11 min readRecent weeks recap:
US Global stocks recap
Global equity markets ended the holiday-shortened weeks with the Nikkei 225, Nifty 50, Stoxx 600, S&P 500, and the Dow Jones closing at record highs, supported by light news flow and thin holiday volume. The Nasdaq underperformed major peers.
Major US data/themes
On the data front, US GDP growth accelerated to 4.3% annualised in Q3, marking a 2-year high and significantly beating expectations. However, durable goods orders turned negative as consumer confidence cooled amid concerns about the employment outlook and business conditions. The USD recorded its weakest week since June, dropping to its lowest level since early October around Christmas, before recovering as January began.
Gold / Silver moves
Gold and Silver extended impressive rallies throughout 2025, reaching record highs of $4548 and $84, respectively, in low volumes around Christmas, before falling sharply at the start of last week. Still, Gold and Silver are pushing higher at the beginning of the week as rising political and geopolitical uncertainty in LATAM could drive increased demand for safe havens.
In addition to developments between the US and Venezuela, the precious metals markets will be watching US data this week, including ISM manufacturing and services PMIs, December ADP payroll reports, and the non-farm payrolls report on Friday, for more clues about the path of US interest rates.
Oil moves
Oil prices are falling at the start of the week as investors weigh up US-Venezuelan tensions and the weekend OPEC+ meeting. Oil prices fell 1% at the start of the week. However, this is due to markets weighing the prospect of additional Venezuelan oil entering the market, rather than a reaction to the OPEC+ meeting. Venezuela holds around 7% of global oil reserves, which Trump is looking to take over and restructure Venezuela’s oil industry.
OPEC+ met on Sunday and left output unchanged after a quick meeting. This reaffirmed its pause in production increases in Q1, reflecting concerns about a supply glut this year as oil prices slipped sharply throughout 2025. Oil prices fell 18% in 2025. OPEC+ producers are showing few signs of desire to resume oil production increases at this stage.
Indian markets
Indian markets started the new year on a firm footing, extending gains for a second straight week as the Nifty 50 rose to a fresh record high and the Rupee weakened further against the USD. The Nifty rose 1%, closing the week near 26,330. The Sensex rose 0.7%, ending the week above 85,800. Looking at sectors, Metals and Banks led the gains while defensives underperformed.
Foreign Institutional Investors (FIIs) ended the year on a negative note, selling ₹34,3000 crore in December 2025. Over the whole year, they remained net sellers for the second consecutive year, selling shares worth almost ₹3 lakh crore.
However, this selling pressure was fully absorbed by Domestic Institutional Investors (DIIs), which provided strong support with inflows of around ₹7.8 lakh crore amid steady domestic investor participation.
On the data front, Indian manufacturing activity eased to a 2-year low in December 2025, with growth in new orders, production, and employment all slowing. The manufacturing PMI fell to 55 in December from 56.6 in November. The level 50 separates expansion and contraction.
Key Indian market drivers will include rising tensions between the US and Venezuela and the impact on oil prices. Movement in crude can impact global risk sentiment. Trump has also threatened India with additional tariffs on Russian oil purchases, keeping US-India relations in focus.
Meanwhile, the RBI’s ongoing role in providing liquidity, stabilising bond yields, and supporting the rupee will remain in focus, as well as the India Q3 earnings season. Furthermore, USD/INR rose 0.24% last week and 0.58% in December. The pair is rising further at the start of the new week as the rupee weakens following Trump’s threat of additional tariffs.
Pakistan markets
The KSE 100 rallied 3.8% last week, reaching a fresh record high above 179,000. This was the eighth straight week of gains, boosted by improved economic indicators and expectations of stronger earnings in the coming weeks. Easing inflation, the surprise 50-basis-point December policy rate cut, which took rates to a 3-year low, has also helped drive a rotation into equities. The upbeat mood has continued at the start of this week, with the KSE 100 reaching new all-time highs above 183,000.
In recent macroeconomic data, the Sensitive Price Index (SPI) rose 2.41% YoY, while the country’s trade deficit reached $3.7 billion in December. Exports fell to $2.3 billion while imports rose to $6 billion.
USD/PKR slipped -0.05% last week to settle on Friday at 280.100. The pair is rising at the start of the new week.
Week ahead (focus US & Asia)
US-Venezuela & Geopolitical Risks
Markets are so far shrugging off the US audacious capture of the Venezuelan President Nicolas Maduro. Still, the markets may underestimate these risks as Trump threatens further action in the Americas. Stocks in Asia are surging, and Europe has opened higher on Monday.
Oil prices are lower, although safe-haven gold and Silver are rising after Trump said the US would take control of Venezuela and threatened Colombia and Mexico, marking an aggressive shift in US policy, which brings geopolitical risks back to the market at the start of 2026.
If stability in Latin America comes into question, it could hurt risk sentiment. Any involvement by Iran, Russia, or China in the situation in Venezuela could also be a clear negative. However, if Venezuela’s oil returns to the broader market, it could benefit the global economy in the long term.
Federal Reserve Chair Nominee
At the end of last year, President Trump indicated he would nominate a successor to Federal Reserve Chair Jerome Powell in early 2026. CNBC reported that this could take place in the first week of January.
The original list of 12 nominees has been narrowed, with White House economic advisor Hassett positioned as the favourite to replace Powell for much of the contest. However, in the final stages, there are reports of insiders recommending against Hassett.
Other favourites include Governor Warsh, Governor Waller, or BlackRock’s Rick Rieder. Powell’s term expires in May this year. Trump has often criticised Powell for cutting rates too slowly. The next Fed Chair is expected to be more aligned with Trump’s dovish stance, which could support stocks, keep pressure on the USD, and pull USD/JPY lower.
ISM manufacturing PMI (Monday)
Expectations are for US ISM manufacturing to remain in contraction at 48.3, up modestly from 48.2, but still below the 50 level that separates expansion from contraction. The S&P Global manufacturing PMI also showed that a softer trend persisted in US manufacturing activity in December, with a weaker gain in production and renewed contraction in order books.
International sales continued to decline, partly due to tariffs, which have increased operating expenses. That said, input and output costs rose at the slowest pace in 11 months. The market will be watching to see if these trends are confirmed in the ISM manufacturing data. Stronger-than-forecast data could help boost stocks such as the Dow Jones.
India GDP (Wednesday)
Indian GDP is expected to rise 6.5% in the 2025-2026 fiscal year, ending March 2026, marking the slowest pace of growth since the COVID pandemic drove the economy into recession in 2021-2022. However, this is slightly higher than the initial estimate of 6.4%. The figure is a sharp slowdown from the upwardly revised 9.2% growth rate in the earlier fiscal year, as higher energy prices and slower overall growth in Asian emerging economies weigh.
Even so, this is still strong growth compared to global economies. The data comes as India has reportedly overtaken Japan to become the world’s fourth-largest economy by nominal GDP, ranking only behind the US, China, and Germany, and could be on course to claim 3rd place within the next few years if the current trend holds.
ISM services PMI (Wednesday)
This is a closely watched gauge given the service sector’s importance to the US economy. Using the S&P Global services PMI as a point of comparison, service sector activity expanded in December but at a slower pace. The index fell to a 20-month low amid weakening demand across the service sector and employment growth as good as stalled as firms became more cautious.
Any sense that the industry is weakening could hurt confidence, although the prospect of further rate cuts would be a positive for the sector. Expectations are for the services PMI to ease to 52.3 in December from 52.6. A stronger-than-forecast services PMI reading could boost stocks and the USD.
Chinese CPI (Friday)
Expectations are for CPI to rise to 0.8% YoY in December, up from 0.7%, while PPI is expected to rise to -1.5% YoY in December, up from -2.2% YoY, a 22-month low. In November, CPI rose to 0.7% as, a 21-month high, driven mainly by food prices.
However, the PPI declined to 2.2%, reflecting persistent deflationary pressures amid weak demand and slack factory activity. Rebounding inflation could help ease deflation fears. China has been suffering from deflation since the end of the pandemic. Stronger than forecast inflation could help boost socks and AUD/USD – the Aussie is considered a proxy for China.
US non-farm payroll (Friday)
Expectations are for 57k jobs to have been added in December, down slightly from 64k in November. The unemployment rate is set to tick lower to 4.5% from 4.6%. The data marks a return to usual reporting after the November report also included October’s numbers, which showed payrolls declined by 105k as the government shutdown reduced federal worker payrolls.
The shutdown is expected now to have a limited impact on December’s numbers. The data will likely set expectations for Fed policy at the January FOMC meeting, following softer-than-expected CPI data but stronger growth.
The jobs market has been a point of concern among policymakers, who continue to weigh the risk of sticky inflation against a cooling labor market. The Fed cut rates at its final meeting last year, and while policymakers remain open to further cuts, any such moves would be contingent on clear disinflation.
A weak US NFP report could fuel hopes for a rate cut and boost stocks, including the Nasdaq. However, a markedly weaker report could raise concerns about the economy’s outlook and weigh on stocks such as the S&P 500.
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