OK, time for a recap.

The global stock market rally has driven Britain and America’s stock markets to fresh highs today, despite an underwhelming employment report from the US.

The Dow Jones index has pushed further over the 25,000 mark, while in London the FTSE 100 has closed at a new peak over 7,700.

Shares jumped despite the news that America’s economy didn’t create as many jobs in December as expected. The closely-watched Non-Farm Payroll only rose by 148,000, missing forecasts of a 190,000 gain, while wage growth was unexceptional at 2.5% over the last year.

My colleague Dominic Rushe explains:

The headline numbers suggest that the jobs market remains strong. The labor department announced that the unemployment rate held steady at 4.1% in December, close to a 17-year low.

The US economy has now added more than 2m jobs a year for seven straight years, a run last seen in the 1990s. But the pace of hiring has slowed, the recovery remains uneven, and wages continue to lag behind growth.

Analysts voiced concerns that US retailers cut jobs in December - despite the festive shopping season.

In the UK, car sales fell in December for the first time since 2011 - and by the biggest amount since 2009.

Further falls are expected in 2018, as consumers continue to shun diesel cars -- with some switching to electric cars instead.

The automobile industry is now urging the government to agree a Brexit transition deal by March, at the latest, otherwise manufacturers will be forced to trigger contingency plans.

I’ll be back later with the close of Wall Street....

Boom! The FTSE 100 has ended the week at a new all-time high.

The blue-chip index of the biggest companies listed in London has closed at 7724 - the first time it has finished over the 7700 mark.

That’s a gain of 28 points, or 0.37%.

Energy provider Centrica and water group United Utilities were the biggest risers, up around 3% after an analyst upgrade.

But insurance group Admiral led the fallers, down 3% after figures showed UK car sales fell last year - and may keep falling in 2018. Fewer new cars means less insurance business.

Other European markets also had a strong day, as the first week of 2018 gets off to a strong start. No wonder analysts are talking about a ‘melt-up’....

Boom! The US stock market has hit fresh record highs (yet again) at the start of trading in New York.

Traders are shrugging off the news that America’s job creation slowed last month.

The Dow Jones continued its march upwards, gaining 70 points to 25,145. The S&P 500 and the Nasdaq are also pushing higher, as the bull market shows no inclination to fizzle out.

But while shares rise, the US dollar has dropped.

Jacob Deppe, Head of Trading at online trading platform, Infinox, explains:

“Surprisingly, Wall Street shook off the lower than expected jobs data and rose still higher, although the Dollar fell 0.3% versus the Euro and 0.26% versus the Pound on the news.

“December’s Non-Farm Payrolls data does not fit the current narrative of booming US growth. The initial reaction from the market is to ignore. That could be perilous.

“It’s also possible markets have decided the recent harsh weather contributed to the slowdown in jobs

Here’s Ian Kernohan, economist at Royal London Asset Management, on today’s Non-Farm Payroll:

“There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate. Wage growth ticked higher to 2.5%, still a very modest rate despite the sharp fall in unemployment over the past few years.

“The Federal Reserve puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP. Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March.”

Yikes! America’s retail sector cut around 20,000 jobs last month, according to today’s non-farm payroll.

That could be proof that the rise of internet shopping is forcing Main Street stores to cut back.

The NFP report also shows a 55,000 increase in goods-producing jobs, a 30,000 increase in construction, and a 91,000 increase in service-sector roles.

Breaking! The US economy created 148,000 new jobs in December.

That’s rather less than the 190,000 which economists had predicted.

The unemployment rate has come in at 4.1% - unchanged on last month.

More to follow.....

Investors on both side of the Atlantic are bracing for the latest US jobs report to hit the wires, in 35 minutes time.

December’s Non-Farm Payroll is expected to show that America’s economy created around 190,000 new jobs last month, leaving the unemployment rate at just 4.1%.

However, there is talk that the NFP could be better, after another survey yesterday suggested that US firms hired 250,000 people in December.

Here’s a round-up of the latest Wall Street forecasts:

Economists will also be looking closely at the wage growth figures, for signs that the US economic recovery is reaching workers’ pockets.

Average earnings are expected to have risen by 2.5% per year, the same as a month ago, and by 0.3% in December alone.

Craig Erlam of City firm Oanda says:

We’ve been promised higher inflation and wage growth for some time and investors are increasingly not buying it.

Even some policy makers are starting to question why nothing has not materialised and should that continue, rate hike forecasts will start to slip, especially with interest rates now already elevated. Today’s jobs report should offer some insight on this, with average earnings having arguably become the most important component of it. Still earnings are only expected to have risen by 2.5% compared to a year ago, below last year’s peak and well below where they need to be for inflation to sustainably return to target.

Whatever happens, we’ll probably hear Donald Trump’s views through the usual channel....

Over in the City, the FTSE 100 index has climbed to new heights.

It just hit 7727 points for the first time, up 0.4% or 31 points today, as the global stock market rally continues to bubble away.

Markets have been surging in recent weeks, and there is plenty of talk that shares will keep rising as markets ‘melt-up’.

Rupert Harrison of asset manager BlackRock (and former top official in the UK Treasury), told Bloomberg TV that “there are very good reasons to be positive”

Harrisons says:

Since coming back from New Year, the phrase I’ve heard most is ‘melt up’.

There’s been a strong start to the year, and there are good reasons for that - the data is staying barn-stormingly strong.

There doesn’t seem to be any sign of the reversion to the mean that people had been looking out for.

On top of that, you’ve got tax cuts in the US juicing the prospects for earnings and also potentially boosting the Capex cycle we are in.

But, Harrison also cautions that there are some potential risks, including:

• Everyone is ‘bought in’ to the idea that global growth will continue, so any slowdown could alarm investors..
  
• Trade policy: Donald Trump must soon decide whether to take action against China over the alleged dumping of cheap metals and solar panels.

The US president is up early, and wasted no time in tweeting about the bull market:

But as one City expert has already pointed out, each 1,000 point gain is less impressive than the last one.....

The latest inflation figures from the eurozone are out -- and they show that prices are rising more slowly than expected.

Despite the European Central Bank’s huge money-printing operation, eurozone inflation probably only rose by 1.4% per year in December, down from 1.5% in November.

Energy prices were up 3% year-on-year, down from 4.7% in November, while food, alcohol and tobacco inflation dipped to 2.1% from 2.2%.

This seems to vindicate the ECB’s decision to press on with its monetary stimulus -- which has been a factor behind the rise in stock markets recently.

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Breaking away from the car sales figures.... we have good news for the UK economy.

UK productivity (basically how much each worker actually produces) jumped by 0.9% in the third quarter of last year, new figures show.

That’s the largest increase in productivity since April-June 2011, and may show that future growth will stronger than previously expected.

Labour productivity grew in both the services and manufacturing industries, according to the Office for National Statistics.

This looks like good news for the UK government. Last autumn, the independent Office for National Statistics slashed its forecast for productivity growth, having concluded that it would not recover to its levels before the financial crisis. Weak productivity leads to slower economy growth, smaller tax receipts and higher government borrowing.

But.... UK productivity has still taken a severe knock over the last decade, and basically flat-lined since the financial crisis.

The SMMT have just issued a press release, confirming that UK car sales declined in 2017.

Here are the key points:

• Overall annual demand falls -5.7% in 2017 – but new car market still third biggest in a decade at over 2.5 million vehicles.
• December represents the ninth consecutive month of decline, as registrations for final month of year drop -14.4%.
• Appetite for electrified cars reaches record high, with almost 120,000 alternatively fuelled vehicles (AFVs) hitting UK roads – a 34.8% uplift.
• Diesel demand declines -17.1%, undermining progress on emissions and CO2 as industry body warns consumers could end up paying more in fuel if they travel high mileages.

There’s a couple of handy charts too:

Newsflash: Britain’s FTSE 100 has hit a fresh intraday record high.

The index of blue-chip companies gained another 12 points, or 0.15% points, to 7708 points, six points above yesterday’s record levels.

Rebecca O’Keeffe, head of investment at interactive investor, says investor optimism is undimmed, for the moment....

European markets continue to make further gains, with the sheer scale of the global rally demonstrating how investors are embracing all things equity and risk related, basking in the euphoria of synchronous global growth. Equity markets, which were already strengthening well in advance of Trump’s $1.5tn tax cut, or indeed a prospective US infrastructure bill that could form the centrepiece of 2018 legislation, show no sign of any stress, with new record highs an almost daily occurrence.

With the party in full swing and implied volatility at such low levels, markets are seemingly immune to any possible downside, but the key risk that might ultimately bring markets down is inflation. A material increase in inflationary pressures would potentially force central banks to tighten rates faster than the market is expecting

Chris Bosworth, Director of Strategy at Close Brothers Motor Finance, believes Brexit anxiety and opposition to diesel cars are the main reason car sales fell last year.

“Today’s figures reflect the impact that anti-diesel messages from the government and ongoing Brexit trade negotiations are having on both business and consumer confidence across the motor industry.

December marks the ninth month of consecutive decrease in new car sales as squeezed consumers are reluctant to purchase big ticket items such as cars and motorcycles.

Alex Buttle, director of car buying comparison website Motorway.co.uk, says diesel’s days are numbered (after the emissions scandal). He wants the government to offer more incentives to shift to electric.

“Quite frankly, 2017 has been a year to forget for the UK car industry.

“You’d have to dig pretty deep to find anything positive to take from the past 12 months which has seen diesel demonised in the media on a weekly basis.

“As sales of new diesels continue to fall, 2017 could well mark the end of one era of motoring and the dawn of a new one, as hybrid and electric sales start to take off. “The destiny of diesel may already be set in stone.

Now the Government needs to stand by its commitment to the future and put its full backing behind AFVs.

“Incentives to encourage consumers to switch to hybrid and electric vehicles need to run alongside the billions of pounds of investment being pumped into the supporting infrastructure.

It’s official: Britain’s car industry has suffered its biggest drop in sales since the financial crisis.

Sales of new vehicles fell by 5.6% during 2017 - the first annual decline since 2011, and the worst since 2009.

Diesel sales were particularly dire, as my colleague Gwyn Topham explains:

UK car sales declined in 2017 after five years of rapid growth, with the industry blaming government for a collapse in consumer confidence in diesel vehicles.

Total sales for last year were 2.54m new vehicles, a decline of 5.6% on 2016, with diesel sales dropping 17%. Despite the decline, 2017 sales remained near the highest on record.

The Society of Motor Manufacturers and Traders (SMMT), the UK automotive industry’s trade body, has forecast a further 5% to 7% decline in sales in 2018.

Mike Hawes, the SMMT’s chief executive, said 2017 had been a “very volatile year”.

While sales reached a record high in March, by December they were 13.9% down year-on-year, with 152,000 fewer cars sold than in the same month in 2016.

Hawes attributed the drop to a decline in business and consumer confidence in the wider economy and uncertainty over the future of diesel.

Sales of diesel cars dropped by 31% in December, while petrol car sales dropped by 1.6%, after relatively minor tax changes targeting diesel in the November budget.

The SMMT is now urging the UK government to rapidly agree a Brexit transition deal with Brussels.

Otherwise, Hawes warns, carmakers will soon be forced to take tough - and potentially irreversible - decisions.

He says:

“Some investment decisions are overdue … we need clarity [on the terms of a transitional period] by the end of the first quarter.”

[Otherwise] They will have to start implementing contingency plans.”

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

With stock markets at record levels, investors will be looking to today’s US unemployment report for reasons to keep optimistic, and keep buying assets.

The monthly non-farm payroll report is expected to show that America’s economy continued to create jobs in December.

The Wall Street consensus is that around 190,000 new workers were hired across the US last month, down from 228,000 in November. But it’s possible that the NFP could be stronger.

The figures will probably also show that America’s unemployment rate remained at just 4.1%. But economists will be hoping to see evidence that employees are being paid more.

David Madden of CMC Markets explains:

On a month-on-month basis average earnings are tipped to increase by 0.3% and on an annual basis they are forecasted to rise by 2.5%.

The US has been steadily creating new jobs over the past few years, but wage growth has been sluggish. If the US economy wants to step up a gear in terms of economic growth, wage growth and in turn the spending levels will need to tick up.

Also coming up today.

European stock markets are expected to open mixed, after Thursday’s strong session drove the UK FTSE 100 to a new alltime high.

Last night the US Dow Jones closed over 25,000 points for the first time ever, on hopes that the world economy will remain upbeat this year.

Traders will also be watching out for the latest eurozone inflation figures, and new UK car sales figures (of which more in a moment....)

The agenda

• 9am GMT: UK car sales figures for December
  
• 10am GMT: Eurozone flash inflation figures for December
  
• 1.30pm GMT: US non-farm payroll unemployment report
  
• 3pm GMT: US factory orders