Global equity markets started the year with strong momentum, led by gains across Asia and renewed optimism surrounding artificial intelligence. Stocks in Hong Kong, South Korea, Taiwan, and Singapore reached fresh highs, supported by enthusiasm for more efficient AI development in China and reports of an upcoming IPO for Baidu’s AI chip business.
In the United States, small- and mid-cap shares showed pro-cyclical leadership, although semiconductor gains were not enough to lift major indexes across the board.
On Friday, the S&P 500 edged slightly higher, the Dow Jones Industrial Average posted modest gains, while the Nasdaq ended in negative territory, reflecting a mixed session amid a lack of major economic data or corporate headlines. Overall sentiment remained constructive as investors welcomed the start of 2026.
A strong backdrop after a volatile 2025
The broader environment remains supportive following a strong, albeit volatile, year for global equities. In 2025, the S&P 500 recorded 39 new all-time highs and delivered an 18% return, including dividends, while most other equity markets posted gains of around 30%.
Looking ahead, expectations for continued economic growth, further monetary easing, and rising corporate earnings underpin a positive outlook, albeit with more moderate returns as valuations have risen. Artificial intelligence is likely to remain a key driver, but leadership is expected to broaden across sectors and regions, reinforcing the case for a diversified approach to equity markets.
Latest market and economic update
Here’s a snapshot of how major regions and asset classes performed as 2026 began.
Asian markets
Asian markets began the year on a strong footing, driven by a rally in technology and semiconductor shares. Japan’s Nikkei and TOPIX surged, with chipmakers Advantest and Tokyo Electron jumping sharply.
South Korea’s KOSPI hit a record high, driven by gains in Samsung Electronics and SK Hynix. China advanced, while Hong Kong and other regional markets were mixed.
U.S. market outlook
U.S. equity futures were mostly flat as investors assessed heightened geopolitical risks after the U.S. military detained Venezuela’s President Maduro. S&P 500 and Nasdaq futures edged higher, while Dow futures dipped slightly.
Markets await Friday’s December jobs report, with traders cautious amid potential Fed policy shifts and uncertainty over U.S. involvement in Venezuela’s oil sector.
European equities
European shares opened 2026 strongly, with the STOXX 600 rising 0.7% to near record highs. Gains were led by technology, driven by ASML (+7%), and defence shares (+3.3%), while basic resources (+0.6%) and energy (+1.4%) also advanced. Media (-1.2%) and real estate (-0.7%) lagged, amid eurozone factory activity retreating further into contraction.
Currency and commodities
The dollar strengthened, with the dollar index reaching a two-week high above 98.5 amid U.S. geopolitical concerns in Venezuela and anticipation of key economic data. The euro traded at 1.1683, reflecting dollar resilience. Markets focus on Friday’s jobs report, other employment and PMI data, and potential Fed rate cuts, amid uncertainty over the next Fed chair.
Oil prices edged higher, with Brent at $60.92 and WTI at $57.43, as markets weighed U.S. action in Venezuela and geopolitical risks. Maduro’s capture caused no immediate disruption to PDVSA output. Analysts see modest short-term price risks while OPEC+ maintains production, and attention turns to Iran amid ongoing protests and rising tensions.
Geopolitical developments
President Donald Trump said the U.S. may take action against Colombia and Iran after a strike on Venezuela that led to the capture of President Nicolas Maduro. He warned of further military action if the interim government does not cooperate, criticised Colombia over drug trafficking, cited unrest in Iran, and said Washington would oversee Venezuela’s transition until elections are held.
China’s economic data
China’s services sector grew at its slowest pace in six months in December, with new business and exports weakening. Employment declined for a fifth month, while input costs rose, but selling prices fell due to competition.
Despite this, business sentiment strengthened, and the economy remains on track for around 5% growth in 2026.
Equities on the move
The following companies experienced notable share price movements driven by analyst ratings, quarterly earnings, or other news:
- Baidu: Shares rose 15% after announcing plans to spin off its AI chip unit, Kunlunxin, and seek a Hong Kong listing. The move aims to highlight Kunlunxin’s standalone value, attract semiconductor-focused investors, and broaden financing, while the unit continues operating as a Baidu subsidiary amid the company’s push for AI self-sufficiency.
- BYD vs Tesla: BYD overtook Tesla as the world’s largest electric vehicle seller in 2025, delivering 2.26 million cars, up 28% year-on-year. Tesla’s deliveries fell 8% to 1.64 million, marking a second consecutive annual decline.
- Microsoft: Shares fell more than 2% after Brazil’s antitrust regulator launched an investigation into suspected anti-competitive practices in cloud services.
- Samsung Electronics: Regained memory chip leadership with HBM4 and plans to double AI-enabled devices to 800 million in 2026 using Google’s Gemini, integrate AI across products, and maintain foldable phone dominance despite slow adoption and competition.
- Tokyo Electric Power Co: Shares surged nearly 9% after announcing plans to restart a reactor at its Kashiwazaki-Kariwa nuclear plant.
- TSMC: Hit a record high after Goldman Sachs raised its price target to NT$2,330, citing strong AI-driven demand and capacity tightness.
- ASML: Upgraded by Bernstein and Aletheia Capital with price targets above €1,250, citing strong demand for EUV lithography and DRAM expansion.
- Apple: Raymond James resumed coverage with a Market Perform rating, citing valuation constraints and moderate growth outlook.
- Palo Alto Networks: Upgraded by Guggenheim from Sell to Neutral, citing operational improvements and AI-related demand.
- Sea Ltd: Upgraded by Maybank to Buy, highlighting Shopee’s VIP programme and strong monetisation growth.
- Arista Networks: Upgraded by Piper Sandler to Overweight, citing AI and hyperscaler demand and robust financial health.
- Under Armour: UBS maintained a Buy rating with an $8 price target, citing turnaround potential and strong brand recognition.
- Vertiv Holdings: Barclays upgraded to Overweight, raising its price target to $200, citing strong exposure to data centres and growth in liquid cooling.
Upcoming data and events
Today’s key U.S. economic releases include ISM Manufacturing data for December, covering New Orders, PMI, Prices, and Employment, alongside 3- and 6-month Treasury bill auctions.
Total vehicle sales for December are also scheduled, offering insights into manufacturing activity, pricing pressures, employment trends, and consumer demand as 2026 gets underway.
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