Market navigator:
week of 12 January 2026

What happened last week

• US expansionist ambition: Following Venezuelan President Nicolás Maduro's detention, the Trump administration announced Venezuela will 'turn over' up to 50 million barrels of sanctioned oil to the US, with Washington maintaining control over oil sales while preserving China's market access. Tensions escalated as the US pursued Greenland control. West Texas Intermediate (WTI) crude advanced 3.1% while Brent crude gained 4.3%.
• Deflationary pressures recede: Full-year consumer inflation of 0% and 39 consecutive months of producer price contraction underscore persistent deflationary headwinds in China. However, December's consumer price index (CPI) registered 0.8% year-on-year (YoY) growth—the strongest since February 2023—while regulatory intervention curtailing battery supplier price competition suggests emerging stabilisation.
• Labour market shows measured deceleration: US December non-farm payrolls increased by 50,000 positions, below consensus. Downward October and November revisions confirmed softening conditions, though no signs of collapse appears evident. Unemployment moderated from 4.5% to 4.4% as federal employees returned post-shutdown. Market-implied January rate cut probability declined to 4%.
• Central bank policies: Euro area inflation decelerated from 2.1% to 2.0% in December, aligning with the European Central Bank (ECB) target and reinforcing policy stability expectations. In Australia, while CPI cooled from 3.8% to 3.4% in November, the Reserve Bank of Australia's (RBA) deputy governor emphasised inflation remains elevated, eliminating near-term easing prospects.

Markets in focus

Risk-on sentiment propels US equities to new record

US equities delivered robust gains during the first full trading week of January, with the S&P 500 and Dow Jones both setting historic highs. The S&P 500 advanced 1.6% for the week, while the technology-heavy Nasdaq 100 appreciated 2.2%. Market breadth improved as the rally extended beyond mega-cap technology names. Small-cap equities delivered their strongest start since 2021, with the Russell 2000 surging 4.6%.

While Nvidia continues to face uncertainty surrounding chip exports to China, chief executive Jensen Huang articulated the artificial intelligence (AI) industry's trajectory at the CES 2026 technology conference. The company's forthcoming Vera Rubin platform promises 5 times inference performance improvement and 90% reduction in token costs versus existing systems. The platform's diminished cooling requirements precipitated sharp declines amongst heating, ventilation and air conditioning (HVAC) providers, with Johnson Controls' share price plunging 9%. Huang identified memory storage as an underserved market opportunity, catalysing a dramatic rally amongst memory and storage manufacturers. SanDisk shares soared 28% in a single session following his comments.

Energy corporations rallied sharply on Venezuelan developments, with SLB and Valero both gaining 12% last week as the administration announced plans to revitalise Venezuelan petroleum production.

The US Tech 100 index approaches a critical technical juncture as it tests the upper boundary of a consolidation range persisting nearly two months. Momentum indicators have strengthened as the relative strength index (RSI) finally penetrated its descending trendline. Should the index breach and sustain above 25,830, there is a high probability for it to challenge the historical record at 26,253. Rejection at the upper boundary would likely trigger a retracement into the range with support established at 24,650.

Figure 1: US Tech 100 index (daily) price chart

Hang Seng Index consolidates as focus shifts to healthcare

The Hang Seng Index (HSI) declined 0.4% last week following an impressive 2.8% advance on 2 January — the first trading day of the year. Trading volumes normalised as southbound capital flows officially resumed following the New Year holiday period.

Investor focus rotated from AI-related equities in the preceding week towards healthcare corporations. Baidu retreated 4% after surging 21% previously. Last week's outperformers comprised Hansoh Pharmaceutical, WuXi Biologics and Innovent Biologics. The Chinese government emphasised support for pharmaceutical innovation at its national drug supervision work conference, pledging enhanced drug safety oversight while actively supporting research and development efficiency improvements for innovative pharmaceuticals and medical devices.

Meanwhile, Chinese insurance corporations ranked amongst the most actively traded southbound equities on policy support expectations and anticipation of interest rates stability. China Life rallied 9% last week.

The HSI momentarily surged to a two-month peak of 26,858 on 6 January, breaching the prolonged consolidation range. However, as cautioned regarding liquidity and sustainability in our previous analysis, the index has subsequently executed a classic throwback to test the breakout zone. The HSI currently resides precisely at the range's upper boundary. Technically, the configuration remains constructive as the 20-day simple moving average (SMA) now trends steeply towards a golden cross formation with the 50-day SMA. Provided the index defends the 26,000 support zone in forthcoming sessions, the structural trajectory remains viable for renewed attempts at the subsequent resistance level approximating 27,200-27,300.

Figure 2: Hang Seng Index (daily) price chart

Bitcoin consolidates amid mixed flows

Positive sentiment surrounding Bitcoin failed to sustain momentum following a robust start to the year. While markets broadly anticipate the Federal Reserve (Fed) continued monetary easing trajectory, other major central banks have begun diverging, with the ECB and RBA signalling concluded easing cycles while the Bank of Japan (BoJ) articulates plans for further rate increases.

Spot exchange-traded fund (ETF) net flows reverted to negative territory last week after briefly turning positive during the week of 29 December. Liquidation of leveraged positions accelerated as trading activity normalised following the holiday season, with $1.1 billion worth of long positions liquidated last week according to Coinglass data.

However, developments weren't all negative. MSCI announced it would not exclude cryptocurrency treasury firms from its indices presently. Previously, investors grew concerns that index exclusions would trigger forced selling of stakes in treasury corporations such as Strategy by passive funds. Strategy's share price advanced 2.4% following the announcement.

The daily price chart reveals Bitcoin's consolidation pattern since December following the steep sell-off from October's peak. Price momentum has improved recently as demonstrated by the RSI's upward trajectory. Bitcoin appears likely to trade within the range between $86,300 and $94,800 near term. A breach below $84,000 or breakthrough above $94,800 would provide clearer directional conviction for subsequent movement.

Figure 3: Bitcoin (daily) price chart

The week ahead

US inflation data assumes prominence Tuesday following November's surprising deceleration, which raised questions regarding data reliability after government shutdown disruptions affected collection methodology. Markets will scrutinise both headline and core CPI readings for December to determine whether November's slowdown reflected genuine disinflationary momentum or statistical anomalies. Together with personal consumption expenditures (PCE) data due 22 January, this week's CPI and producer price index (PPI) data will prove valuable for the Fed's interest rate decision on 27--28 January.

US retail sales data Wednesday warrants close attention following October's stagnant reading. The stagnation may have reflected consumer caution preceding Black Friday promotions, suggesting pent-up demand could materialise in November figures.

China's December trade balance Wednesday will reveal whether the world's second-largest economy remains heavily dependent on exports to sustain growth momentum. Consensus anticipates export growth decelerating to 2.9% YoY from November's 5.9%, while import growth is expected to moderate to 0.8% from 1.9%. Deterioration in import performance would intensify pressure on Chinese policymakers to strengthen domestic demand support.

Fourth-quarter earnings season officially commences with results from major US banking institutions including JPMorgan Chase, Goldman Sachs and Citigroup. Financial sector performance will provide insights into consumer and corporate lending health, particularly following idiosyncratic credit events in the previous quarter. Taiwan Semiconductor Manufacturing Company (TSMC) will also inaugurate the season for the technology sector, whose guidance will prove critical for assessing AI infrastructure demand. Investors now demand more than simply meeting top and bottom-line expectations. They demand evidence of sustainable growth in management's forward guidance and rational capital allocation. Disappointment across any dimension may trigger sector rotation or broader market risk aversion.

According to FactSet's Earnings Insight report, analysts project an earnings growth rate of 8.3% YoY for the S&P 500 in Q4, with expectations for information technology and financial sectors improving while utilities and consumer staples declined. For the full calendar year of 2025, S&P 500 constituents are estimated to report 12.3% earnings growth. If realised, 2025 would represent the strongest performance since 2021, which recorded 47.9% growth on a low base effect. While the Magnificent Seven companies will continue leading growth, the differential with the remaining 493 constituents is expected to narrow materially, broadening leadership in the AI rally.

Figure 4: S&P 500 earnings and revenue growth (2025 & 2026 data are estimates)

Key macro events this week

Tuesday 13 January 2026

• 7.30am (HK time) — Australia Westpac Consumer Confidence Change (January): previous –9%
• 9.30pm (HK time) — US Core Inflation Rate MoM (December): previous N/A, consensus 0.3%
• 9.30pm (HK time) — US Core Inflation Rate YoY (December): previous 2.6%, consensus 2.7%
• 9.30pm (HK time) — US Inflation Rate MoM (December): previous N/A, consensus 0.3%
• 9.30pm (HK time) — US Inflation Rate YoY (December): previous 2.7%, consensus 2.7%

Wednesday 14 January 2026

• 11.00am (HK time) — China Trade Balance (December): previous $111.68 billion, consensus $113.3 billion
• 11.00am (HK time) — China Exports YoY (December): previous 5.9%, consensus 2.9%
• 11.00am (HK time) — China Imports YoY (December): previous 1.9%, consensus 0.8%
• 9.30pm (HK time) — US PPI MoM (October): previous 0.3%
• 9.30pm (HK time) — US PPI MoM (November): consensus 0.3%
• 9.30pm (HK time) — US Retail Sales MoM (November): previous 0%, consensus 0.4%
• 11.00pm (HK time) — US Existing Home Sales (December): previous 4.13 million, consensus 4.2 million

Thursday 15 January 2026

• 3.00pm (HK time) — UK GDP MoM (November): previous –0.1%, consensus 0%
• 5.00pm (HK time) — Germany Full Year GDP Growth 2026: previous –0.2%

Key corporate earnings

(in local exchange time)

Tuesday 13 January 2026

• JPMorgan Chase
• BNY Mellon

Wednesday 14 January 2026

• Bank of America
• Wells Fargo
• Citigroup

Thursday 15 January 2026

• TSMC
• Morgan Stanley
• Goldman Sachs
• BlackRock
• Infosys

_{Source: Trading Economics, Nasdaq, LSEG (as of 10 January 2026)}