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
- Surprise UK growth – GDP grew by 0.3% in November, driven by the services sector. This marks a strong turnaround after a 0.1% economic contraction in October.
- US inflation holds steady – annual inflation remained at 2.7% in December, exactly as markets expected. Food and shelter costs continued to rise, but energy price increases eased. However, core inflation, which excludes more volatile food and energy prices, saw a small fall to 2.6%.
- Germany returns to growth – after seeing a shrinking economy in both 2024 and 2023, Europe’s largest economy returned to expansion in 2025 with a 0.2% growth. This was thanks to support from growing household consumption and government spending.
- China reaches record trade surplus – December exports climbed 5.5% while imports remained flat. Chinese exporters continue to find success in shifting away from the US market and into Europe and Southeast Asia.
- Political pressure on the Fed – members of the US Central Bank, including its chair, Jerome Powell, have been served subpoenas and threatened with indictment by the Department of Justice (DoJ) regarding the costs of renovating the Federal Reserve (Fed) headquarters.
What this means for financial advisers and clients
After predictions pointed to a modest 0.1% rise, November’s stronger UK growth took many by surprise. It suggests the country may have shaken off lingering uncertainty surrounding the recent Budget. The real test is durability. Can this positive momentum continue into 2026, or does it prove short lived?
In the US, the grounds behind the Fed subpoenas are being questioned heavily. Many view the move as an act of vengeance by Trump, following frustration over a lack of movement in interest rates. Such actions could undermine the independence and credibility, of the Fed. For now, markets appear relaxed, assuming the investigation will reveal no wrongdoing.
That said, December’s inflation numbers remain stubbornly above target. In an economy already showing signs of fragility, this complicates the case for near-term rate cuts and reinforces the message that the path back to ‘normal’ will be uneven. For clients, it’s another reminder that short-term noise is inevitable, but long-term outcomes still hinge on staying diversified and invested.
Chart of the week - Mag 7 performance divergence
Source: Charlie Bilello
Why this matters
As a whole, the so-called ‘Magnificent 7’ mega US tech stocks once again outperformed the S&P 500 in 2025. That in itself is nothing new. What is different is what’s happening beneath the surface.
While this is a pattern we’ve seen for the last few years, what makes 2025 standout is the split in returns between the Mag 7 stocks themselves. While past years have seen extensive outperformance across the board, last year, returns were highly concentrated in just two stocks: Nvidia and Google, with the remaining five component companies all underperforming the main US market.
This shift hints at the emergence of winners and losers within the major tech companies, and a move away from blanket optimism around AI, which only heightens discussions around potential bubbles.
The scale of that concentration also matters. As of December, Nvidia alone accounts for around 7% of the S&P 500 and more than 5% of the MSCI World Index. When a single company carries that much weight, index performance becomes increasingly sensitive to a very small number of outcomes.
Investors should remain alert to this concentration risk and make sure they’re comfortable with the level of diversification within portfolios.
The Markets
UK markets remain positive
UK markets rose, led by internationally focused large-cap stocks, which outpaced smaller, more domestically focused companies. Mining and financials also outperformed, while positive GDP figures increased market confidence.
US struggles as tech pullbacks
The US markets slipped as mega-cap tech stocks lost momentum and some investors stepped back. Slowly cooling inflation figures dampened sentiment, though these may not be enough to trigger another interest rate cut this month.
Broad strength across Emerging Markets
Emerging Markets outperformed the UK and US, driven by broad strength across Asia and parts of Latin America. Chinese markets grew on expectations of extended policy support, while Taiwan and Korea were boosted by tech-related gains.
Oil static, gold sees a rise
Gold rose as investors sought a safe haven in response to rising threats to the Fed’s independence. Oil prices also rose around tensions in Iran and possible threats to supply, although it lost ground later in the week as Trump said he’d hold off on military action.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.15% | 3.14% |
| FTSE 250 | 1.09% | 3.69% |
| S&P 500 | -0.06% | 1.97% |
| NASDAQ | -0.60% | 1.69% |
| FTSE Developed Europe Ex-UK | 0.62% | 3.08% |
| FTSE Emerging Markets | 1.80% | 4.45% |
| FTSE Japan | 4.30% | 6.97% |
| Brent Crude | 0.30% | 4.75% |
| Gold Spot | 2.17% | 6.87% |
| UK 10yr Gilt yield | -6bp | -10bps |
| US 10yr Treasury yield | -2bps | No change |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 15th January 2026.
2026 Let's Talk Markets webinars
The first webinar of 2026 kicks off next Tuesday, 20th January, and we’re setting the tone for the year ahead.
Our team is already shaping a programme that builds on what you told us you value most: sharper market insight, practical takeaways, and topics that land exactly when you need them.
One small but important housekeeping note. You’ll need to register again. Each year’s series is brand new, and sign-ups don’t roll over.
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.
