Market navigator:
week of 26 January 2026

What happened last week

• Greenland tensions ease: Trump retreated from tariff threats and ruled out using military force to acquire Greenland after forming a framework deal with NATO focused on Arctic security. Despite averting immediate conflict, the episode damaged transatlantic relations. Gold surged above $4,900 per ounce on safe-haven demand, whilst Germany's DAX 40 rebounded 1.2% on Thursday following earlier losses exceeding 3%.
• Australian's robust labour market: Unemployment rate unexpectedly fell from 4.3% to 4.1% in December, the lowest in seven months. Employment surged 65,200, led by gains in full-time roles. Markets increased expectations of a February rate hike from the Reserve Bank of Australia (RBA) to around 60%, driving AUD/USD to 0.69, its highest level in 16 months.
• Resilient US economy: The Federal Reserve's (Fed) preferred measure, core personal consumption expenditure, rose 0.2% month-on-month (MoM) in November, matching expectations. Robust consumer spending and upward GDP revisions (from 3.8% to 4.4%) reinforced economic resilience.
• Potential yen intervention following BOJ's policy hold: The Bank of Japan kept rates unchanged at 0.75% in January but raised its growth and inflation forecasts, signalling commitment to further rate increases should conditions warrant. Core inflation decelerated from 3.0% to 2.4% in December, meeting expectations. USD/JPY initially rose despite the hawkish tilt but subsequently plunged from 159.2 to 155.7, raising speculation of official intervention.

Markets in focus

Volatile US markets amid geopolitical tensions

The US equity market experienced heightened volatility driven by geopolitical tensions and dip-buying sentiment. The S&P 500 declined 0.3% whilst Nasdaq 100 and Dow Jones generated returns of 0.3% and -0.5% respectively. The Volatility Index (VIX) briefly exceeded 20 during the week.

Tuesday's sell-off on fears of escalating US-Europe tensions surrounding Greenland disputes created buying opportunities for retail investors. According to JPMorgan's Equity Strategy team, the US market recorded its third-largest retail trading day in a year on Tuesday, with volumes reaching $4 billion.

Corporate developments drove performance divergence across sectors. Intel's share price plunged as much as 17% on Friday following disappointing guidance and challenges meeting AI chip demand. Four Magnificent Seven companies report earnings this week. At the World Economic Forum in Davos, Tesla CEO Elon Musk announced full self-driving (FSD) approval expected in Europe and China as early as February, widespread robotaxi deployment across the US by year-end, and Optimus consumer rollout by end of 2027. The announcement lifted the share price 4% on Thursday.

Following four consecutive bearish candlesticks since 16 January, US Tech 100 rebounded swiftly to recoup losses. However, the 20-day moving average (MA) is approaching a death cross with the 50-day moving average. The relative strength index (RSI) requires monitoring for a breakout above its downward trajectory. Until momentum recovery strengthens and the death cross is avoided, establishing new historical highs above 26,253 remains unlikely near-term. Support should emerge around 24,900.

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

Hang Seng consolidates amid mixed economic signals

The Hang Seng Index (HSI) registered minimal movement at -0.3% last week despite robust southbound net inflows.

China's economy expanded 5% in 2025 in real terms, meeting Beijing's target according to official data. However, several indicators reveal ongoing domestic challenges. Fixed asset investment's decline accelerated in December from -2.6% to -3.8% whilst major cities' home prices declined 2.7% year-on-year (YoY), the fastest pace since July. Markets await evidence of effectiveness from the latest stimulus measures, including adjusted relending rates and reduced commercial mortgage down-payment requirements.

Corporate developments proved supportive. Pop Mart surged 23% following announcement of its first buyback programme in two years. Baidu rallied 10% on enhanced AI capabilities, launching driverless taxi services in Abu Dhabi and updating its Ernie AI chatbot. Alibaba's shares recouped losses, advancing 1% last week as reports emerged of restructuring its chipmaking division T-Head Semiconductor, potentially enabling independent listing in the future.

The HSI continues consolidating near 26,800 ahead of its next advance after encountering resistance around 27,000–27,300. The uptrend remains intact as the index trades above its 20-day MA. However, the moving average convergence divergence (MACD) indicator approaches a negative crossover, indicating diminishing upward momentum. Pullbacks should find support around 26,100.

Figure 2: Hang Seng Index (daily) price chart

A volatile week for the Nikkei

Japanese government bonds (JGB) sold off significantly on Tuesday following the Takaichi administration's announcement of plans to reduce consumption tax on food and beverages for two years ahead of the 8 February lower house election. The tax relief carries an estimated cost of approximately 5 trillion yen annually without clear funding mechanisms. The sell-off extended to equities, with Nikkei 225 plunging 2.7% intraday before recovering swiftly after the administration reiterated fiscal discipline as a priority. The index concluded the week largely unchanged at -0.1%.

Beyond the administration's reassurance, a deepening regional rally supported the swift recovery. Memory chip shortages and general AI demand drove the Korean KOSPI above 5,000. The Taiwan TAIEX also established new highs, approaching 32,000. The rally expanded to second-tier AI beneficiaries including Japanese toilet manufacturer Toto, which surged 9% following Goldman Sachs' report highlighting potential applications of Toto's ceramic components in the AI supply chain.

As election campaigns commence, increased volatility in Japanese equities is anticipated. Whilst Japan 225 remains supported by an upward trend line established since April, the RSI displays early signs of bearish divergence. Traders should note the index has not experienced a correction exceeding 9% since April. Electoral surprises could drive the index below the trend line towards the 50-day MA at 51,293, potentially testing previous support around 50,168. Gains will likely face resistance at the recent high of 54,535.

Figure 3: Japan 225 (daily) price chart

The week ahead

The forthcoming week features the Fed's policy meeting alongside critical inflation data from Australia and fourth-quarter growth figures from the euro area, developments that will shape monetary policy trajectories across major economies.

The Federal Open Market Committee (FOMC) meeting on 28–29 January will likely maintain policy rates at 3.50%–3.75%, given resilient labour markets and consumer spending. However, attention has increasingly shifted beyond monetary policy to the Fed's independence. Governor Lisa Cook's legal battle with the Trump administration and the Department of Justice's investigation into Chair Jerome Powell have raised unprecedented concerns about central bank autonomy. With Powell's term ending in May, markets are questioning whether the Fed will implement another rate cut before his departure, particularly as political pressures mount.

Australia's December inflation data assumes critical importance following surprisingly strong employment figures. This marks the first quarter-end inflation reading since the Bureau of Statistics transitioned to monthly reporting frequency, allowing full comparability with historical quarterly datasets. Whilst markets price in approximately 60% probability of a February rate hike, the Reserve Bank of Australia (RBA) will likely require sustained evidence of inflationary pressure rather than relying on isolated data surprises before tightening policy.

The euro area's Q4 gross domestic product (GDP) flash estimate will test the European Central Bank's (ECB) projection of 1.4% full-year growth for 2025, accelerating from 2024's modest 0.9% expansion. In China, official purchasing managers' index (PMI) data will provide crucial insights into manufacturing and services activity ahead of Lunar New Year holidays.

Corporate earnings season reaches its crescendo as mega-cap technology firms Microsoft, Meta, Tesla and Apple report quarterly results. Payment processors Visa, Mastercard and American Express will illuminate consumer spending trends, offering valuable perspectives on household financial health heading into 2026.

Figure 4: Probability distribution of Fed policy rates

Key macro events this week

Monday 26 January 2026

• 9.30pm (HK time) — US durable goods orders month-on-month (November): previous -2.2%, consensus 0.5%

Tuesday 27 January 2026

• 9.15pm (HK time) — US ADP employment change (week ending 3 January): previous 8,000
• 11.00pm (HK time) — CB consumer confidence (January): previous 89.1, consensus 90.1

Wednesday 28 January 2026

• 7.50am (HK time) — Japan BOJ monetary policy meeting minutes
• 8.30am (HK time) — Australia inflation rate year-on-year (December): previous 3.4%, consensus 3.6%

Thursday 29 January 2026

• 3.00am (HK time) — US Fed interest rate decision: previous 3.50%–3.75%, consensus 3.50%–3.75%
• 1.00pm (HK time) — Japan consumer confidence (January): previous 37.2, consensus 38

Friday 30 January 2026

• 6.00pm (HK time) — Eurozone GDP growth rate quarter-on-quarter flash (Q4): previous 0.3%, consensus 0.3%
• 9.30pm (HK time) — US producer price index month-on-month (December): previous 0.2%, consensus 0.2%

Saturday 31 January 2026

• 9.30am (HK time) — China NBS manufacturing PMI (January): previous 50.1, consensus 50.2
• 9.30am (HK time) — China NBS non-manufacturing PMI (January): previous 50.2, consensus 50.8

Key corporate earnings

(in local exchange time)

Tuesday 27 January 2026

• UnitedHealth
• Boeing

Wednesday 28 January 2026

• Microsoft
• Meta
• Tesla
• ASML
• Lam Research
• IBM
• GE Vernova

Thursday 29 January 2026

• Apple
• Visa
• Mastercard
• Caterpillar
• SAP

Friday 30 January 2026

• Exxon Mobil
• Chevron
• American Express

_{Source: Trading Economics, Nasdaq, LSEG (as of 18 January 2026)}