Key Points

• U.S. markets pull back on policy uncertainty: Equity futures edged lower as investors digested a second consecutive S&P 500 decline, heightened by uncertainty surrounding the upcoming announcement of a new Federal Reserve chair and its implications for monetary policy.
• Tech earnings drive volatility: Mixed results from major technology companies, including a sharp post-earnings drop in Microsoft despite strong AI spending, reinforced concerns about margin pressure and the pace of cloud growth.
• Market leadership continues to broaden: While megacap tech faced scrutiny, relative strength in other sectors and resilience in the Dow point to a healthier, more diversified equity rally in 2026.
• Political risk back in focus: The rising probability of a U.S. government shutdown added another layer of near-term risk, keeping investors cautious despite generally supportive economic and earnings trends.

January Economic Calendar

U.S. Futures Slip as Fed Leadership Uncertainty and Tech Earnings Weigh

U.S. equity futures moved lower after the S&P 500 posted a second straight decline, reflecting renewed caution around Federal Reserve leadership uncertainty and mixed signals from major technology earnings. Futures on the S&P 500, Nasdaq 100 and Dow all fell about 0.3%, while regular-session trading saw losses in the Nasdaq offset by modest gains in the Dow.

Investor focus remains on President Donald Trump’s announcement of a new Fed chair, adding sensitivity to policy expectations, as well as earnings-driven volatility within technology stocks. Signs of slowing cloud growth and scrutiny around AI monetization have reinforced a gradual broadening of market leadership beyond megacap tech, even as overall weekly performance remains positive.

U.S. Firms Target Critical Metal Supply Chain Vulnerabilities

A growing effort to reduce U.S. dependence on China and Russia for critical military materials is drawing attention to niche domestic suppliers. LightPath Technologies, a Florida-based optics and photonics firm, is developing infrared imaging components that eliminate the need for germanium – a rare earth metal largely controlled by China and Russia.

China produces roughly 67% of global germanium, while China and Russia together account for about 90% of global germanium and gallium output, both vital for military imaging, communications and solar applications. Export restrictions imposed by Beijing have sharply curtailed U.S. imports, accelerating demand for alternatives.

LightPath’s proprietary “BlackDiamond” glass, licensed from the U.S. Naval Research Laboratory, offers a lighter, cheaper, and domestically sourced substitute, positioning the company within defense, drone manufacturing, and industrial inspection supply chains.

Fed Leadership Uncertainty Adds to Policy Sensitivity

Markets are closely monitoring signals from Washington after President Donald Trump said he will announce a replacement for Federal Reserve Chair Jerome Powell. While policy continuity is broadly expected in the near term, uncertainty around future Fed leadership has increased investor sensitivity to institutional independence, inflation credibility, and the longer-term policy outlook.

Any indication of a more accommodative or politically influenced stance could have material implications for rates, currencies, and risk assets.

Asia-Pacific Markets Mixed as Policy and Trade Risks Persist

Asia-Pacific equities traded unevenly as investors weighed improving risk sentiment against lingering trade and policy uncertainty. Japanese and South Korean markets showed resilience, while broader regional performance reflected caution around global demand and U.S. policy developments.

Attention remains on fiscal negotiations in Washington, trade signals from the White House, and the implications for export-oriented Asian economies navigating an increasingly fragmented global trade environment.

Conclusion

Policy uncertainty warrants caution: Prospects of a change in Federal Reserve leadership and ongoing fiscal negotiations in Washington increase short-term volatility, reinforcing the need for prudent risk management.

Earnings dispersion is rising: Markets are rewarding companies with clear earnings visibility and disciplined capital allocation, while punishing weaker guidance, particularly within parts of the technology sector.

Broadening market leadership: Rotation into non-mega-cap sectors suggests healthier market structure and opportunities beyond headline index drivers.

Stay selective and diversified: A balanced approach across sectors and regions remains appropriate as macro resilience offsets elevated political and policy risks.

Investment Insights

• Policy uncertainty warrants caution: Prospects of a change in Federal Reserve leadership and ongoing fiscal negotiations in Washington increase short-term volatility, reinforcing the need for prudent risk management.
• Earnings dispersion is rising: Markets are rewarding companies with clear earnings visibility and disciplined capital allocation, while punishing weaker guidance, particularly within parts of the technology sector.
• Broadening market leadership: Rotation into non-mega-cap sectors suggests healthier market structure and opportunities beyond headline index drivers.
• Stay selective and diversified: A balanced approach across sectors and regions remains appropriate as macro resilience offsets elevated political and policy risks.

Key Points

• U.S. Markets Consolidate Near Highs: Equities remain supported by earnings momentum and steady liquidity conditions, though investors are increasingly sensitive to policy guidance and valuation risks.
• Europe Recalibrates China Strategy: The UK’s renewed engagement with Beijing highlights a pragmatic approach to trade and investment amid global fragmentation.
• European Banks Regain Footing: Deutsche Bank’s results reflect a broader stabilization in European financials as deal activity and capital markets recover.
• Precious Metals Signal Macro Unease: Record gold and silver prices point to structural demand for hedges against fiscal, currency, and geopolitical risk.

January Economic Calendar

Markets Steady as Investors Weigh Fed Outlook and Earnings Momentum

U.S. equity markets traded with a cautious tone as investors balanced optimism around corporate earnings with lingering policy and macro uncertainty. Major indexes held near recent highs, supported by resilient risk appetite and steady capital flows, even as market participants assessed signals from the Federal Reserve regarding the future path of interest rates. Attention remained focused on earnings quality and forward guidance, with investors increasingly selective amid elevated valuations. Treasury yields stabilized after recent volatility, while commodities continued to reflect demand for inflation hedges and geopolitical protection.

UK–China Engagement Signals Pragmatic Reset in Economic Relations

The United Kingdom is deepening its economic engagement with China as Prime Minister Keir Starmer leads a high-profile delegation of business leaders to Beijing. Talks with Chinese leadership are centered on trade, investment access, and strategic cooperation, highlighting Europe’s pragmatic approach to maintaining commercial ties despite geopolitical sensitivities. The visit reflects a broader trend of global powers recalibrating relationships with China, balancing national security considerations with economic necessity as global growth becomes more fragmented.

Deutsche Bank Posts Strong Finish to 2025 as Investment Banking Rebounds

Deutsche Bank reported a solid set of fourth-quarter results, capping a stronger 2025 driven by improved revenues and cost discipline. The lender benefited from a recovery in investment banking activity, resilient corporate financing demand, and stable performance across its wealth and asset management divisions. Management emphasized continued balance sheet strength and capital flexibility as Europe’s largest banks navigate a mixed economic outlook, higher funding costs, and evolving regulatory expectations.

Gold and Silver Extend Record Rally as Market Signals Structural Stress

Gold and silver prices pushed to fresh record highs, reflecting sustained demand for safe-haven assets amid geopolitical uncertainty, currency volatility, and concerns over long-term fiscal stability. Analysts note that tight physical supply, strong central bank buying, and rising investor demand are distorting traditional pricing signals, raising questions about market liquidity and price discovery. The continued surge underscores a broader shift toward real assets as confidence in fiat stability and policy coordination remains fragile.

Conclusion

Global markets are navigating a complex intersection of resilient earnings, shifting geopolitical alliances, and underlying macro stress. While U.S. equities continue to find support from corporate performance and steady monetary policy, investor behavior suggests growing caution beneath the surface. Europe’s renewed engagement with China and strengthening bank balance sheets point to selective regional opportunities, even as geopolitical risk remains elevated. Meanwhile, the relentless rise in precious metals highlights persistent concerns around currency stability, fiscal discipline, and long-term policy credibility. In this environment, disciplined positioning and diversification remain critical.

Investment Insights

• Favor Selectivity Over Broad Exposure: Elevated equity levels warrant a focus on earnings durability and balance sheet strength rather than index-level risk.
• Geopolitical Pragmatism Creates Opportunity: Europe’s engagement with China may support trade-linked sectors, but policy volatility remains a key risk factor.
• Financials Show Relative Value: Improving profitability and capital resilience in European banks offer selective upside as conditions normalize.
• Maintain Real-Asset Hedges: Persistent strength in gold and silver reinforces their role as strategic diversifiers amid policy and fiscal uncertainty.

Key Points

• U.S. equities steady ahead of Fed and Big Tech earnings: Markets are holding near record levels as investors balance expectations of a steady Federal Reserve with earnings from major technology leaders that will shape near-term sentiment.
• China accelerates AI model rollouts: Chinese technology firms are rapidly launching lower-cost, open-source AI models, intensifying competition with U.S. peers and signaling a strategic focus on scale, ecosystem integration and emerging-market adoption.
• UK–China engagement signals pragmatic reset: Prime Minister Keir Starmer’s high-level China visit with senior executives underscores renewed European efforts to secure trade and investment channels despite geopolitical and security sensitivities.
• EU–India trade deal reshapes global trade flows: The landmark free trade agreement positions Europe and India to reduce tariff barriers and diversify growth partners, while potentially increasing friction with the U.S. amid an already volatile global trade backdrop.

January Economic Calendar

Markets Hold Near Records Ahead of Fed and Big Tech Earnings

U.S. equity futures traded narrowly mixed as investors positioned for the Federal Reserve’s first policy decision of the year and a heavy slate of major technology earnings. In regular trading, the S&P 500 rose 0.4% to a fresh record close, while the Nasdaq Composite gained 0.9%, supported by strength in large-cap technology. The Dow Jones Industrial Average lagged, falling more than 400 points after a sharp drop in UnitedHealth shares.

Markets broadly expect the Federal Reserve to keep rates steady, with attention focused on Chair Jerome Powell’s guidance on the timing of potential easing later in 2026. Investor focus now shifts to earnings from Microsoft, Meta Platforms and Tesla, due Wednesday, followed by Apple on Thursday, which are expected to shape near-term market sentiment amid a softer U.S. dollar and resilient risk appetite.

China’s AI Firms Accelerate Model Releases as Global Competition Intensifies

Chinese technology companies are rapidly rolling out new artificial intelligence models, prioritizing speed, affordability and ecosystem integration as competition with U.S. rivals intensifies. Startups such as Moonshot AI and Z.ai have launched frequent model upgrades, while larger players including Alibaba and Baidu are leveraging open-source and low-cost strategies to drive adoption, particularly in emerging markets.

Rather than focusing solely on benchmark leadership against U.S. peers, Chinese firms are emphasizing user growth and embedding AI into existing platforms such as e-commerce, payments and messaging. This approach is helping accelerate usage and build ecosystems, even as questions remain about long-term monetization and technological parity with leading U.S. models.

UK Re-Engages China as Starmer Leads Business Delegation to Beijing

U.K. Prime Minister Keir Starmer has launched the first British leader visit to China in eight years, bringing a delegation of nearly 60 business and cultural organizations in a bid to reset economic ties amid heightened global tensions. The trip includes senior executives from HSBC, Airbus, AstraZeneca and GSK, underscoring London’s focus on trade, investment and strategic industries.

Starmer is scheduled to meet Chinese President Xi Jinping and Premier Li Qiang, with discussions spanning commercial cooperation and national security. The visit reflects renewed European engagement with Beijing as governments balance economic interests against geopolitical risk.

EU–India Trade Pact Raises Stakes for Global Trade Relations

A landmark free trade agreement between the European Union and India has shifted global trade dynamics, with attention now turning to how U.S. President Donald Trump will respond. Branded the “mother of all deals” by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, the pact aims to gradually eliminate most bilateral tariffs after nearly two decades of negotiations.

The agreement is widely viewed as a strategic hedge against unpredictable U.S. trade policy, particularly as Washington maintains elevated tariffs on EU and Indian exports. While U.S. officials have criticized the move, both Brussels and New Delhi frame the deal as a boost to competitiveness, market access and strategic autonomy amid rising geopolitical and trade uncertainty.

Conclusion

Global markets are navigating a delicate balance between policy uncertainty and structural opportunity. U.S. equities remain supported by resilient earnings expectations and a cautious Federal Reserve, even as investors remain alert to currency moves and geopolitical developments.

In parallel, Asia’s growing influence is evident through China’s accelerating push in artificial intelligence, renewed diplomatic engagement from Europe, and landmark trade realignments such as the EU–India agreement. Together, these dynamics underscore a gradual reordering of global capital flows and technology leadership.

For investors, the environment favors selectivity, diversification across regions, and a disciplined focus on long-term growth drivers amid persistent volatility.

Investment Insights

• U.S. assets face policy cross-currents: Record equity levels alongside a weaker dollar and an on-hold Fed suggest supportive financial conditions, but heightened sensitivity to policy signals and earnings guidance argues for selective exposure rather than broad beta.
• China’s tech push is about scale, not headlines: Accelerating AI model rollouts emphasize ecosystem adoption and cost efficiency, favoring platforms with distribution and integration advantages over pure benchmark leaders.
• Geopolitics is reshaping capital flows: High-level diplomatic engagement with China and Asia’s growing market depth highlight a gradual diversification away from U.S.-centric exposure.
• Trade realignment creates regional winners: The EU–India free trade deal strengthens long-term growth prospects for export-oriented sectors in both regions, while increasing the risk of reactive U.S. trade measures.

Key Points

• U.S. Markets Steady Ahead of Earnings and Fed: U.S. equities opened a pivotal week on a firmer footing as investors positioned for heavy Big Tech earnings and the Federal Reserve’s policy decision, with sector moves reflecting sensitivity to both earnings guidance and policy headlines.
• China Profits Stabilize but Recovery Uneven: China’s industrial profits returned to modest growth in 2025 after three years of declines, helped by policy efforts to curb price wars, though weak domestic demand and sharp sector divergence highlight a fragile and uneven recovery.
• Asia Attracts Strong Global Capital Flows: Asian equity markets continued to draw robust international inflows, pushing regional benchmarks to record highs and fueling a surge in IPO and deal activity, as investors rotate toward growth opportunities outside the U.S.
• South Korea Hit by Renewed U.S. Tariff Threats: President Trump’s move to raise tariffs on South Korean autos and pharmaceuticals reignited trade uncertainty, pressuring Korean exporters and underscoring the ongoing geopolitical risk premium facing export-oriented Asian markets.

January Economic Calendar

Markets Steady as Earnings Season Intensifies

U.S. equity futures were little changed Monday night after stocks opened the week higher, as investors balanced a strong start to earnings season against rising policy and regulatory uncertainty. The S&P 500 gained 0.5% in the regular session, supported by advances in major technology stocks ahead of key results from Apple, Microsoft, Meta and Tesla, while futures remained flat heading into Tuesday. Sentiment was tempered by sharp after-hours declines in health insurers after the Trump administration proposed keeping Medicare Advantage payment increases near zero for 2027, well below market expectations. Attention now turns to a heavy earnings calendar, the Federal Reserve’s policy decision later this week, and fresh signals on tariffs, with investors increasingly focused on whether earnings momentum can offset political and macro risks.

China Profits Stabilize as Recovery Remains Uneven

China’s industrial profits rose 0.6% in 2025, ending three years of declines, as policy efforts to curb price wars and stronger overseas demand helped stabilize corporate earnings despite weak domestic consumption. December profits climbed 5.3% year-on-year, marking the strongest monthly gain since September, supported partly by pre-holiday production and improving factory activity. However, the recovery remains uneven, with manufacturing and utilities posting gains while mining and energy sectors saw sharp declines, highlighting persistent margin pressure and excess capacity. Analysts say the modest rebound underscores China’s reliance on policy support and exports, with fragile consumer demand and sector divergence likely to constrain a broader and more durable industrial recovery.

Asia Draws Global Capital as Equity and IPO Activity Accelerates

Asian equity markets are seeing a strong influx of global capital, driving record highs and a surge in deal-making across the region. The MSCI Asia Pacific Index has reached fresh peaks, building on gains of more than 25% in 2025, while benchmarks in Japan and South Korea have also hit all-time highs. Robust IPO activity, rising cross-border flows and renewed interest in technology and semiconductors are reinforcing investor confidence, particularly in markets such as China, India, Japan and South Korea. Bankers say investors are increasingly comfortable allocating capital amid geopolitical uncertainty, focusing instead on earnings momentum, policy support and Asia’s growing role in global growth and innovation.

South Korea Tariffs Rekindle Trade Uncertainty

U.S.–South Korea trade tensions resurfaced after President Donald Trump said tariffs on South Korean autos, pharmaceuticals and lumber would rise to 25% from 15%, citing delays in Seoul’s legislature approving a bilateral trade deal reached last year. The announcement weighed on Korean auto stocks, with Hyundai Motor and affiliates falling sharply before trimming losses, underscoring investor sensitivity to renewed policy risk. While South Korean officials said they had not received formal notice, the move highlights how trade disputes remain a live market variable. For investors, the episode reinforces the vulnerability of export-heavy sectors to abrupt shifts in U.S. trade policy and geopolitical leverage.

Conclusion

Global markets are navigating a complex mix of earnings optimism, shifting policy signals and renewed geopolitical frictions. U.S. equities remain supported by resilient corporate results and expectations of a steady Federal Reserve, even as trade and fiscal risks linger beneath the surface. In Asia, improving capital flows and renewed investor interest contrast with uneven economic fundamentals, particularly in China and export-dependent economies facing tariff uncertainty. Together, these dynamics point to a market environment where selective exposure, regional diversification and close monitoring of policy developments are increasingly critical for investors seeking to balance opportunity with risk in 2026.

Investment Insights

• Earnings resilience vs. policy risk: Solid U.S. corporate earnings are supporting equity markets, but elevated tariff uncertainty and political risk argue for selective exposure rather than broad beta positioning.
• Asia attracting global capital: Strong equity inflows and IPO activity across Asia highlight renewed investor confidence, favoring markets with clear growth drivers such as technology and advanced manufacturing.
• China recovery remains uneven: The modest rebound in industrial profits reflects policy support, but weak domestic demand and sector divergence suggest a cautious approach to China-linked assets.
• Trade-sensitive sectors face volatility: Rising U.S.–South Korea trade tensions underscore the need to manage exposure to export-heavy industries vulnerable to sudden policy shifts.

Key Points

• U.S. Export Policy Uncertainty: Export decisions on AI semiconductors remain a major swing factor for companies with China-linked tech revenue.
• Memory Supply Tightness: While upstream vendors benefit from pricing power, downstream players face margin compression amid extended chip shortages.
• Silver Hits $100, Gold Nears $5,000: Metals strength is driving miners into leadership roles, though risks rise if prices go parabolic.
• Private Markets Expand in Asia: Accelerated push into Asian private wealth is intensifying competition across managers and distributors.

January Economic Calendar

Trump Approves Nvidia H200 Exports to China

Policy signals around advanced AI chip exports continue to shift, keeping semiconductor supply chains—and China-facing revenue exposure—highly sensitive to Washington headlines. This is an “earnings + geopolitics” setup: a single licensing or oversight change can reprice multiples quickly.

Memory Chip Shortage Expected to Extend

Tight memory supply conditions point to continued pricing power for upstream vendors, but also margin pressure for hardware OEMs and hyperscalers depending on contract structure. Watch for second-order effects: capex timing changes, product launch delays, and substitution toward alternative configurations.

Mining Stocks Surge as Metals Rally

A broad move higher in metals is lifting miners and rekindling “supercycle” narratives, with the usual split between momentum-driven inflows and discipline-focused investors watching for parabolic price action. For portfolios, the key question is durability of demand (AI infrastructure, electrification) versus the speed of new supply response.

Blackstone Expands Asia Hiring

Large alternative managers are leaning harder into Asia private wealth distribution, aiming to channel HNW flows into private market strategies. This supports a longer-run theme: product proliferation (evergreen/semi-liquid), more advisor partnerships, and intensified competition for shelf space across regional banks and platforms.

Conclusion

Markets are being pulled by a familiar mix of policy risk, AI-driven capex cycles, and real-asset repricing, with private wealth distribution becoming an increasingly important transmission channel for alternatives into Asia.

Investment Insights

• Policy Risk is a Volatility Catalyst: Size positions to survive headline-driven gaps rather than relying on “base case” scenarios.
• Diversified Semiconductor Exposure: Favor a mix of compute, memory, and infrastructure exposure amid shifting export regulations.
• Disciplined Commodity Strategy: Distinguish structural demand from late-cycle momentum; use pullbacks to scale into positions.
• Distribution is Strategy in Alternatives: Firms with strong bank and platform relationships, and well-structured products, may scale faster.

Key Points

• U.S. equities stabilize on easing geopolitics: Relief around a Greenland deal framework helped U.S. stocks extend a rebound, with broader participation across sectors even as rate-sensitive assets and gold reflected lingering macro uncertainty.
• Geopolitical rifts remain fluid: President Donald Trump’s shifting stance on alliances and multilateral initiatives has kept markets sensitive to headlines, reinforcing volatility tied to trade, diplomacy and policy credibility.
• AI export policy adds uncertainty for semiconductors: Debate in Washington over allowing Nvidia to sell advanced AI chips to China highlights the tension between national security concerns and preserving U.S. technological leadership.
• Japan stays cautious ahead of elections: The Bank of Japan held rates while lifting growth forecasts, signaling policy patience as political uncertainty, rising bond yields and a weak yen shape the near-term outlook.

January Economic Calendar

U.S. Markets Steady as Tariff Fears Ease

U.S. equity futures traded near flat levels Thursday night after major indexes extended their rebound for a second session, supported by easing geopolitical tensions linked to Greenland. The Dow Jones Industrial Average rose more than 300 points on Thursday, while the S&P 500 and Nasdaq Composite gained around 0.6% and 0.9%, respectively, as investors welcomed indications from Donald Trump that planned tariffs on eight European nations would not proceed following a framework discussion with NATO.

Despite the relief rally, lingering uncertainty remains as details of the Greenland framework are unclear, and gold prices continued to hold near record highs, signaling persistent demand for safe havens. After-hours trading was more volatile, with Intel shares sliding sharply on weaker guidance, underscoring ongoing earnings sensitivity.

U.S.–Canada Relations Fray as ‘Board of Peace’ Rift Widens

Relations between the United States and Canada deteriorated further after Donald Trump withdrew Canada’s invitation to join his proposed “Board of Peace,” days after Canadian Prime Minister Mark Carney warned at the World Economic Forum against the use of tariffs and economic integration as tools of coercion. Trump said the board could eventually rival the United Nations, a scope that has unsettled several U.S. allies, while Carney has positioned Canada alongside other “middle powers” seeking to resist pressure from larger economies.

The dispute underscores rising geopolitical and trade uncertainty among close allies, reinforcing investor sensitivity to policy-driven risk and the growing role of geopolitics in shaping global economic alignments.

U.S. Lawmakers Split Over Nvidia AI Chip Sales to China

A growing divide has emerged in Washington after Donald Trump signaled support for granting licenses to Nvidia to sell advanced AI chips to China, prompting pushback from lawmakers concerned about national security risks. The House Foreign Affairs Committee advanced the proposed “AI Overwatch Act,” which would expand congressional oversight of AI chip exports and potentially block sales of Nvidia’s powerful H200 processors to Chinese firms such as Alibaba and Tencent.

Supporters of the exports argue restrictions risk ceding technological leadership to China, while critics warn the chips could strengthen China’s military and surveillance capabilities. The debate highlights intensifying U.S.–China tech tensions and adds policy uncertainty for global semiconductor markets and AI supply chains.

Bank of Japan Holds Rates as Growth Outlook Improves Ahead of Election

The Bank of Japan held its benchmark interest rate at 0.75% while upgrading its economic growth forecasts, striking a cautious tone as Japan heads into a snap election on Feb. 8. The central bank lifted its GDP growth outlook to 0.9% for fiscal 2025 and 1% for fiscal 2026, citing a gradual recovery supported by wage gains, government stimulus and accommodative financial conditions.

The decision was split, with one board member proposing a hike to 1%, underscoring emerging inflation risks even as headline inflation eased to 2.1%. Rising bond yields, fiscal expansion plans and a weakening yen remain key market concerns, leaving investors focused on how post-election policy dynamics could shape Japan’s monetary path.

Conclusion

Markets closed the week steadier but far from settled, as easing rhetoric around Greenland provided short-term relief while deeper policy uncertainties linger. Shifting signals from Donald Trump continue to drive sharp swings across equities, currencies and safe havens, underscoring how sensitive sentiment remains to geopolitical headlines.

At the same time, debates over Nvidia’s AI chip exports to China highlight the fragile balance between national security and global technology leadership. In Asia, the Bank of Japan’s cautious stance reflects the challenge of managing growth, inflation and political risk simultaneously.

Together, these dynamics point to a market environment where volatility is likely to persist, making disciplined positioning and selective risk-taking essential in the weeks ahead.

Investment Insights

• Policy relief is fragile: The temporary easing of Greenland-related tensions has reduced near-term risk premiums, but abrupt policy reversals from Donald Trump argue for disciplined risk management rather than chasing short-term rallies.
• Technology geopolitics matter: The debate over Nvidia’s AI chip exports underscores rising regulatory risk in semiconductors, favoring diversified exposure to global tech leaders over concentrated bets.
• Japan remains a balancing act: The Bank of Japan’s steady policy stance ahead of elections supports growth but keeps currency and bond volatility elevated, warranting selective positioning in Japanese assets.
• Volatility favors selectivity: With macro uncertainty still high, portfolios should emphasize quality balance sheets, pricing power and defensive diversification across regions and asset classes.

Key Points

• U.S. equities rebound on easing trade risk: Markets rallied after President Donald Trump signaled a framework deal on Greenland and backed away from imminent European tariffs, lifting the S&P 500 and broadening gains beyond technology.
• Greenland diplomacy steadies sentiment: Trump’s Davos remarks outlining cooperation with NATO on mineral rights and security reduced near-term geopolitical tail risks, helping reverse the recent “sell America” trade in stocks, bonds and the dollar.
• Japan export momentum falters: December shipments missed expectations as exports to the U.S. fell sharply, highlighting renewed tariff sensitivity for Japan even as a weak yen and Asia demand offered partial offsets.
• South Korea growth undershoots: Fourth-quarter GDP slowed amid a construction slump and softer exports, underscoring vulnerability in South Korea’s export-led model despite strong semiconductor demand and stable policy rates.

January Economic Calendar

Markets Rebound as Greenland Tensions Ease

U.S. equities rebounded sharply after President Donald Trump signaled a pause in planned tariffs on Europe and outlined a preliminary framework for negotiations over Greenland, easing recent geopolitical concerns. The S&P 500, Dow and Nasdaq each rose about 1.2%, while small-cap stocks outperformed, reflecting a broad-based relief rally led by financials and energy. Sentiment improved further after Trump said the U.S. would not pursue control of Greenland by force, following discussions with Mark Rutte. Investors are now turning their focus to the upcoming U.S. inflation report and corporate earnings, with markets still modestly lower for the week despite Wednesday’s rebound.

Trump Signals Greenland Framework, Keeps Markets on Edge

President Donald Trump reinforced market focus on geopolitics and policy direction after telling CNBC in Davos that the U.S. has a “concept of a deal” with NATO regarding Greenland, following talks with Secretary General Mark Rutte. Trump said the framework could involve mineral rights and joint security initiatives, while confirming he had stepped back from imposing near-term tariffs on European allies. Beyond Greenland, the president signaled he has largely settled on a successor to Federal Reserve Chair Jerome Powell, revived support for a temporary credit card interest rate cap, and reiterated a hard line on Iran’s nuclear ambitions. Markets interpreted the remarks as easing immediate trade risks, while underscoring ongoing policy uncertainty around rates, regulation and geopolitics.

Japan Export Growth Falters as U.S. Demand Weakens

Japan’s export momentum softened at the end of 2025, highlighting renewed external pressures despite resilience across Asia. December exports rose 5.1% year on year, undershooting market expectations of 6.1%, as shipments to the United States fell 11.1% after a brief rebound in November, according to data cited by Reuters. By contrast, exports to mainland China increased 5.6%, while shipments to Hong Kong surged 31.1%, underscoring a shift toward regional demand. Imports grew faster than expected, adding to trade balance pressures. Analysts at Moody’s Analytics warned that higher U.S. tariffs, geopolitical frictions with China and policy uncertainty ahead of snap elections called by Prime Minister Sanae Takaichi could weigh on Japan’s export outlook despite support from a weak yen.

South Korea Growth Miss Highlights Export and Construction Strain

South Korea’s economy lost momentum at the end of 2025, underscoring mounting pressure on its export-led growth model. Gross domestic product expanded 1.5% year on year in the fourth quarter, below expectations, while output contracted 0.3% on a quarterly basis – the sharpest slowdown since late 2022, according to advance estimates from the Bank of Korea. Weak construction activity and a pullback in exports offset modest gains in consumption, with shipments falling 2.1% from the previous quarter despite strong full-year performance driven by semiconductors. Trade uncertainty remains a key risk as new U.S. tariff threats on AI chips loom under President Donald Trump, even as a prior bilateral deal eased auto tariffs. Policymakers kept rates steady to support financial stability amid a sharply weakening won.

Conclusion

Markets ended the period on a more constructive footing as geopolitical risk eased and policy signals turned less confrontational. President Donald Trump’s shift toward a negotiated framework on Greenland helped stabilize global risk sentiment, allowing U.S. equities to recover from recent volatility. In Asia, softer trade and growth data from Japan and South Korea underscored the ongoing drag from global trade uncertainty, even as structural demand for semiconductors remains supportive. Overall, the backdrop points to a market environment driven by policy clarity, selective growth themes and heightened sensitivity to geopolitical developments.

Investment Insights

• Policy clarity can quickly reprice risk: The easing of tariff threats linked to Greenland highlights how rapidly geopolitical rhetoric can swing market sentiment, reinforcing the need to actively manage exposure to policy-driven volatility tied to the Donald Trump administration.
• Asia growth remains uneven: Slower trade momentum in Japan and cooling growth in South Korea point to ongoing external demand headwinds, favoring selective positioning rather than broad-based regional exposure.
• Semiconductors are supportive but not immune: Structural AI-driven chip demand continues to underpin Asia’s export base, yet rising tariff risk and currency pressure argue for a cautious, valuation-aware approach.
• Diversification and balance matter: In a landscape shaped by geopolitics, trade policy and uneven growth, portfolios benefit from diversified allocations, with an emphasis on quality balance sheets and regions less exposed to abrupt policy shifts.

Key Points

• U.S. Markets Jolt on Greenland Tariff Escalation: Wall Street suffered its sharpest daily decline since October as President Trump’s renewed tariff threats tied to Greenland triggered a broad risk-off move, pushing equities lower, Treasury yields higher, and the dollar weaker.
• Asia Slides as Gold Hits Record Highs: Asian markets retreated as geopolitical tensions spilled over from the U.S., driving investors toward safe havens and lifting gold to fresh all-time highs amid fears of an expanding transatlantic trade conflict.
• European Capital Pullback Signals Confidence Erosion: Denmark’s AkademikerPension announced plans to sell roughly $100 million in U.S. Treasurys, citing concerns over U.S. fiscal sustainability, underscoring how geopolitical strain is beginning to influence global capital allocation decisions.
• Reliance Industries Faces Domestic Growth Test: While geopolitical pressures and sanctions complicate energy operations, slowing momentum in Reliance Retail has emerged as the dominant concern for investors, prompting brokerages to trim forecasts despite resilience in refining and telecom.

January Economic Calendar

Wall Street Slides as Tariff Rhetoric Rattles Risk Appetite

U.S. equities suffered their sharpest selloff since October after renewed tariff threats tied to Greenland heightened political and market uncertainty. The Dow Jones Industrial Average fell nearly 1.8%, while the S&P 500 dropped 2.1% and the Nasdaq Composite slid 2.4%, pushing major benchmarks into negative territory for 2026.

The move was accompanied by rising Treasury yields and a weaker dollar, signaling a broader “sell America” response. President Donald Trump escalated tariff threats against European allies ahead of Davos, unsettling global markets. With earnings season intensifying, results from companies such as Netflix and Johnson & Johnson are now in focus as investors look for corporate fundamentals to stabilize sentiment.

Gold Surges as Asia Markets Slide on Tariff Escalation

Asia-Pacific markets weakened as President Donald Trump’s renewed tariff threats tied to Greenland triggered a flight to safety, lifting gold to a record above $4,800 an ounce. Japan’s Nikkei 225 and South Korea’s Kospi led regional declines, while Hong Kong and mainland China were mixed.

The risk-off mood followed Wall Street’s sharpest selloff since October, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all posting steep losses. Rising U.S. Treasury yields and a weaker dollar underscored concerns that escalating trade tensions could spill over into global growth and asset valuations.

Danish Pension Fund Exits U.S. Treasurys Amid Fiscal and Geopolitical Strains

Denmark’s AkademikerPension said it will sell its roughly $100 million holding in U.S. Treasurys by month-end, citing concerns over America’s deteriorating public finances and rising geopolitical risk. The move follows a widening budget deficit, heavy debt-servicing costs and Moody’s Ratings’ downgrade of U.S. sovereign credit last year.

Tensions between Washington and Copenhagen have intensified as Donald Trump presses for control of Greenland and threatens tariffs on European allies. The decision adds to signs of a broader “sell America” trade, echoed by comments from Ray Dalio, who warned that sustained trade and political conflicts could prompt global investors to reassess U.S. assets and Treasurys as safe havens.

Reliance Industries Faces Domestic Growth Test

India’s largest conglomerate, Reliance Industries, is facing rising investor scrutiny as a slowdown in its retail arm weighs more heavily on valuation than geopolitical challenges in energy. Reliance Retail posted modest quarterly growth, prompting brokerages including Macquarie Capital, Citi and UBS to cut earnings forecasts and target prices, despite maintaining buy ratings.

While the group has reduced imports of discounted Russian crude following U.S. sanctions on Rosneft and Lukoil, its refining margins have held up and telecom continues to deliver steady growth. With domestic consumption soft and retail momentum slowing, investors increasingly see execution at home—rather than geopolitics abroad—as the key risk shaping Reliance’s near-term outlook.

Conclusion

Global markets are navigating a sharp rise in geopolitical risk, with tariff threats linked to Greenland unsettling investor confidence and triggering broad-based volatility across equities, currencies and bonds. The shift toward safe havens, including record-high gold prices, reflects growing unease over policy unpredictability and its spillover into capital flows.

At the same time, signs of selective capital reallocation away from U.S. assets highlight sensitivity to fiscal and political credibility. In Asia, company-specific fundamentals remain critical, as illustrated by Reliance Industries, where domestic demand trends now outweigh external pressures. Overall, markets are entering a more fragile phase where geopolitics and fundamentals are increasingly intertwined.

Investment Insights

• Elevated policy risk favors selectivity: Escalating tariff threats tied to Greenland reinforce the need to manage geopolitical risk premiums, particularly across European exporters, global cyclicals and trade-sensitive equities.
• Safe-haven demand is rising: The move into gold and away from U.S. assets highlights growing investor sensitivity to fiscal discipline and policy credibility, supporting defensive allocations amid elevated volatility.
• Sovereign risk is back in focus: The Danish pension fund’s exit from U.S. Treasurys underscores rising scrutiny of U.S. debt sustainability, with implications for yields, the dollar and global capital flows.
• Emerging market fundamentals diverge: Reliance Industries’ retail slowdown shows domestic demand dynamics matter more than geopolitics, reinforcing the need for selective, fundamentals-driven exposure in India.

Key Points

• U.S. markets retreat on tariff escalation risk: Wall Street futures slid sharply as President Donald Trump threatened escalating tariffs on European allies over Greenland, reviving trade uncertainty and pressuring global equities ahead of a heavy earnings week.
• Europe faces renewed trade shock: Trump widened tariff threats by floating 200% duties on French wines and champagne, intensifying transatlantic tensions and raising the risk of retaliation that could weigh on European exports and consumer prices.
• Japan heads into high-stakes snap election: Prime Minister Sanae Takaichi called an early vote to lock in strong personal approval ratings, a move that could reshape policy direction amid fragile coalition math and rising geopolitical pressure.
• Quantum computing gains strategic relevance: UBS flagged “meaningful breakthroughs” in quantum technology, highlighting long-term disruption potential led by large-cap tech platforms, while cautioning that pure-play quantum stocks remain highly volatile despite rapid innovation.

January Economic Calendar

Markets Slide on Escalating Greenland Tariff Threats

U.S. stock futures pointed sharply lower as investors reacted to President Donald Trump’s renewed tariff threats linked to Greenland, setting up a risk-off start to the week after the Martin Luther King holiday. Dow futures signaled a drop of more than 300 points, with S&P 500 and Nasdaq futures also under pressure, reflecting heightened policy uncertainty and concerns over potential retaliation from European allies.

European equities fell broadly, led by automakers and luxury goods, while volatility crept higher amid geopolitical tensions spanning Europe and Iran. With major earnings due this week, markets are weighing whether solid corporate guidance can offset rising political and trade risks.

Trump Escalates Europe Trade Tensions With French Wine Tariff Threat

U.S. President Donald Trump threatened to impose 200% tariffs on French wines and champagne, sharply escalating trade tensions with Europe as disputes over geopolitics and Greenland intensify. The comments, tied to French President Emmanuel Macron’s reported refusal to join Trump’s proposed “Board of Peace” on Gaza, added to broader investor unease already driven by earlier threats of tariffs on eight European nations unless the U.S. gains control of Greenland.

European officials are weighing retaliatory measures, raising the risk of a wider transatlantic trade conflict. Markets are increasingly pricing in higher policy uncertainty, with the prospect of tit-for-tat tariffs posing downside risks to European exporters and adding volatility to global trade-sensitive sectors.

Japan Calls Snap Election as Political Stakes Rise

Japan’s Prime Minister Sanae Takaichi has called a snap election for Feb. 8, dissolving the Lower House months after taking office in a bid to secure a stronger mandate while her personal approval ratings remain high. The move comes despite the ruling Liberal Democratic Party holding only a one-seat majority and facing a newly unified opposition, raising uncertainty over whether Takaichi’s popularity will translate into parliamentary gains.

Analysts see the gamble as an effort to lock in authority ahead of potential economic headwinds, rising tensions with China, and an expected meeting with U.S. President Donald Trump. The outcome could shape Japan’s policy stability, regional diplomacy, and investor confidence in the months ahead.

Quantum Computing Emerges as a Long-Term Tech Catalyst

Quantum computing is gaining renewed attention as UBS highlights “meaningful breakthroughs” that could shape the next phase of technology growth, even as broader tech valuations remain elevated. While still fragmented and immature, the sector is advancing toward practical applications in molecular simulation, optimization, artificial intelligence and cryptography, with UBS suggesting true “quantum advantage” could emerge in the 2030s.

Large-cap technology leaders including Alphabet, IBM, Microsoft and Amazon are driving progress through different qubit architectures, while smaller pure-play firms such as IonQ, D-Wave Quantum and Rigetti offer more direct exposure but with significantly higher volatility. UBS views the space as strategically important, favoring diversified platforms with scale and balance-sheet strength as quantum development gradually accelerates.

Conclusion

Markets enter the week navigating a complex mix of political risk, policy uncertainty and structural innovation. Escalating tariff threats tied to Greenland have reintroduced volatility across U.S. and European assets, reinforcing how geopolitics can quickly disrupt sentiment even as earnings season unfolds.

In Asia, Japan’s snap election underscores rising political stakes at a time of fragile regional stability, while China’s growth challenges continue to shape global demand dynamics. At the same time, longer-term themes such as quantum computing highlight where future value creation may emerge. For investors, the backdrop favors disciplined positioning, selective risk-taking and a clear distinction between short-term noise and enduring secular trends.

Investment Insights

• Elevated policy risk favors selectivity: Escalating tariff threats tied to Greenland reinforce the need to manage geopolitical risk premiums, particularly across European exporters, global cyclicals and trade-sensitive equities.
• Asia policy outcomes matter: Japan’s snap election could influence fiscal flexibility and regional diplomacy, with implications for the yen, Japanese equities and broader Asia-Pacific risk sentiment.
• China remains a structural drag: Slowing consumption and investment underscore the case for cautious exposure to China-linked assets, despite headline growth meeting official targets.
• Focus on long-term innovation selectively: Quantum computing represents a high-potential but volatile theme, best approached via diversified large-cap platforms rather than concentrated pure-play exposure.

Key Points

• Asia Markets Under Pressure Amid Geopolitics and Rates: Asia-Pacific equities weakened as investors weighed escalating U.S.–Europe tensions over Greenland, mixed China data, and a sharp rise in Japanese government bond yields to multi-decade highs, lifting demand for gold and silver as safe havens.
• China Growth Slows as Consumption Falters: China’s fourth-quarter GDP growth eased to 4.5%, the weakest in nearly three years, with soft retail sales and deepening property investment declines reinforcing expectations for further monetary and credit easing despite headline growth meeting Beijing’s annual target.
• Trump Tariff Threats Test Transatlantic Ties: President Trump’s threat to impose escalating tariffs on eight European nations over Greenland has rattled markets, raising risks to EU-U.S. trade relations, NATO cohesion, and global supply chains amid growing legal and diplomatic pushback.
• Hedge Fund Titans Post Record 2025 Gains: The world’s largest hedge funds delivered a record $115.8 billion in net gains in 2025, led by firms such as TCI, Citadel and Bridgewater, highlighting how scale, diversified strategies and macro opportunities continue to favor industry leaders.

January Economic Calendar

Asia Markets Ease as Greenland Tensions and China Data Weigh on Sentiment

Asia-Pacific markets mostly declined as investors digested rising geopolitical tensions linked to U.S. threats toward Greenland and a fresh batch of Chinese economic data. Hong Kong’s Hang Seng fell over 1%, while Japan’s Nikkei slid nearly 1% as long-dated Japanese government bond yields climbed to multi-decade highs, reflecting tightening financial conditions. China’s latest GDP, retail sales and industrial output figures did little to lift regional risk appetite. Safe-haven demand remained strong, with gold and silver hitting record highs. South Korea stood out as a relative outperformer, buoyed by a sharp rally in Hyundai shares, while broader global markets remained cautious.

China Growth Slows as Consumption Weakness Deepens

China’s economic growth slowed to 4.5% in the fourth quarter, the weakest pace in nearly three years, underscoring persistent pressure from soft domestic demand despite full-year GDP meeting Beijing’s 5% target. December data showed retail sales growth missed expectations, marking the weakest consumption reading since late 2022, while fixed-asset investment fell more sharply as the property downturn deepened. Industrial output offered a modest bright spot, beating forecasts, and markets reacted cautiously, with mainland equities trimming early gains. Policymakers signaled the need for more proactive support, reinforcing expectations that additional monetary easing will be required in early 2026 to stabilize growth and counter deflationary pressures.

Trump Escalates Trade Threats Over Greenland, Raising Transatlantic Tensions

President Donald Trump said the U.S. will impose escalating tariffs on imports from eight European NATO allies unless Greenland is sold to the United States, sharply intensifying geopolitical and trade risks. The tariffs would start at 10% on Feb. 1 and rise to 25% by June, stacking on existing duties and threatening the EU-U.S. trade agreement reached last year. European leaders condemned the move as coercive and destabilizing, with the EU calling an emergency meeting to coordinate a response. Markets are weighing the risk of a renewed transatlantic trade dispute, potential legal challenges in U.S. courts, and broader implications for NATO cohesion and global economic stability.

Hedge Fund Giants Deliver Record Gains as Scale Drives Outperformance

The world’s largest hedge funds posted a record $115.8 billion in net gains for clients in 2025, underscoring the dominance of scale in an industry that also logged its strongest overall dollar performance on record. According to Edmond de Rothschild Capital Holdings, the top 20 hedge fund firms generated nearly 40% of industry-wide profits despite managing less than one-fifth of total assets. TCI led with a historic $18.9 billion gain, while Citadel reinforced its status as the most successful hedge fund firm of all time. Strong equity and bond markets, alongside macro trading opportunities, favored large, diversified platforms, highlighting a widening performance gap between industry leaders and smaller rivals.

Conclusion

Global markets are navigating a complex mix of slowing growth, rising geopolitical risk and shifting capital flows. Asia’s recent weakness reflects unease over higher bond yields in Japan, softer Chinese demand and renewed political uncertainty stemming from U.S.–Europe tensions. China’s data underscore the fragility of domestic consumption and reinforce expectations for further policy support. At the same time, aggressive tariff threats risk destabilizing established trade relationships and adding volatility to global markets. Against this backdrop, the strong performance of large hedge funds highlights the premium investors continue to place on scale, diversification and active risk management in an increasingly uncertain macro environment.

Investment Insights

• Rising geopolitical risk premiums: Escalating tariff threats and political tensions are increasing uncertainty around global trade, favoring diversified portfolios and selective exposure to defensive assets.
• China growth recalibration: Slowing domestic demand and weak investment reinforce expectations for further monetary and fiscal easing, supporting a cautious stance on China-linked cyclicals while favoring exporters and policy beneficiaries.
• Rates and duration risk: Higher Japanese bond yields and global rate volatility argue for careful duration management and selective fixed-income positioning.
• Active management advantage: The outsized gains of large hedge funds highlight the value of scale, flexibility and active strategies in navigating volatile, policy-driven markets.