Geopolitical risk is emerging as a dominant theme for markets in 2026. US President Donald Trump’s assertive stance towards Venezuela has already rippled through energy markets, but the broader concern is whether Washington’s approach could extend to other regions. Attention is now turning towards Greenland, as US Secretary of State Marco Rubio prepares to meet Danish leaders, prompting European governments and NATO allies to respond defensively. At the same time, domestic political developments in the United States are adding to market unease, with the Supreme Court expected to rule on the legality of Trump’s tariffs and a decision on the next Federal Reserve chair anticipated soon.
On the economic front, investors will be closely focused on US inflation data as the government’s statistical machinery resumes normal operations following a prolonged shutdown that disrupted several key releases. The December US consumer price index, due on January 13, will offer a crucial gauge of price pressures ahead of the Federal Reserve’s late-January policy meeting. While the previous report showed inflation cooling more than expected, price growth has remained stubbornly above the Fed’s 2% target. Markets are still pricing in at least two additional quarter-point rate cuts by the end of 2026, according to Reuters.
Artificial intelligence remains another major focal point, with Taiwan Semiconductor Manufacturing set to report earnings on January 15. As the world’s leading producer of advanced chips, TSMC is seen as a bellwether for the durability of the AI investment boom. The company has already reported stronger-than-expected fourth-quarter revenue, and analysts expect full-year sales to have surged sharply, driven by demand from major clients such as Apple and Nvidia. According to earlier reports, Nvidia approached TSMC to ramp up production capacity to meet strong demand for AI chips, particularly from China.
Across the Atlantic, the US earnings season begins in earnest with major banks reporting fourth-quarter results. JPMorgan Chase is due to report on January 13, followed by Citigroup, Bank of America and Wells Fargo, with Goldman Sachs and Morgan Stanley later in the week. Strong investment banking activity and a pickup in dealmaking are expected to support results, while management commentary on consumer spending will be scrutinised for clues about the broader health of the US economy. S&P 500 earnings are projected to have risen around 9% in the fourth quarter from a year earlier, Reuters reported.
In Europe, attention will turn to Germany, where markets are still digesting the impact of last year’s sweeping fiscal overhaul and stimulus push. Massive infrastructure spending plans and pro-growth reforms helped drive significant capital inflows and propelled Germany’s DAX index to repeated record highs. Nearly a year later, questions remain about how much of that optimism has translated into real economic activity. Full-year German GDP data, due on January 15, may provide some answers. Reuters cited OECD estimates suggesting that after two consecutive years of contraction, Germany’s economy likely returned to modest growth in 2025.With politics, policy and profits all in play, the week ahead looks set to test investor confidence across regions and asset classes, as markets recalibrate to a fast-moving and increasingly complex global landscape.Also read: Motilal sees silver sparkle through 2026, pegs Rs 3.20 lakh target. Is the big run just beginning?(With input from agencies.)
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