The opening bell has rung on Wall Street, and the Dow Jones and the S&P 500 have hit fresh record highs.

The Dow rose 163 points, or 0.45%, to 36,748 while the S&P 500 gained 15 points, or 0.3%, to 4,811 and the tech-heavy Nasdaq also added 15 points, or 0.1%, to 15,847.

The FTSE 100 index in London has powered 120 points, or 1.6%, ahead to 7,505 while Germany’s Dax is up 1.1% at 16,200, France’s CAC is 1.56% higher at 7,329 and Italy’s FTS MiB has gained 1.2% to 28,066.

The pan-European Stoxx Europe 600 has also hit a fresh record high, rising 1.1% to 495.46.

Sweden’s Economic Crime Authority has charged Swedbank’s former chief executive Birgitte Bonnesen over alleged economic crimes in relation to a Baltic money laundering scandal that rocked the bank three years ago.

The authority said in a statement that the former CEO was being charged with gross swindling as the primary count, or with serious market manipulation in the second instance, Reuters reported.

Swedbank said last year it would not file claims for damages against its former top executive and board for the financial year 2019, when the Swedish banking group came under investigation over money-laundering breaches in the Baltics.

When Bonnesen was sacked by Swedbank in March 2019, she was the second Nordic banking boss to be ousted within months amid money laundering allegations. Thomas Borgen resigned from Denmark’s largest lender, Danske Bank, last autumn.

On Wall Street, the Dow Jones and the S&P 500, which closed at record levels last night, are set for a record open, as worries about the Omicron variant subsided. Futures are pointing to a further 141 point gain for the Dow, a 15 point rise for the S&P 500 and a 21 point increase for the Nasdaq.

Over here, the FTSE 100 has climbed 108 points, or 1.47%, to 7,493. Germany’s Dax is 154 points ahead, a near-1% gain, at 16,174 while France’s CAC has added 103 points, or 1.4%, to 7,320 and Italy’s FTSE MiB has jumped 286 points, or 1%, to 28,017.

Britain’s manufacturers have suffered a drop in export demand amid pressure from Covid and Brexit, according to fresh data that shows supply chain disruption and staff shortages held back the economy in December.

Go-Ahead has halted the trading of its shares on the London Stock Exchange after the train and bus operator failed to file its financial results because of issues surrounding a £25m breach of Southeastern’s railway franchise agreement.

Burger King has become the first fast food restaurant to launch vegan nuggets in the UK today.

Shares in the embattled Chinese property developer Evergrande rose after being suspended.

Ministers have greater powers to block foreign takeovers of British firms after new rules came into effect on Tuesday giving them more scope to unpick deals that have the potential to harm national security.

The National Security and Investment Act, which enhances existing powers, is described by the government as the “biggest shake-up of the UK’s national security regime for 20 years”.

The number of UK first-time homebuyers has hit its highest level since 2002, according to a new estimate.

Despite the uncertainty generated by the pandemic and strong house price growth, the number of first-time buyer transactions in 2021 is estimated to be 408,300, according to Yorkshire Building Society.

The US electric carmaker Tesla has been criticised for opening a new showroom in the capital of Xinjiang, a region at the heart of years-long campaign by Chinese authorities of repression and assimilation against the Uyghur people.

Elizabeth Holmes, founder of Theranos, has been found guilty on four of 11 charges of fraud, concluding a high profile trial that captivated Silicon Valley and chronicled the missteps of the now-defunct US blood testing startup.

Can London stock market shake off dinosaur image to boldly go?

The survey also showed that Britain’s manufacturers have suffered a drop in export demand amid pressure from Covid and Brexit, writes our economics correspondent Richard Partington.

The latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) showed growth in UK factory output was limited in December by Covid restrictions and Brexit weighing on orders and pushing up costs.

According to the survey of 650 manufacturers, which is tracked by the government and the Bank of England for early warning signs from the economy, inflows of new work from overseas dropped for the fourth month in a row.

While firms reported continued growth at the end of last year and a slight easing of supply chain delays, manufacturers warned that logistics issues, Brexit difficulties and the possibility of further pandemic restrictions at home and overseas had still damaged export demand at the end of the year.

With new trade restrictions since leaving the EU and the impact of the pandemic, Britain’s exporters are set to be the slowest to recover from Covid-19 across major European economies, according to research by Euler Hermes.

The Paris-based trade credit insurer forecasts UK exports won’t recover to pre-pandemic levels until 2023, leaving the UK lagging European counterparts with Germany and Italy expected to recover in 2021 and other nations in 2022.

It comes despite an uptick in demand for manufactured goods across advanced economies as consumers turn to purchasing physical products while pandemic restrictions limit appetite for services.

Ana Boata, head of economic research at Euler Hermes, said: “Our forecasts show that Brexiting in times of Covid-19 has hindered exporters’ capacity to benefit from the strong upswing in demand that lockdown has presented.”

She said fresh post-Brexit border controls on UK imports at the start of 2022 would bring more disruption, while the Omicron coronavirus variant would add to severe uncertainty facing firms.

“British exporters have been tasked with sailing increasingly perilous trade waters in recent years – another 12 months of headwinds could be enough to sink many.”

Go-Ahead has halted the trading of its shares on the London Stock Exchange after the bus and rail operator failed to file its financial results due to issues surrounding a £25m breach of Southeastern’s railway franchise agreement, reports Mark Sweney.

The transport group, which was stripped of the contract to operate the computer network in September, said that it is continuing to work closely with its auditor Deloitte to attempt to publish its results for the year to 3 July by the end of the month.

In December the company, which apologised for “serious” failings in its railway business after it was found not to have declared more than £25m in taxpayer funding that should have been returned, said that the scandal would mean it would miss the six-month deadline for filing its annual results and have to suspend its shares under UK regulatory rules.

The announcement of the impending trading suspension prompted a 25% fall in the company’s share price, which ended the year at 667p, giving Go-Ahead a market value of £288m at the close of the last day the company’s shares traded on New Year’s Eve. Go-Ahead’s shares were officially suspended on Tuesday morning.

On the currency markets, the pound is trading close to two-year highs against the euro, as gilt yields rose on growing expectations that the Bank of England will raise interest rates again next month.

The UK central bank surprised markets with its first rate rise in three years at its December meeting.

In the eurozone, no rate increases are expected this year while in the US, markets are forecasting the first hike by May, followed by two more increases later this year.

The pound reached 86.65p against the euro, the highest since February 2020, and slipped 0.2% against the dollar to $1.35.

Separate figures from the Bank of England show that British consumers borrowed the most in 16 months in November.

Consumer credit rose by a net £1.2bn, more than expected, most of which was borrowed on credit cards. It was the biggest increase since July 2020.

Mortgage approvals were the lowest since June 2020 after the phasing out of a stamp duty holiday. Approvals for house purchase totalled 67,000 in November, close to the 12-month average up to February 2020 of 66,700.

However, net mortgage lending to individuals increased to £3.7bn in November from £1.1bn in October, suggesting the housing market remains buoyant.

UK factory activity grew more quickly than initially estimated in December and supply chain problems eased a little, according to a survey.

The final reading of the IHS Markit/CIPS manufacturing purchasing managers’ index for December was 57.9, up from a preliminary reading of 57.6 and not far off November’s three-month high of 58.1. The survey said:

Although a slight easing in supply chain delays helped lift output volumes and take some of the heat out of input price increases, logistic disruptions and staff shortages were nonetheless still stymieing the overall pace of expansion.

Companies maintained a positive outlook at the end of 2021. The majority of firms (63%) forecast that production would increase over the coming 12 months, compared to only 6% anticipating a contraction. Optimism reflected expectations of renewed global economic growth, planned investment and hopes for less disruption caused by Covid-19, Brexit and supply chain issues.

Inflationary pressures remained high. Prices charged by factories rose at their fastest pace on record. The report explained:

December saw a further substantial increase in average input prices, with the rate of inflation staying among the steepest seen in the survey history. There were reports of higher costs for chemicals, electronics, energy, food products, metals, timber and wood. Freight, shipping and air transportation costs were also higher, while ongoing supply disruptions, raw material shortages and issues relating to Brexit and Covid-19 also led to higher prices paid.

German unemployment fell more than expected in December, according to official data, suggesting that the jobs market in Europe’s largest economy remains resilient despite rising Covid-19 infections.

The Labour Office said the number of people out of work dropped by 23,000 in seasonally adjusted terms to 2.405 million. Economists polled by Reuters had expected a decline of 15,000. The jobless rate fell to 5.2%, the lowest since March 2020, when Germany and other countries entered their first coronavirus lockdown.

Labour Office head Detlef Scheele said:

The labour market developed well at the end of the year. The recovery of the previous months continued.

However, he cautioned that the jump in Covid-19 cases and renewed restrictions to contain the spread of Omicron increased uncertainty.

Burger King says it has become the first fast food chain in the UK to sell vegan nuggets, as the industry tries to cash in on the popularity of plant-based alternatives.

The world’s second-largest hamburger chain is launching the nuggets today. They are made from soy and plant proteins “to taste the same as their meat originals” and are certified by the Vegan Society, the company said.

Two years ago, Burger King UK launched a plant-based burger that turned out not to be suitable for vegetarians due to the way it is cooked.

Airlines and travel stocks are surging this morning, amid relief that while Covid infections have reached new record highs, the Omicron variant may be less severe than feared.

In London, British Airways owner IAG is the biggest riser on the FTSE 100 index, up 8.6%, while Premier Inn owner Whitbread is almost 3% higher. Oil giants BP and Shell also rose, as the optimism spread across energy, banking and other sectors.

The FTSE is 1.1% higher at 7,467, rising to the highest levels since February 2020, as UK stocks caught up with the rest of Europe after yesterday’s bank holiday in the UK.

The pan-European Euro Stoxx 600 hit a new record high this morning, after the S&P 500 and Dow Jones on Wall Street closed at all-time highs last night. Europe’s travel and leisure index jumped 2.5% to its highest level in more than six weeks.

Ryanair and the Hungarian airline Wizz Air both jumped 8%.

Wizz Air said it carried 2.6 million passengers in December, up nearly 300% from a year earlier, and it announced it would launch new routes from its Gatwick Airport base to 14 destinations including Faro and Catania.

And we’re off: The FTSE 100 index in London has jumped more than 1% to 7,461 in the first couple of minutes of trading, a gain of 77 points. The more domestically-focused FTSE 250 is also over 1% ahead.

Shares in embattled Evergrande rose after the Chinese property developer resumed trading on the Hong Kong Stock Exchange on Tuesday, reports my colleague Mark Sweney.

China’s second-biggest developer halted trading on Monday after receiving an order from authorities at Danzhou city in Hainan on 30 December telling it to demolish 39 under-construction buildings at the Ocean Flower Island project.

The struggling company, which has seen its market value plunge almost 90% over the last year, saw its stock rise by almost 2% in trading on the Hang Seng on Tuesday.

“The company will actively communicate with the [Hainan] authority in accordance with the guidance of the decision letter and resolve the issue properly,” Evergrande said in a filing to the Hong Kong Stock Exchange.

It comes after Evergrande said its sales for 2021 plunged 39% from the year before to $69.5bn (£51.6bn). Evergrande is struggling to repay more than $300bn (£222bn) in liabilities by selling assets and shares.

Nearly $20bn of international market bonds were deemed to be in cross-default by ratings firms last month after it missed payments.

The property developer missed new coupon payments worth $255m due last Tuesday though both have a 30-day grace period.

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

It’s the first day of trading in London today, as UK stock markets were shut for the New Year’s bank holiday yesterday. Stock trading will start in about half an hour.

Oil prices rose slightly this morning before dipping 0.3%, ahead of the Opec oil cartel’s monthly meeting.

China’s factory activity grew at its fastest pace in six months in December, indicated by the latest Caixin/Markit manufacturing purchasing managers’ index. The overall index rose to 50.9 in December, from 49.9 in November. Other Asian indices also pointed to expansion. Many Asian stock markets rose, with Japan’s Nikkei up 1.77% while Hong Kong’s Hang Seng dipped 0.3%.

In Germany, retail sales rose unexpectedly in November, according to official figures released at the crack of dawn. Sales were up 0.6%, beating expectations of a 0.5% drop. Germany’s Federal Statistical Office said turnover in retail trade recorded a new record high in 2021, although clothing retailers suffered losses for the second year of the pandemic.

European shares bounced to record highs on their first day of trading yesterday, with traders betting on steady economic recovery despite the surge in Covid infections caused by the Omicron variant.

Europe’s benchmark index, the Stoxx 600, hit a record intraday high of 491.73 points and later closed at 489.99, up 0.45%. It recorded a 22.4% rise last year, its second-best annual performance in more than a decade.

The US, French and German stock markets all had a stellar year in 2021 and outpaced the UK’s FTSE 100 index, which rallied 14.3%, its best year since 2016, as UK stocks recovered from the pandemic shock of 2020. Despite the recovery, the FTSE 100 ended the year 6.5% below its peak of 7,903 points, which was set in May 2018. On Wall Street, the S&P 500 index jumped by 27% in 2021, achieving 70 record closing highs.

Apple became the first US company to be valued at over $3tn on Monday as the tech company continued its phenomenal share price growth, tripling in value in under four years. Tesla jumped 13.5% after reporting breath-taking car sales last quarter and last year.

Ipek Ozkardeskaya, senior analyst at Swissquote, says:

Globally, there is a lot of news regarding the rising omicron cases, but there is also a lot of news that the omicron cases are not as deadly as the previous variants of Covid. And investors prefer focusing on a glass half full rather than a glass half empty at the start of the year.

However, many market strategists are cautious about 2022, predicting measly increases of 4% to 7% for the FTSE 100. Inflation has jumped to 5.1% in the UK and 6.8% in the US and is set to go even higher, meaning interest rates are on the rise, while China is expected to spoil the party with tighter credit and regulations.

In the US, Elizabeth Holmes, founder of Theranos, has been found guilty on four of 11 charges of fraud, concluding a high profile trial that captivated Silicon Valley and chronicled the missteps of the now-defunct blood testing startup.

The Agenda

• 7.45am GMT: France inflation for December (forecast: 2.9%)
• 8.55am GMT: Germany unemployment for December
• 9.30am GMT: Bank of England mortgage approvals and consumer credit for November
• 9.30am GMT: UK Markit/CIPS manufacturing PMI for December
• 3pm US ISM Manufacturing PMI for December