Key Points

• U.S. markets pause ahead of inflation and earnings: Stock futures edged lower as investors awaited U.S. CPI data and the start of bank earnings season, with markets balancing easing inflation expectations against tariff and policy uncertainty.
• Trump escalates trade pressure on Iran: The U.S. announced an immediate 25% tariff on any country doing business with Iran, heightening geopolitical risk and adding a new layer of uncertainty to global trade and energy markets.
• Venezuela assets surge on regime-change optimism: Venezuelan equities soared to record highs as investors priced in hopes of sanctions relief, economic stabilization and potential debt restructuring following Maduro’s ouster, despite warnings about liquidity and execution risks.
• Asia rallies as Japan leads on political clarity: Asia-Pacific markets advanced, driven by a sharp jump in Japan’s Nikkei on expectations of a snap election, while investors largely looked past geopolitical tensions and focused on growth and policy signals.

January Economic Calendar

Markets Pause Ahead of Inflation and Bank Earnings

U.S. stock futures edged lower as investors turned cautious ahead of a closely watched consumer inflation report and the start of bank earnings season. Markets are focused on whether disinflation can persist, with December CPI expected to show annual inflation of 2.7%, reinforcing expectations that the Federal Reserve may delay rate cuts until mid-2026.

Equities showed resilience in the prior session, with major indexes hitting record highs despite political pressure on the central bank and ongoing scrutiny of Jerome Powell. Attention is now shifting to earnings from major lenders such as JPMorgan, as investors assess the outlook for credit, margins, and economic momentum amid evolving trade and policy risks.

U.S. Threatens Secondary Tariffs on Iran Trade

Markets are assessing rising geopolitical and trade risks after Donald Trump said the U.S. will impose a 25% tariff on any country conducting business with Iran, effective immediately. The announcement signals a sharp escalation in Washington’s effort to economically isolate Tehran amid intensifying anti-government protests and growing regional tensions.

While details on implementation remain unclear, the move adds uncertainty for global trade flows, particularly in energy and emerging markets with exposure to Iran. The timing is notable, coming just ahead of a potential U.S. Supreme Court ruling on the legality of several of Trump’s earlier tariffs, reinforcing investor caution around policy-driven volatility and cross-border trade risk.

Venezuela Markets Surge on Regime Change Optimism

Venezuelan assets have rallied sharply after the U.S. capture of former president Nicolás Maduro, with the country’s benchmark Indice Bursátil de Capitalización jumping more than 130% to record highs since early January. Investors are pricing in the possibility of sanctions relief, renewed access to foreign capital and a gradual revival of oil production following years of economic collapse.

Interest has spread beyond equities to sovereign and state oil company bonds, reflecting hopes of eventual debt restructuring. However, analysts caution that Venezuela’s markets remain small and illiquid, making the rally highly sensitive to headlines and political outcomes rather than confirmed policy shifts.

Asia Markets Rally as Japan Leads on Snap Election Expectations

Asia-Pacific markets traded broadly higher, led by a sharp rally in Japan after renewed expectations that the ruling party will call a snap election boosted investor confidence. Japan’s Nikkei 225 jumped more than 3%, with gains concentrated in technology and semiconductor-linked stocks, while government bond yields climbed and the yen weakened to a one-year low.

Elsewhere, markets largely shrugged off geopolitical risks tied to Iran, Venezuela and U.S. political pressure on the Federal Reserve. Oil prices edged higher amid Iran-related tensions, while U.S. equity futures were steady ahead of inflation data and major bank earnings, reinforcing a cautiously risk-on global backdrop.

Conclusion

Global markets are navigating a complex mix of macro resilience and rising geopolitical risk. Investors remain focused on near-term catalysts, including U.S. inflation data and bank earnings, while policy actions—from expanded tariffs to regime shifts—are reshaping expectations across energy, emerging markets and global trade.

The sharp rally in Venezuelan assets highlights how quickly sentiment can reprice on political change, even as execution risks remain elevated. Meanwhile, Asia’s gains, led by Japan, underscore how policy clarity can offset external uncertainty. Overall, markets continue to balance solid fundamentals against an increasingly fragmented geopolitical backdrop.

Investment Insights

• Maintain balance between risk and resilience: Equity markets continue to advance despite geopolitical shocks, suggesting underlying earnings strength, but heightened policy risk argues for diversified exposure rather than concentrated bets.
• Watch inflation and financials closely: U.S. CPI data and bank earnings are near-term catalysts that will shape rate expectations and sector leadership in early 2026.
• Treat Venezuela cautiously: The surge in Venezuelan assets reflects optimism and illiquidity rather than confirmed reform; exposure should be viewed as tactical and high risk.
• Asia offers selective opportunity: Japan’s equity rally tied to political momentum contrasts with a weaker yen and rising yields, favoring exporters and rate-sensitive positioning.