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.

Key Points

• U.S. stocks steady as chips and banks rebound: Wall Street stabilized as strong earnings from major banks and upbeat semiconductor results helped offset ongoing geopolitical and policy uncertainty, keeping major indexes near record levels.
• TSMC deepens U.S. expansion on AI demand: Taiwan Semiconductor signaled a further acceleration in U.S. investment, reinforcing confidence in long-term AI-driven chip demand and supporting the broader semiconductor supply chain.
• India pivots trade toward China as U.S. tariffs bite: Indian exports to China surged while shipments to the U.S. declined, highlighting New Delhi’s push to diversify trade partners amid elevated U.S. tariffs and shifting global trade dynamics.
• Asian chip stocks rally on U.S.-Taiwan deal: Semiconductor shares across Asia advanced after a U.S.-Taiwan trade agreement and strong chip earnings, with Taiwan outperforming regional peers as investors priced in sustained capital spending and supply-chain realignment.

January Economic Calendar

U.S. Stocks Rebound as Chips and Banks Lead

U.S. equity markets advanced Thursday as strength in semiconductors and financials lifted major indexes, even as futures steadied later in the session. The S&P 500 and Nasdaq rose about 0.3%, while the Dow climbed 0.6% and small caps outperformed.

Chipmakers rallied after Taiwan Semiconductor Manufacturing Company delivered strong quarterly results, reinforcing optimism around AI-driven demand and boosting names such as Nvidia and Advanced Micro Devices. Financials also gained following solid earnings from Goldman Sachs and Morgan Stanley.

While fundamentals remain supportive, investors remain cautious amid elevated valuations, geopolitical risks, and policy uncertainty, leaving major indexes modestly lower for the week overall.

TSMC Signals Deeper U.S. Expansion on AI Demand

Taiwan Semiconductor Manufacturing Co. is preparing to scale up its already massive U.S. footprint, signaling that its $165 billion investment commitment is likely to rise as demand for artificial intelligence chips accelerates.

TSMC said it is stepping up capital expenditure in both Taiwan and the U.S., with plans to build a multi-plant “gigafab cluster” in Arizona after purchasing additional land. The expansion follows strong earnings and coincides with a new U.S.-Taiwan trade agreement that lowers tariff risks and supports reshoring of chip production.

Executives emphasized that the investment reflects customer demand rather than trade negotiations, noting that TSMC’s first Arizona fab is already producing chips at yields comparable to its leading Taiwan facilities, reinforcing confidence in U.S. manufacturing execution.

India Shifts Trade Toward China as U.S. Tariffs Bite

India’s export flows are rebalancing as steep U.S. tariffs push New Delhi to deepen trade ties with China, even as shipments to the United States weaken. Exports to China surged 67% in December, while shipments to the U.S. fell 1.8%, reflecting the impact of 50% U.S. tariffs on Indian goods.

China has now emerged as India’s largest merchandise trading partner, overtaking the U.S. in the April-December period, though at the cost of a widening bilateral trade deficit. Overall, India’s December trade deficit rose 21.4% year on year to $25 billion as imports outpaced exports.

The data underscore India’s accelerating export diversification strategy amid tariff pressures and a fragile outlook for a U.S.-India trade deal.

Asian Chip Stocks Lead as U.S.-Taiwan Trade Deal Lifts Semiconductor Outlook

Asian equity markets traded mixed on Friday, but semiconductor stocks outperformed after strong earnings and a U.S.-Taiwan trade agreement reinforced confidence in global chip demand. Shares of Taiwan Semiconductor Manufacturing Co. rose about 1.5% after the company reported another record quarter and signaled a sharp increase in 2026 capital spending to meet AI-driven demand, helping Taiwan’s benchmark index outperform the region.

The U.S.-Taiwan deal, which includes large-scale Taiwanese investment commitments in U.S. chip manufacturing in exchange for lower tariffs, supported sentiment across Asia, lifting major chipmakers in South Korea and Hong Kong. The rally was reinforced by gains on Wall Street, where bank and technology stocks advanced on solid earnings and resilient U.S. labor market data.

Conclusion

Markets are navigating a complex mix of solid earnings momentum and elevated geopolitical and policy risk. Strong results from banks and semiconductor leaders underscore the resilience of corporate fundamentals, particularly in areas tied to artificial intelligence and global infrastructure investment.

At the same time, shifting trade patterns — from India’s export realignment to the deepening U.S.-Taiwan technology partnership — highlight how geopolitics continues to reshape supply chains and capital flows. While volatility risks remain, especially around tariffs and global diplomacy, the current environment favors selective exposure to earnings-driven sectors with clear structural tailwinds.

Investment Insights

• Earnings remain the primary driver: Strong results from banks and semiconductor leaders reinforce that equity performance in early 2026 is being led by earnings quality rather than multiple expansion.
• AI and semiconductors retain structural tailwinds: TSMC’s expanded U.S. investment and robust capex outlook highlight sustained demand visibility across the AI and advanced chip ecosystem.
• Geopolitics is reshaping trade, not halting it: India’s pivot toward China and the U.S.-Taiwan deal illustrate redistribution of trade flows rather than a collapse in global commerce.
• Volatility favors selectivity: Policy uncertainty argues for disciplined positioning in high-quality, cash-generative companies with pricing power and global diversification.

Key Points

• U.S. stocks steady as policy and earnings risks linger: Equity markets paused after recent declines as investors weighed new U.S. semiconductor tariffs, mixed bank earnings, and renewed concerns over Federal Reserve independence against a still-resilient earnings backdrop.
• Asia trades mixed amid policy and regulatory signals: Asian markets were uneven as South Korea’s central bank held rates steady, Japan’s equities cooled after record highs, and regulatory scrutiny in China weighed on select technology and consumer names.
• Geopolitical tensions disrupt aviation and energy sentiment: Iran’s temporary airspace closure underscored rising regional risks, prompting airlines to reroute flights and reinforcing a geopolitical risk premium across energy and transport sectors.
• China’s AI chip IPO surge highlights structural limits: Strong listings by smaller Chinese AI chipmakers reflect investor demand, but manufacturing bottlenecks and Huawei’s dominant, vertically integrated position continue to shape the sector’s long-term competitive landscape.

January Economic Calendar

U.S. Stocks Slip as Tech and Banks Weigh on Sentiment

U.S. stock futures were little changed after the S&P 500 and Dow posted a second consecutive session of losses, reflecting pressure on technology and financial shares amid rising policy and geopolitical uncertainty. The Nasdaq fell 1% as major tech names declined following new U.S. semiconductor tariffs and reports that Chinese authorities restricted imports of Nvidia’s H200 chips, even as Washington later approved limited sales with a government revenue share.

Bank stocks also lagged after weaker-than-expected earnings from Wells Fargo. Despite near-term volatility driven by tariffs, Iran-related tensions, and renewed concerns over Federal Reserve independence, investors remain focused on resilient earnings, with small-cap stocks hitting fresh record highs and upcoming bank results expected to shape near-term market direction.

Asia Markets Mixed as Central Banks Hold Steady and Tech Weakness Persists

Asia-Pacific markets traded mixed as investors weighed steady monetary policy in South Korea against renewed weakness in global technology stocks. The Bank of Korea left its benchmark interest rate unchanged at 2.50%, citing limited scope for easing after recent currency depreciation, a move that lifted South Korean equities modestly while the won softened.

Japan’s Nikkei pulled back after record highs, while Hong Kong and mainland China declined, led by sharp losses in Trip.com following a regulatory probe. The cautious tone mirrored Wall Street’s second straight decline overnight, where chipmakers slid amid earnings pressure and fresh concerns over China’s restrictions on advanced U.S. semiconductor imports.

Iran Airspace Disruption Highlights Escalating Geopolitical Risk

Iran briefly shut most of its airspace for several hours before reopening it early Thursday, rattling airlines and underscoring rising regional tensions with the United States. The temporary closure triggered widespread flight diversions, with global carriers continuing to avoid Iranian airspace even after restrictions were lifted, reflecting elevated security concerns.

The move came amid heightened fears of potential U.S. military action following a violent crackdown on protests in Iran, which has already prompted the relocation of some U.S. military personnel in the region. While President Donald Trump later struck a more cautious tone, the episode reinforced geopolitical risk in the Middle East, with knock-on implications for aviation, energy markets and broader investor sentiment.

China’s AI Chip IPO Boom Masks Huawei’s Quiet Dominance

China’s artificial intelligence chip sector has seen a surge of investor enthusiasm as several domestic designers rush to list shares, but analysts say the country’s true AI heavyweight remains Huawei, which continues to dominate the market while staying private.

Recent IPOs from smaller firms have delivered strong market gains, yet most lack the scale, manufacturing access and full-stack capabilities needed to rival Nvidia. Huawei’s integrated approach—spanning chip design, systems, software and infrastructure—has given it a structural edge, supported by priority access to limited domestic manufacturing capacity.

While IPO momentum reflects investor appetite for China’s semiconductor self-sufficiency push, experts caution that production constraints and likely consolidation could challenge newly listed players, reinforcing Huawei’s central role despite its absence from public markets.

Conclusion

Global markets remain finely balanced as investors navigate a dense mix of policy risk, earnings signals and geopolitical uncertainty. In the U.S., resilient corporate fundamentals are offset by heightened sensitivity to regulatory shifts, tariff measures and questions around central bank independence.

Across Asia, steady monetary policy contrasts with selective equity volatility driven by regulatory actions and political developments. Meanwhile, rising tensions in the Middle East continue to inject risk premiums into energy and transport markets, while China’s push for technological self-sufficiency highlights both progress and structural constraints.

Overall, markets are transitioning from momentum-driven gains toward a more selective, fundamentals-led phase.

Investment Insights

• Favor fundamentals over momentum: With policy uncertainty and geopolitical headlines driving short-term volatility, earnings quality and balance-sheet strength are likely to be the primary differentiators in equity performance.
• Expect sector rotation, not broad risk-off: Financials and technology face near-term pressure from regulation and trade measures, while selective energy and industrial exposures may benefit from geopolitical risk premiums and infrastructure priorities.
• Maintain geographic diversification: Asia’s mixed policy backdrop and China’s uneven recovery reinforce the value of diversified regional exposure rather than concentrated country bets.
• Hedge macro and policy risk: Elevated geopolitical tensions and central bank independence concerns support maintaining exposure to defensive assets and volatility buffers within portfolios.

Key Points

• U.S. Markets Cautious Ahead of Data and Earnings: U.S. stock futures traded flat to lower as investors weighed upcoming inflation data, bank earnings and renewed political pressure on the Federal Reserve, with financials underperforming and energy stocks lifted by higher oil prices.
• Oil Jumps as Iran Risks and Fed Independence Concerns Rise: Crude prices surged on escalating tensions around Iran, while softer-than-expected core U.S. inflation failed to reassure markets amid growing unease over perceived threats to central bank independence.
• Trump’s Iran Tariff Threat Clouds U.S.-China Trade Outlook: President Trump’s proposed 25% tariffs on countries doing business with Iran risk reigniting U.S.-China trade tensions, potentially undermining the fragile trade truce ahead of high-level diplomatic meetings.
• China Trade Surplus Hits Record as U.S. Trade Slumps: China posted a record $1.2 trillion trade surplus as exports beat forecasts, but trade with the U.S. fell sharply, highlighting ongoing tariff frictions and Beijing’s growing reliance on non-U.S. markets.

U.S. Markets Pause as Bank Earnings and Policy Risks Loom

U.S. stock futures were largely flat as investors looked ahead to a fresh round of bank earnings and additional inflation data, following a modest pullback from recent record highs. The S&P 500 and Dow ended Tuesday lower, pressured by weakness in financial stocks after softer investment banking results at major lenders weighed on sentiment. Energy shares outperformed as oil prices rose more than 2% amid renewed geopolitical tensions involving Iran. Markets also remain uneasy over policy uncertainty, including proposed caps on credit card rates and ongoing pressure on the Federal Reserve, contributing to cautious positioning ahead of key earnings and macro updates.

U.S. Stocks Ease as Oil Rallies on Iran Tensions and Fed Independence Fears

U.S. equities retreated from recent highs as a renewed spike in geopolitical risk and concerns over central bank independence unsettled investors, even after inflation data came in slightly cooler than expected. Oil prices jumped more than 2.5% after President Donald Trump halted engagement with Iranian officials and signaled support for protests in the oil-producing nation, raising fears of supply disruption. Core U.S. CPI showed easing price pressures, but markets were overshadowed by Trump’s renewed attacks on Federal Reserve Chair Jerome Powell, prompting global central bankers to publicly defend the Fed’s independence. The combination weighed on risk sentiment, while energy prices and volatility moved higher.

Tariff Threats Cloud U.S.-China Trade Outlook

President Donald Trump’s move to impose a 25% tariff on countries doing business with Iran has raised fresh risks for the fragile U.S.-China trade truce, adding uncertainty to global markets. Beijing, Iran’s largest trading partner, warned it would take “all necessary measures” to protect its interests, signaling the potential for renewed tit-for-tat escalation. Analysts cautioned that the policy could undermine U.S. agricultural exports and reopen trade tensions just months after tariffs were partially rolled back. With China heavily reliant on Iranian oil and the U.S. Supreme Court poised to rule on the legality of Trump’s tariff powers, investors are bracing for heightened trade volatility ahead of key diplomatic meetings later this year.

China Trade Surplus Swells as U.S. Ties Cool

China’s trade surplus surged to a record $1.2 trillion in 2025 as export growth in December sharply beat expectations, underscoring Beijing’s continued reliance on external demand amid weak domestic consumption. Exports rose 6.6% year on year in December, while imports climbed 5.7%, both well above forecasts, helping cushion the economy against deflationary pressures and a sluggish property sector. However, trade with the United States deteriorated markedly, with China’s exports to the U.S. down 20% for the year and shipments in December plunging 30%, reflecting sustained tariff frictions. As exports increasingly pivot toward Europe and Southeast Asia, global partners have raised concerns over imbalances, intensifying pressure on Beijing to rebalance growth toward domestic demand.

Conclusion

Global markets are entering a more delicate phase as solid economic data and resilient corporate earnings are increasingly offset by geopolitical risk and policy uncertainty. Rising tensions around Iran, renewed trade frictions between the U.S. and China, and concerns over the independence of the Federal Reserve have injected fresh volatility into asset prices, even as inflation shows signs of moderation and growth remains intact. China’s record trade surplus underscores shifting global trade dynamics and the persistence of imbalances. For investors, the backdrop argues for disciplined positioning, close monitoring of policy signals, and a balanced approach that recognizes both near-term risks and longer-term opportunities.

Investment Insights

• Position for higher volatility: Geopolitical escalation around Iran and renewed U.S.-China trade friction raise the risk of abrupt market moves, favoring diversified portfolios and selective exposure to defensive assets.
• Watch policy credibility closely: Continued pressure on the Federal Reserve could lift risk premiums on U.S. assets, supporting gold and other perceived hedges against institutional uncertainty.
• Be selective in financials: Strong earnings capacity is being offset by regulatory and political headwinds, suggesting dispersion within the banking sector rather than broad-based upside.
• Monitor China spillovers: China’s record trade surplus and weak domestic demand point to external growth reliance, increasing the likelihood of further trade tensions that could impact global cyclicals.

January Economic Calendar

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.

Key Points

• Asia-Pacific Markets Advance as Commodities React to Geopolitics: Asian equities rose following record U.S. closes, while oil prices remained volatile amid escalating protests in Iran and rising geopolitical risk, driving gold to fresh all-time highs.
• Japan Weighs Snap Election Amid Yen Weakness: Prime Minister Sanae Takaichi’s government is preparing for a potential February snap election, seeking to capitalize on strong approval ratings as the yen hits a one-year low and economic pressures persist.
• Markets Turn Risk-Off on Fed Independence Fears: U.S. stock futures slid after the Justice Department opened a criminal investigation into Federal Reserve Chair Jerome Powell, reviving concerns over political interference in monetary policy.
• Powell Pushes Back as Institutional Credibility in Focus: Powell confirmed the probe is linked to Fed building renovations but warned the action threatens central bank independence, prompting safe-haven flows and higher risk premiums on U.S. assets.

Asia Markets Advance as Wall Street Records and Middle East Risks Shape Sentiment

Asia-Pacific equities opened the week higher after U.S. stocks ended Friday at record highs, supported by a resilient U.S. labor market that reinforced confidence in global growth. Gains were tempered by rising geopolitical risk, with investors monitoring escalating protests in Iran and potential U.S. intervention, developments that briefly lifted energy markets before oil prices pulled back. Brent crude slipped to around $63 a barrel, while gold surged to a fresh all-time high above $4,580 an ounce as demand for safe havens increased. Regional markets were mixed, with strength in South Korea offset by softer trading in China and a weaker Japanese yen.

Japan Weighs Snap Election as Takaichi Seeks Political Mandate

Japan’s ruling Liberal Democratic Party is preparing to dissolve parliament and call a snap election as early as February, aiming to capitalize on Prime Minister Sanae Takaichi’s exceptionally strong approval ratings, which stand near 75%. The move, reported by NHK, comes just four months into her term and is intended to stabilize the governing coalition amid a fragile parliamentary majority.

Political uncertainty is unfolding against a challenging economic backdrop, with the yen at a one-year low, inflation running above the Bank of Japan’s target for nearly four years, and revised data showing a sharper-than-expected contraction in third-quarter GDP. Markets are likely to monitor election timing closely for implications on fiscal policy, currency stability, and Japan’s geopolitical posture.

Markets Jolt as Fed Independence Comes Into Focus

U.S. equity futures slid after the Justice Department opened a criminal investigation into Federal Reserve Chair Jerome Powell, escalating tensions between the Trump administration and the central bank and prompting a clear risk-off reaction. Dow, S&P 500 and Nasdaq futures fell as investors questioned the durability of Fed independence, pushing volatility higher and lifting gold prices as a defensive hedge.

Powell said the probe was politically motivated and reaffirmed the Fed’s commitment to evidence-based policy, but markets showed unease with U.S. institutional risk at a time when equities are trading near record highs. Attention now turns to upcoming bank earnings and the Fed’s next policy meeting, where rate cuts are expected to remain on hold.

Fed Independence Tested as Powell Faces Criminal Probe

U.S. markets were rattled after Federal Reserve Chair Jerome Powell confirmed he is under federal criminal investigation tied to a $2.5 billion renovation of the Fed’s headquarters and related congressional testimony, an action he said reflects political pressure rather than legal substance.

Powell warned the probe strikes at the heart of central bank independence, arguing monetary policy risks being influenced by intimidation rather than economic data. Stock futures fell on the news, while investors moved toward safe havens amid concerns over institutional credibility. President Donald Trump denied directing the investigation but reiterated criticism of Powell, heightening uncertainty ahead of Powell’s term expiration in May and raising the risk of increased volatility across U.S. assets.

Conclusion

Global markets enter the new week balancing resilience against rising political and geopolitical uncertainty. Asian equities drew support from strong U.S. market momentum, even as commodity prices reflected heightened risk stemming from Middle East tensions. In Japan, the prospect of a snap election adds a new layer of political uncertainty to an already fragile macro backdrop marked by yen weakness and slowing growth.

Meanwhile, developments in the U.S. have shifted investor focus toward institutional stability, with concerns over Federal Reserve independence triggering a more cautious, risk-aware tone. Collectively, these dynamics underscore a market environment where confidence remains selective and policy credibility is increasingly central to asset pricing.

Investment Insights

• Maintain diversification as headline risk rises: Geopolitical tensions and political interventions are driving short-term volatility, reinforcing the value of balanced exposure across equities, commodities, and defensives.
• Energy and defense remain tactical hedges: Elevated geopolitical risk continues to support select energy producers and defense-related names, though price sensitivity to policy shifts remains high.
• Asia requires selective positioning: Japan’s political uncertainty and currency weakness contrast with pockets of resilience across Asia, favoring exporters and companies with dollar-linked revenues.
• Policy credibility matters for risk assets: Heightened scrutiny of central bank independence could increase risk premiums, supporting allocations to gold and other traditional safe havens.

January Economic Calendar