new offshore oil and gas drilling in most US coastal waters, two weeks before Donald Trump takes office, who has pledged to expand offshore drilling.

In a last-ditch effort, Biden said he is using authority under the federal Outer Continental Shelf Lands Act to protect offshore areas along the east and west coasts, the eastern Gulf of Mexico and portions of Alaska’s Northern Bering Sea from future oil and natural gas leasing.

Biden said in a statement:

My decision reflects what coastal communities, businesses and beachgoers have known for a long time: that drilling off these coasts could cause irreversible damage to places we hold dear and is unnecessary to meet our nation’s energy needs,

As the climate crisis continues to threaten communities across the country and we are transitioning to a clean energy economy, now is the time to protect these coasts for our children and grandchildren.

However, the outgoing president’s orders will not affect large swathes of the Gulf of Mexico, where most US offshore drilling occurs, but will protect coastlines along California, Florida and other states from future drilling. In total, they will protect more than 625m acres of federal waters.

The orders could be difficult for Trump to unwind because they are likely to require an act of Congress to repeal.

Trump himself has a complicated history on offshore drilling. He signed a memorandum in 2020 directing the interior secretary to ban drilling in the waters off both Florida coasts, and off the coasts of Georgia and South Carolina until 2032.

This came after Trump initially moved to vastly expand offshore drilling, before retreating amid widespread opposition in Florida and other coastal states.

This time round, Trump has vowed to establish what he calls American “energy dominance” around the world as he seeks to boost US oil and gas drilling and move away from Biden’s focus on climate change.

Investor morale in the eurozone has fallen to the lowest level in more than a year, with Germany a continued drag on the bloc.

The Sentix index for the eurozone dropped to -17.7 points in January from 17.5 in December, the lowest since November 2023 – though not as bad as the -18 forecast by economists polled by Reuters.

“In the eurozone, the economic engine is threatening to freeze up for the long-term,” the survey said, adding that Germany’s economy “is hanging on to the eurozone like a lead weight”.

The survey of 1,121 investors showed expectations slightly improved to -5.0 in January from -5.8 points last month. But this was outweighed by the worsening view of the current situation, which fell to -29.5 in January from -28.5 in December – marking the lowest level since October 2022.

The survey also found that Germany – Europe’s largest economy, which is holding a general election next month – appears to be in recession and is unlikely to emerge from it any time soon.

Separate PMI surveys showed an improvement in the eurozone’s services industry in December, but overall business output continued to decline.

In its monthly snapshot, Hamburg Commercial Bank said the composite PMI output index, which comprises manufacturing and services, rose to 49.6 from 48.3 in November.

For the services sector, the business activity index climbed to 51.6 from 49.5 in November, indicating a return to growth. The 50 mark divides expansion from contraction.

The High Speed 1 line that carries Eurostar trains from London to the Channel Tunnel has been forced by the regulator to cut the prices it charges operators in a push to open up the route to more companies.

The Office of Rail and Road (ORR) said it hoped the £5m annual reductions in what HS1 Limited may charge those using the line up to 2030 will support growth, “including the introduction of new operators”.

Eurostar operates the only international train services from Great Britain, but two companies – Spanish rail firm Evolyn and the Dutch train startup Heuro – have said they are interested in offering rival services amid criticisms of the cost of Eurostar. The operator of the Channel Tunnel, Getlink, said a year ago that new direct high-speed train routes from London to Cologne, Frankfurt, Geneva and Zurich could be up and running within five years.

Any company operating a service on HS1 must pay charges to access the 109km line. While the owner is a private company, the amount it can charge is regulated because it holds a monopoly.

The ORR said that HS1 needed to cut its fees by 3.8% compared with what it had planned, including reducing charges for renewing tracks and London St Pancras stations and lowering maintenance costs.

This is a stark statistic: the chief executives of FTSE 100 companies will have made more money in 2025 by midday on Monday than their average worker does in a whole year, according to the latest measure of inequality between bosses and their employees.

Median pay for FTSE 100 chief executives is £4.22m, 113 times the median full-time worker’s pay of £37,430, according to the High Pay Centre, a campaign group. That means UK bosses will exceed their workers’ annual pay within 29 hours – or at about 11:30am on Monday, if they started work straight after the new year holiday.

Bosses will hit the milestone marginally quicker this year than last, when it was reached at 1pm on the third working day of the year.

Workers’ pay did improve somewhat faster over the year, according to figures disclosed by the companies. Pay for bosses rose by 2.5%, against 7% for workers. However, bosses’ pay is at record levels.

The annual study aims to highlight the huge disparity in pay for bosses and their staff, a gap that has grown bigger in recent decades, prompting calls for action from unions and some politicians.

Britain’s private sector barely expanded last month, according to surveys, recording the lowest business activity since October 2023, as firms in the dominant services laid off staff at the fastest rate since January 2021, when a Covid lockdown was in force.

The final reading for the composite PMI (which includes manufacturing and services), from S&P Global, shows that the main business activity index fell to 50.4 in December from 50.5 in November, the lowest since October 2023 and barely above the 50 mark that separates expansion from contraction. It is slightly below the flash estimate of 50.5.

The headline index for the services sector rose to 51.1 in December from 50.8 in November, but was below the flash estimate of 51.4. Input cost pressures accelerated to an eight-month high, the survey showed.

Tim Moore, economics Director at S&P Global Market Intelligence, said:

The service sector ended last year with only a marginal upturn in business activity and a near-stalling of incoming new work. Survey respondents suggested that falling business and consumer confidence, largely due to worries about domestic economic prospects in 2025, had led to a considerable loss of growth momentum. While most parts of the UK service economy noted weak demand and cutbacks to client budgets, there remained pockets of strong growth in areas such as technology services.

A post-Budget slump in business optimism persisted in December, with output growth expectations for the year ahead unchanged from November’s 23-month low. Concerns about the impact of rising payroll costs, alongside a general unease about the climate for business investment, were reported as the main factors weighing on prospects for growth in 2025.

Rising input price inflation added to the gloomy near-term outlook for service providers, with overall cost pressures reaching an eight-month high in December. Prices charged inflation meanwhile intensified at the end of last year and remained well in excess of pre-pandemic trends.

Faced with subdued demand and rises in employment costs, many services firms scaled back their staff hiring and delayed backfilling roles in December. Nearly one in four reported an overall decline in their payroll numbers. Excluding the pandemic, this represented the steepest pace of job shedding for more than 15 years.

Aldi has reported its “best Christmas ever” after Britain’s fourth-biggest grocer said it made sales of more than £1.6bn in the four weeks to Christmas Eve, thanks in part to shoppers trading up to its premium range.

The supermarket chain said total sales for the crucial holiday period increased by 3.4% year-on-year, helped by a 12% increase in sales of its Specially Selected own-label products.

The German-owned retailer’s annual sales growth was slower than the 8% it recorded during Christmas in 2023, but it was still a consecutive record year for sales during the period.

The last three months of the year are known of as the “golden quarter” in the retail industry as households go on a spending spree for presents and food. Aldi said that Monday 23 December 2024 was its busiest ever trading day, with 3 million customers visiting. Its previous busiest day was Friday 22 December the year before.

It came after its fellow German-owned rival, Lidl, also reported record Christmas sales of more than £1bn. Lidl sales rose by 7% for the period, albeit after it increased its floor space by 3%. The two German chains have changed British spending habits by emphasising lower prices over extensive choice.

But it’s not all doom and gloom.

The consultancy firm KPMG reckons the UK economy will grow by 1.7% this year, double the estimated rate for last year.

Dame Irene Hays, the owner and chair of Hays Travel, Britain’s largest independent travel agent, is also upbeat. She told BBC radio 4’s Today programme:

I don’t see less confidence in the sector. In fact, I know it’s early days in January, but we were up in 2024 by 18.4% and just looking at the early start we’ve had to January, we’re up by 22% so there’s general confidence in the sector.

There’s an acknowledgement that there are additional payments to be made in terms of national insurance and national living wage. But we’ve been around for 45 years now, and we have managed a business through lots of different administrations, and all we do is really understand the rules of the game and try and play it better than anybody else.

British medium-sized businesses are gearing up for a challenging start to 2025 amid supply chain pressures and rising costs, according to another business survey, from the accounting and advisory firm BDO.

More than a quarter (29%) of firms are grappling with significant supply chain challenges, with delayed deliveries and inventory shortages disrupting operations and affecting their ability to meet customer demand.

On top of this, firms worry about economic and geopolitical tensions, and the prospect of new tariffs on international trade from Donald Trump, who becomes US president on 20 January.

Rising operating costs are another major challenge, with 28% of companies regarding the growing financial burden as their top concern going into the new year. Almost a third, 32%, of mid-sized businesses say they need additional financial support – including bank loans or government grants – to help navigate the hurdles of 2025.

Even so, many of them are more confident that they were at the start of the decade.

Nearly half (49%) feel they are in a stronger position than before the Covid-19 pandemic began in March 2020. This is reflected in their investment intentions, with an average of £4.6m earmarked by mid-sized companies over the next two to five years.

As part of their investment plans, almost half (47%) of companies are looking to integrate AI into their supply chain operations to streamline processes, reduce errors and improve overall efficiency. Almost a quarter (23%) are planning to hire people in specific roles to support AI adoption.

Richard Austin, partner at BDO, said:

Mid-sized businesses have faced a tough decade so far but, despite ongoing supply chain challenges and elevated costs, they are entering 2025 in a stronger position and with strong intent to invest in future growth.

We need the government to throw its weight behind these ambitious, resilient mid-sized businesses. They are the engine room of the economy, employing more than eight million people across the UK. They need a more favourable operating environment, underpinned by policy and taxation, that enables better access to capital and encourages ongoing investment in new technologies.

European stock markets have opened higher, with the exception of the FTSE 100 index in London, which is trading some 20 points lower, down 0.2% at 8,205.

Germany’s Dax and Italy’s FTSE MiB are about 0.3% ahead, while France’s CAC has gained nearly 0.7%.

Richard Hunter, head of markets at interactive investor, said:

Investors finally found their footing in the new year, with markets snapping a five-day losing streak as AI [artificial intelligence] resumed its mantle as a major driver.

Microsoft announced on Friday that it would be spending some $80bn on AI-enabled data centres this year, which spilled over into the wider mega tech sector. Nvidia shares added almost 5%, Super Micro Computer advanced by 11%, with some strength also in evidence in the likes of Amazon and Meta Platforms.

However, heightened valuations means that markets will be prone to disappointments this year. The benchmark S&P500 ended 2024 with a gain of 23%, having posted a rise of 24% the previous year. For the Nasdaq the strength has been even more pronounced, with a spike of 29% last year following on from a jump of 43% in 2023.

In the meantime, US markets are subject to another four-day trading week as markets will be closed on Thursday in honour of former president Jimmy Carter, who died at the end of December. On Friday, the first acid test of the year comes in the form of the release of the non-farm payrolls report, where the current consensus is that 150000 jobs will have been added in December, after posting a gain of 227000 in November.

Turning to Asia and the UK, he said:

Asian markets were lower overnight, failing to respond to comments from the Japanese government that it would act to secure economic growth through wage increases and investment. Equally, and despite a report indicating that China’s services economy grew at the fastest rate in several months, the overarching threat of increased tariffs from the new US administration continue to weigh. Sentiment was further dented after president Joe Biden blocked an attempted $15bn bid for US Steel Corp by Nippon Steel, further ratcheting up geopolitical tension.

Markets struggled to make any meaningful progress in the UK at the open, with Unilever and Rolls-Royce among the early fallers after broker downgrades, although for the latter the markdown made little difference to a share price which has risen by 89% over the last year. On the flipside, there was some strength in the shares of Barratt Redrow after a broker upgrade, where a 23% decline in the price in the last year has reflected disappointment across the sector as a whole that the anticipated recovery in housebuilders has failed to materialise.

More on China.

The tightly controlled yuan has weakened to its lowest level in 16 months while China’s blue-chip stock slipped, and has lost 4.1% so far this year. The currency has had a rocky ride, with two weeks to go until Donald Trump becomes US president. He has threatened big US tariffs on Chinese imports.

Chinese authorities have introduced a number of measures to support the yuan, such as swap and relending schemes totalling 800 billion yuan to shore up investor confidence. The threat of US tariffs along with worries about China’s sluggish economic recovery have triggered capital outflows.

The People’s Bank of China could issue more yuan bills in Hong Kong, state-owned news outlet Yicai reported on Monday. Financial News, a central bank publication, said the PBOC has the tools and the experience to respond to the currency’s depreciation.

Charu Chanana, chief investment strategist at Denmark’s Saxo Bank, said:

The decision to allow the yuan to weaken last week has heightened concerns about capital outflows, further dampening investor sentiment.

Preventing a sharp decline of the yuan will be crucial for China’s recovery. Any tactical recovery this year will need more than just stimulus measures, particularly whether China can negotiate a deal with president-elect Trump.

The Shanghai and Shenzhen stock exchanges have held meetings with foreign investors, to assure them they would continue to open up China’s capital markets, the two bourses said on Sunday night.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Confidence among British businesses has plummeted to the lowest levels since ex-prime minister Liz Truss’s mini-budget in September 2022 following the autumn budget’s large tax increases.

A survey of nearly 5,000 firms from the British Chambers of Commerce showed concerns over taxation were the highest since 2017, while confidence about sales over the next 12 months was the lowest since late 2022.

The BCC’s director general Shevaun Haviland said:

The worrying reverberations of the budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes.

The chancellor, Rachel Reeves, announced £40bn of tax rises on 30 October, with a big burden on businesses, who will have to pay higher social security charges from April, along with a higher national minimum wage.

While the Bank of England estimates that higher public spending will temporarily boost growth next year, the tax rises are also expected to push up inflation slightly.

The BCC said 55% of firms plan to raise prices, up from 39% the quarter before, while 24% intend to scale back investment, up from 18% previously.

Growth in the UK economy picked up in the first half of 2024 as it recovered from a shallow recession in late 2023, but flatlined in the third quarter. The Bank of England has forecast zero growth for the fourth quarter, and an expansion of 1.5% in 2025.

In China, services growth has risen to a seven-month peak, according to a closely-watched survey.

The Caixin purchasing managers’ index (PMI) rose to 52.2 in December from 51.5 in November, signalling the strongest growth in the service sector since May, as new orders accelerated, despite a fresh fall in exports. Confidence remained upbeat despite higher cost pressures.

However, authorities are struggling to prop up the yuan, which has fallen to a 16-year low amid concerns about the economy and US tariffs.

Chinese stocks slipped on Monday, with the benchmark CSI 300 index down by 0.16%, as the country’s two biggest stock exchanges said they met foreign investors over the weekend.

The Shanghai and Shenzhen stock exchanges both held weekend symposiums with foreign investors “to solicit opinions and suggestions on the recent A-share market situation,” referring to shares from companies in mainland China that trade on the two stock exchanges.

The Shenzhen Composite index fell by nearly 0.4% on Monday, while the SSE Composite (stocks that are traded at the Shanghai Stock Exchange) edged 0.14% lower.

The South Korean Kospi led gains in Asia, rising by 2.3%, despite political turmoil in the country. Police will consider arresting members of the presidential security service if they try to block investigators, in an attempt to execute an arrest warrant for impeached president Yoon Suk Yeol, according to the Yonhap news agency and Reuters.

The Agenda

• 9am GMT: Eurozone HCOB PMI composite and services final for December

• 1pm GMT: Germany inflation for December

• 2.45pm GMT: US S&P Global composite and services PMIs final for December

• 3pm GMT: US Factory Orders for November