The UK travel industry is another sector facing considerable pressure in 2019, according to David Madden, analyst at CMC Markets:

The travel sector had a difficult 2018, and given the concerns about global growth, a slight decline in consumer appetites and uncertainty surrounding Brexit, the industry is likely to have a downbeat start to 2019.

On the plus side, the oil price has dropped considerably, but that might be irrelevant if firms have locked in their exposure already.

The drop in the oil market is also a reflection about worries of a slowing economy. The Brexit clock is ticking, and UK consumers are likely to be cautious in the first few months of next year.

Figures out so far suggest many retailers have had a tough Christmas this year, as Brexit-cautious consumers cut back on spending.

The struggle to win customers will intensify in 2019, according to a report by KPMG and Ipsos Retail Think Tank.

The authors note:

It is too easy to point the finger at Brexit as the singular cause of all the woes in the industry. There is in fact a much wider array of forces at play currently. These forces have been gathering momentum for a number of years and are by no means new.

Changing consumer behaviour, the over-supply of physical stores, high levels of legacy debt, regulatory and compliance costs, macro-economic and geopolitical challenges, and a lack of talent at the top of retail businesses to help deliver much-needed change, were all highlighted as forces that would impact negatively on the industry in 2019 – regardless of the outcome of Brexit.

European markets are a sea of red as afternoon trading gets underway... the early boost from Wall Street’s Boxing Day surge has well and truly worn off.

Here are the latest scores:

• FTSE 100: -1.1% at 6,611

• Germany’s DAX: -2% at 10,421

• France’s CAC: -0.4% at 4,610

• Italy’s FTSE MIB: -1.6% at 18,112

• Spain’s IBEX: -0.9% at 8,402

• Europe’s STOXX: -1.1% at 331

The outlook for oil prices is bleak, according to analysts at Cantor Fitzgerald Europe.

Ashley Kelty and Jack Allardyce write:

Crude prices took a battering on Monday as the ‘Santa rout’ continued to hit the markets. With investors spooked by fears over weakening demand and the near term supply glut, prices fell sharply in thin volumes.

The sharp drop even after the impending imposition of new quotas by OPEC+ continues to worry the cartel, with the UAE Energy Minister Suhail al-Mazroueei reportedly claiming that OPEC+ will hold an extraordinary meeting to discuss increasing the cuts and/or extending the period of the new quotas (beyond the four months currently in place).

The latest attack by President Trump on the leadership of the Federal Reserve led to sharp falls across the board, as investors worry about the potential for a recession in 2019. This latest Twitter outburst (does Trump do anything else?) led to the president of Rosneft to directly blame Trump for the fall in oil prices, and warned that oil prices may remain in the $50-$53 range in 2019.

Fundamentals in the oil market look bleak, with slowing economic growth and weaker than expected demand pushing the market firmly into bear territory.

Lower oil prices are weighing on the FTSE, with Brent crude down 1.7% at $53.54 a barrel on renewed fears of a supply glut.

A quick update on the pound, which is roughly flat against the dollar this morning, at $1.2634.

Against the euro, sterling is down 0.3% at €1.1091.

Russ Mould, investment director at AJ Bell, ponders what history might tell us about current market volatility:

The FTSE 100 is treating a 5% surge in America’s S&P 500 benchmark with a good degree of caution and it is easy to see why, even if that was the eighteenth biggest single-day gain in the US index since 1970.

Encouragingly, three of the seventeen other 5%-plus daily advances came immediately in the aftermath of the 1987 Crash, when buying did prove a good plan, and two more in March 2009 when the S&P finally hit bottom as the Great Financial Crisis began to abate.

But history also shows eight of the 5%-plus gains came during the bear market of 2007-2009 and three more during the market downturn of 2000-2003, to suggest there is still a risk that this year’s Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble.

That may explain why the FTSE 100 is hardly responding at all and investors and traders alike will be looking out for a couple of further definitive signals before they decide it really is time to buy on the dips following this year’s Christmas sell-off.

US futures are also down, after yesterday’s major rally on Wall Street:

Wall Street’s Boxing Day surge has failed to materialise in Europe, where markets are now mixed:

• FTSE 100: -0.4% at 6,662

• Germany’s DAX: -0.6% at 10,572

• France’s CAC: +0.7% at 4,660

• Italy’s FTSE MIB: -1% at 18,216

• Spain’s IBEX: +0.1% at 8,491

• Europe’s STOXX 600: -0.1% at 335

The Boxing Day surge on Wall Street was not attributed to any one factor, but was probably helped by a Mastercard report which showed a jump in consumer spending over the holiday season.

Stephen Innes, on the Singapore trading desk of currency specialist Oanda, gives his take:

Thankfully for investors, the relentless selling on the back of risk-off sentiment which prevailed leading up to Xmas has mercifully halted as US stock markets recorded significant gains with the Dow surging over 1,000 points while adding the most significant points gain in history.

It didn’t take much to persuade the bargain hunters into action as early retailer reports are all pointing to a strong holiday season while investors took comfort in Kevin Hassett’s, chairman of the White House Council of Economic Advisers, affirmation that Jerome Powell’s job is “100 per cent” safe.

The surge in online purchases over the holiday season should be a reminder for the markets never to underestimate the purchasing power of the US consumer, as Mastercard payments tracking between November 1 and Christmas Eve leapt 5.1% from a year ago.

This data comes at the perfect time and will provide a huge relief for investors who had to watch with sheer horror the Christmas Eve plunge. There was a good buzz to buy the dip given the US underlying data suggested the latest rout was far too extreme and unwarranted.