Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia – giving you clear insights to support client conversations.
This week's headlines
- US takes action in Venezuela – the US launched a large-scale operation in Caracas deploying strikes on military installations and executing a targeted mission that resulted in the capture of President Nicolás Maduro and his wife, who were subsequently indicted on narco-terrorism charges. In addition, US military forces seized two Venezuela-linked oil tankers in international waters for violating US oil sanctions.
- US "Dream Military" vision – President Trump has proposed a dramatic increase in US defence spending, calling for a $1.5 trillion defence budget in fiscal year 2027 – a 66% surge from the approximately $901 billion approved for 2026. The Committee for a Responsible Federal Budget warns the plan could add $5.8 trillion to the national debt over the next decade – even with tariff revenue assumed – sparking concerns over its viability.
- Global growth outlook slows – the United Nations (UN) updated its economic forecasts, projecting global growth at about 2.7 % in 2026 – slightly below 2025’s pace. While resilient consumer spending and easing inflation have helped sustain activity, trade tensions and fiscal strains cloud the outlook, reinforcing investor caution on growth scenarios.
- UK construction slump – the UK construction sector shrank for the twelfth consecutive month, enduring its weakest run since the global financial crisis. However, the outlook is more optimistic, with confidence amongst construction firms at its highest since July, driven by expectations of lower borrowing costs and clarity following Rachel Reeves’s November Budget.
- US job openings fall – total job openings declined to 7.15 million in December – down from 7.67 million in November and below the consensus estimate of 7.60 million. Levels of job availability remain historically high, despite the 7.7% year-over-year decline.
What this means for financial advisers and clients
Nobody will look back at 2025 and say it was a quiet year for President Trump on the world stage, and his 2026 has begun in particularly belligerent fashion. The UN Security Council convened an emergency session on Monday, with several member states – including France and Denmark – formalizing criticism of the US intervention as a breach of international law. At the same time, several members of the Trump administration have made comments throughout the week about acquiring Greenland, either by purchasing the island or through military force.
Despite such heightened geopolitical tensions, markets have remained relatively calm and have broadly advanced since the new year. AI-related spending continues to show strength, with premier chipmaker Taiwan Semiconductor Manufacturing Company (TSMC) reporting a 20% rise in December quarter revenue.
And whilst Trump has been notably active in international affairs, he also has one eye on the US consumer and the November midterm elections. In an effort to bring down housing costs he has directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. Trump also plans to elaborate on further affordability proposals, including a ban on institutional investors buying single family homes, at the World Economic Forum later this month.
With an active leadership style in the world’s largest economy, and a willingness to deviate from convention, we can expect pockets of continued market volatility. With each un-signalled action or announcement there are winners and losers, with a wide range of sectors such as energy, defence, and real estate impacted to varying degrees just over the last week. As investors we can be cautiously optimistic that Trump favours supporting the economy, be it for ideological or political expediency reasons. But his erratic steering of the Presidency calls for a degree of safety in portfolios – diversification is the best way to protect against where the bombs fall next.
Chart of the week - US tech exposure by asset class
Source: JP Morgan
Why this matters
The chart highlights how exposure to the US technology sector varies across asset classes. We can see exposure is most pronounced amongst private markets, with US tech companies favouring raising capital through these avenues over issuing corporate debt on public markets.
US tech also has a meaningful weighting in the S&P 500 index, however small cap equities and bonds show a far lower exposure, highlighting the benefits of diversifying across asset classes to reduce concentration risks.
The Markets
Mixed US trading
The S&P 500’s weekly rise reflects a hybrid rally, with select tech stocks acting as headline drivers, and secondary support provided by the financial, energy and defence sectors. Fuelled by enthusiasm at the Consumer Electronics Show (CES), memory and storage names such as SanDisk, Western Digital, and Seagate led the charge. Major banks like JPMorgan Chase and Bank of America rallied on expectations of sustained profitability in a higher-rate environment. Energy names including Chevron and Exxon Mobil also climbed on the prospect of increased drilling and infrastructure demand, following the Trump administration’s announcement of plans to take control of Venezuela’s oil industry. President Trump’s proposal to expand the US military budget to around $1.5 trillion by 2027 acted as a catalyst for defence stocks.
UK midcaps rally
The FTSE 250 posted solid gains this week, driven by strong momentum in industrials and standout performance in select mid-cap names. Ocado saw a notable lift following stronger than expected trading indicators, and a rebound in leisure-oriented stocks was driven by a reported government reprieve on planned business rate hikes.
Japan leads
Japanese equities were the best performing region over the week, driven by a combination of solid earnings from key domestic companies, export-oriented strength helped by a weaker yen, and broad participation from cyclical and technology sectors. Heavyweights like Fast Retailing, Toyota, Advantest, and Tokyo Electron played prominent roles, reflecting both the strength in the domestic Japanese economy and continued sensitivity to global market trends.
Crude momentum
Oil prices advanced this week as the Organisation of the Petroleum Exporting Countries (OPEC+) maintained production discipline and US military seized two sanctioned oil tankers. While global markets remain structurally oversupplied, these developments have supported a modest rally. Despite Venezuela’s vast reserves, years of underinvestment and infrastructure decay mean any meaningful recovery in output is likely to be slow and uncertain.
Solid Gold
Amid heightened geopolitical tensions following US intervention in Venezuela, investors once again turned to gold as a safe haven asset. The precious metal extended its remarkable rally, reinforcing its role as a key store of value during periods of uncertainty.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.96% | 1.16% |
| FTSE 250 | 2.18% | 1.93% |
| S&P 500 | 1.36% | 1.20% |
| NASDAQ | 1.63% | 1.10% |
| FTSE Developed Europe Ex-UK | 1.02% | 1.46% |
| FTSE Emerging Markets | 1.39% | 2.49% |
| FTSE Japan | 2.40% | 2.13% |
| Brent Crude | 3.39% | 3.14% |
| Gold Spot | 3.34% | 3.32% |
| UK 10yr Gilt yield | -14bp | -7bps |
| US 10yr Treasury yield | -1bps | +3bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 8th January 2026.
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
