European markets are wearing two very different expressions today.
Corporate earnings and deal-making are driving fresh highs in London, while policymakers and geopolitics keep investors on edge.
From Eli Lilly’s blockbuster results turbocharging the global obesity-drug boom, to the FTSE 100 hitting record levels on energy strength and M&A buzz, there’s momentum in play.
At the same time, improving UK economic data and a pointed show of unity between Beijing and Moscow add layers of complexity to an already crowded macro picture.
Eli Lilly’s blockbuster Q4 earnings
Eli Lilly shares climbed on Wednesday after the drugmaker posted stronger‑than‑expected fourth‑quarter results and raised its 2026 outlook.
Demand for its GLP‑1 blockbusters Zepbound, for obesity, and Mounjaro, for diabetes, continues to explode, powering double‑digit revenue growth and fatter profits.
The company now sees next year’s earnings and sales coming in above Wall Street forecasts, betting that appetite for weight‑loss drugs will stay red‑hot as it prepares to launch an oral pill.
Lilly is also pouring money into new manufacturing capacity, aiming to stay ahead of Novo Nordisk in the race to dominate this booming market over the coming years.
FTSE 100 at fresh record highs
London’s FTSE 100 pushed to a fresh record high on Wednesday, lifted by energy stocks and a takeover-fuelled jump in insurer Beazley, as traders zeroed in on this week’s Bank of England decision.
The blue-chip index climbed around 1.4%, with oil majors tracking firmer crude prices amid simmering US‑Iran tensions, while Beazley surged after agreeing to an £8 billion bid from Zurich Insurance.
Software and data names lagged after Tuesday’s tech selloff, underscoring a sharp rotation beneath the surface.
Markets still expect rate cuts later this year, but the BoE is seen holding at 3.75% and staying deliberately vague on timing.
UK economy gathers pace
The latest S&P Global/CIPS survey suggests the UK economy entered 2026 with a bit more spring in its step.
The services PMI climbed to 54.0 in January from 51.4, signalling the fastest expansion since mid‑2025, while the composite index, which includes manufacturing, hit 53.7.
Firms reported stronger new orders and a rebound in export demand, and business optimism is at its highest since late 2024.
But the picture isn’t all rosy as hiring has fallen for 16 straight months and wage‑driven cost pressures are still feeding into higher prices, complicating the Bank of England’s plans for rate cuts this year.
Putin-Xi show strength via video call
Chinese President Xi Jinping and Russian President Vladimir Putin used a video call to showcase their increasingly tight partnership as the Ukraine war approaches its fourth anniversary.
Putin called the relationship an “important stabilising factor” amid global turbulence, while Xi urged both sides to draw up a “grand plan” to deepen ties.
The two hailed their “no limits” strategic pact, first unveiled just before Russia’s 2022 invasion, with Beijing now acting as an economic lifeline for sanctions‑hit Moscow.
Western governments say China is quietly aiding Russia’s war effort, accusations Beijing rejects as it insists it is not a party to the conflict.
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