Markets initially buckled last week before paring back, or even erasing, their losses. European indices are showing gains of just over 2% for 2026, with US markets up by around 1%. Yet the underlying tone remains heavy.


The balance sheet that financial professionals keep, jotting down positives and negatives, is beginning to tilt towards the latter. On the plus side: the resilience of the US economy, a seemingly bottomless well of investment in artificial intelligence, the perception that Donald Trump may provoke but ultimately returns to more pragmatic (albeit consistently America-first) positions, and continued extraordinary earnings growth from major listed companies relative to sluggish global expansion.


In the negative column: a raft of disorders and imbalances – geopolitical instability, trade tensions, domestic political chaos, inflation, sovereign debt – and the growing sense that this cocktail could turn explosive.


The key difference between the two lists is that the first is largely based on concrete figures and visible developments, while the second is made up of hypothetical misfires. Investors, being optimists by nature, are therefore anchoring themselves to the former, while hedging against the risk that something might go seriously wrong. Hence the relative resilience of equities despite rising risks, alongside a surge in safe-haven assets such as gold – which shattered the USD 5,000 per ounce barrier overnight – and industrial metals, which are performing solidly despite fears over global trade. This can be partially attributed to the absorption effect of AI infrastructure and its associated energy needs, but also to the fact that 2025 demonstrated the strategic importance of natural resources in an era of imperial resurgence.


Among the negatives, bond market tensions reappear with increasing frequency. Unlike equities, bonds tend to move little. But when they do, it’s often a warning shot: a worrying imbalance may be looming. US Treasuries are jittery, but the Japanese market is even more so. There were peculiar movements in the yen on Friday: after flirting with the 160 JPY per USD threshold, the currency abruptly rebounded. A technical operation by the Federal Reserve Bank of New York hinted at a possible joint US-Japan intervention to support the yen: unprecedented in 15 years. Japan’s Prime Minister, Sanae Takaichi, fuelled speculation over the weekend by announcing her intention to act against speculative moves.


Markets are uneasy with the combination of “promises of increased fiscal spending,” “Bank of Japan rate hikes,” and “structural over-indebtedness.” According to Nordea, Japan now faces a potential “Triple Yasu”: falling equities, rising yields, and a weakening yen – signs of growing mistrust in its economic policy. The global financial community is watching closely: Japanese savers are among the largest holders of foreign bonds. A sharp rise in domestic rates could prompt a major repatriation of capital, roiling global debt markets and disrupting long-standing mechanisms, including the famed carry trade.


The alarm bells ringing in Japan are not the only source of tension this week. In the United States, Democrats are threatening another budget showdown, following widespread protests over ICE practices in the wake of a US citizen’s death in Minneapolis. After a botched communication effort by federal services, Donald Trump was forced to intervene, calling for a review of the incident, according to the Wall Street Journal. The episode has deepened domestic divisions.

Key developments to watch as the week begins:


  • Donald Trump has threatened to impose 100% tariffs on Canada should it sign a trade agreement with China.


  • Still in the US, over one million households are without power and 10,000 flights have been cancelled amid an exceptional winter storm.


  • In China, the leadership continues its military purge: the country’s top-ranking officer, Zhang Youxia, is under investigation.


  • On the macroeconomic calendar: Thursday brings two monetary policy decisions. Without slighting the Bank of Canada, it is the Federal Reserve’s announcement that will carry the most weight. Markets are pricing in a 95% chance of a hold at the penultimate FOMC under Jerome Powell’s leadership. The Fed has cut rates by a quarter-point at its last three meetings.


  • On the corporate front, a slew of heavyweights are set to report quarterly earnings: LVMH, ASML, SAP SE, and Roche are among the most anticipated in Europe. In the US, Microsoft, Meta, Tesla, Apple, Visa, and Exxon Mobil will feature, among many others. Some 20% of S&P 500 constituents are due to report this week.


In Asia-Pacific trading, Tokyo slipped 1.7% amid the aforementioned economic concerns. South Korea and India each shed 0.8%. Mainland China’s CSI 300 saw a modest gain. Hong Kong remained flat. Australia is closed for a public holiday. European futures point to a slightly weaker open.

Today’s economic highlights:

On today’s agenda: the Ifo Business Climate Index in Germany; in the United States, the Chicago Fed National Activity Index, durable goods orders, and the Dallas Fed Manufacturing Index. See the full calendar here.

  • GBP / USD: US$1.37
  • Gold: US$5,088.55
  • Crude Oil (BRENT): US$66.38
  • United States 10 years: 4.21%
  • BITCOIN: US$87,894.3


In corporate news:

  • Ryanair raises its fare growth forecast thanks to strong bookings for early 2026.
  • Genus received Canadian approval for its gene-edited pigs resistant to PRRS, advancing commercialization plans in North America and seeking further approval in markets like Mexico, Japan, and China.

  • The UK housing secretary will meet with major developers including Vistry Group and Barratt Redrow to discuss the government’s 1.5 million homes target and planning reform initiatives.
  • Spire Healthcare confirmed it is in early talks with buyout firms including Bridgepoint and Triton Partners to explore strategic options, potentially leading to a private takeover.
  • HSBC, NatWest, Barclays, and Lloyds are expected to raise their profitability targets as part of upcoming earnings reports, following a trend among European banks to aim higher amid resilient earnings.
  • Ericsson receives multiple target price upgrades from Santander, Goldman Sachs, SEB, DNB Carnegie, and Handelsbanken.
  • Ryanair raises its traffic outlook despite Q3 profit impact from an Italian fine.
  • ISS A/S wins a 300 million DKK annual contract for life science services in Switzerland.
  • EFG International to acquire Quilvest Switzerland, managing 5.3 bn CHF of client assets.
  • Vivesto AB secures SEK 53.8 million from a fully subscribed rights issue.
  • Oddo raises its target price for a company to 85 SEK.
  • Merck withdraws from its planned acquisition of Revolution Medicines.

  • The United States is in talks with Chevron and other oil majors and oil services companies on a plan to quickly restart production in Venezuela, according to Bloomberg.
  • Amazon plans to launch a new phase of 14,000 job cuts as part of its reorganization plan, which called for 30,000 job cuts.
  • Dominion Energy estimates that the cold snap affecting the US is likely to have one of the most significant operational impacts ever recorded in winter.
  • Merck & Co is no longer in talks to acquire cancer drug specialist Revolution Medicines, reports the Wall Street Journal.
  • Eaton is finalizing the acquisition of Ultra PCS Limited.


See more news from UK listed companies here


Analyst Recommendations:

  • Molten Ventures Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 580 to GBX 615.
  • Baltic Classifieds Group Plc: BNP Paribas maintains its outperform rating and reduces the target price from GBX 255 to GBX 250.
  • Rightmove Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 730 to GBX 670.
  • The Weir Group Plc: BNP Paribas maintains its outperform rating and raises the target price from GBX 3450 to GBX 3600.
  • Auto Trader Group Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 920 to GBX 685.
  • Fresnillo Plc: Peel Hunt maintains its hold recommendation and raises the target price from GBP 19.535 to GBP 36.47.
  • B&M European Value Retail S.a.: RBC Capital maintains its outperform rating and reduces the target price from GBX 200 to GBX 195.
  • 3I Group Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 48.35 to GBP 47.40.
  • Rio Tinto Plc: HSBC downgrades to hold from buy with a target price of GBP 69.
  • Glencore Plc: HSBC downgrades to hold from buy with a target price of GBP 5.15.
  • The British Land Company Plc: UBS downgrades to neutral from buy and reduces the target price from GBX 445 to GBX 440.
  • Big Yellow Group Plc: Jefferies upgrades to buy from hold with a price target raised from GBX 1200 to GBX 1225.
  • Primary Health Properties Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 115 to GBX 120.
  • Supermarket Income Reit Plc: Jefferies upgrades to buy from hold and raises the target price from GBX 80 to GBX 90.
  • Segro Plc: Jefferies upgrades to buy from hold with a price target raised from GBX 709 to GBX 850.