A Wave of Optimism Sweeps European Markets as 2026 Kicks Off with Strong Gains

• How Did European Markets Perform in the First Session of 2026?
• What’s the State of Manufacturing in the Eurozone?
• How Did Wall Street Fare in the New Year?
• What’s Brewing on the Geopolitical Front?
• Which Corporate Moves Stood Out?
• FAQs: Your Burning Questions Answered

European markets started 2026 on a high note, with major indices like the CAC 40 and EuroStoxx 50 posting solid gains. The FTSE 100 even breached the historic 10,000-point mark for the first time. Meanwhile, mixed PMI data revealed a contraction in Eurozone manufacturing, though France bucked the trend. Wall Street showed cautious optimism, and geopolitical developments in Ukraine added another LAYER to the financial landscape. Here’s a deep dive into the first trading week of 2026.

How Did European Markets Perform in the First Session of 2026?

European stock exchanges wrapped up the first trading session of 2026 in positive territory, buoyed by the release of manufacturing PMI data from France, the Eurozone, and the US. The CAC 40 climbed 0.56%, nearly touching the symbolic 8,200-point threshold before settling at 8,195.21. Over the shortened New Year week, Paris’s flagship index gained 1.13%. The EuroStoxx 50 wasn’t far behind, rising 0.91% to 5,844.34 points.

Across the Channel, London’s FTSE 100 made history by surpassing 10,000 points for the first time, driven by strong performances from mining giants like BP, Shell, and Rio Tinto. "This milestone reflects the resilience of the UK market despite global headwinds," noted a BTCC analyst.

What’s the State of Manufacturing in the Eurozone?

December’s PMI data painted a mixed picture for Eurozone manufacturing. The index, compiled by S&P Global, dipped further into contraction territory at 48.8, down from November’s 49.6. This marks the weakest reading since March 2025, signaling accelerated deterioration in the sector.

Germany bore the brunt of the downturn, with manufacturing contraction hitting its worst level since February 2024. France, however, defied the trend, with its PMI rebounding to 50.7—the highest since June 2022—thanks to renewed growth in factory output. Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, remarked, "The Eurozone’s manufacturing demand continues to shrink, evident in falling new orders and dwindling backlogs. Companies are hesitant to expand capacity, which could further dampen economic prospects."

How Did Wall Street Fare in the New Year?

US markets opened 2026 with a mixed performance. By late afternoon, the Dow Jones had edged up 0.28%, while the S&P 500 and Nasdaq showed more muted movements. The US manufacturing PMI came in at 51.8, meeting expectations but slowing from November’s 52.2. S&P Global highlighted, "Production growth weakened amid shrinking order books, the first decline in a year. Trade tariffs continue to weigh on international sales."

The Fed’s latest meeting minutes revealed a cautious stance, with policymakers projecting just one rate cut in 2026 despite three consecutive reductions. "Most participants agreed further easing WOULD be appropriate if inflation cools," the minutes stated.

What’s Brewing on the Geopolitical Front?

Ukraine’s President Volodymyr Zelensky announced a high-profile security meeting on January 3, attended by representatives from 15 countries, the EU, and NATO. The agenda? Potential peace guarantees amid ongoing negotiations. Two days later, Kyiv plans another round of talks with military officials to discuss post-war security frameworks.

Which Corporate Moves Stood Out?

Michelin stole the spotlight with two US acquisitions—Cooley Group and Tex Tech Industries—set to finalize in H1 2026. Meanwhile, Denmark’s Ørsted rallied after filing a lawsuit to defend its US wind energy project, Revolution Wind, co-owned with Skyborn Renewables.