Global equities opened 2026 on a positive footing, despite thin holiday trading volumes, as investors prepare for a year expected to challenge the AI-driven market rally, bring leadership changes at the U.S. central bank, and potentially introduce fresh volatility under Donald Trump’s presidency.
Trading activity across asset classes remained subdued, with gains from the year-end rally carrying into early sessions. Liquidity was limited due to the holiday period, while markets in Japan and China stayed closed. Elsewhere in Asia, exchanges gradually reopened following New Year celebrations.
Precious metals extended their exceptional momentum from last year. Spot gold rose 0.9% to $4,351.70 per ounce, while spot silver jumped 2% to $72.63 per ounce.
Gold’s rally in 2025 marked its strongest annual performance in 46 years, while silver and platinum recorded their largest gains on record. The surge was driven by a combination of factors, including U.S. rate cuts, geopolitical tensions, strong central bank demand, and steady inflows into exchange-traded funds.
Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, said the rally also reflects growing demand for assets that hedge against long-term U.S. dollar debasement risks.
Equity markets across Asia showed strength. MSCI’s broad Asia-Pacific index excluding Japan gained 0.66%, while Hong Kong’s Hang Seng Index climbed 1.24%.
U.S. equity futures pointed higher, with S&P 500 futures up 0.29% and Nasdaq futures rising 0.36%. European markets were mixed, as EURO STOXX 50 futures fell 0.5%, while FTSE futures edged up 0.1%.
Stocks delivered strong returns in 2025, navigating a year marked by tariff disputes, the longest U.S. government shutdown on record, geopolitical uncertainty, and ongoing concerns over central bank independence.
According to Saira Malik, chief investment officer at Nuveen, last year’s U.S. equity rally was powered by enthusiasm around artificial intelligence, solid corporate earnings, aggressive share buybacks, and strong retail investor participation. She cautioned that volatility driven by macroeconomic, geopolitical, and policy uncertainty — as well as shifting sentiment toward AI — is likely to persist in the year ahead.
Focus Shifts to the Federal Reserve
Investor attention in 2026 is expected to center on the strength of the U.S. economy and the policy direction of the Federal Reserve.
A backlog of U.S. economic data delayed by the government shutdown is scheduled for release in the coming days and could influence expectations for further interest rate cuts. Markets currently price only a 15% probability of a rate cut this month, though traders still anticipate another move by June.
The U.S. dollar started the year on weak footing. The euro rose 0.1% to $1.1759, sterling gained 0.16% to $1.3481, and the yen strengthened slightly to 156.64 per dollar, remaining close to levels that have previously prompted concerns over possible intervention by Japanese authorities.
Expectations of further easing by the Fed, even as some global peers consider rate hikes, weighed on the dollar throughout 2025. The currency posted its largest annual decline in eight years, pressured further by uncertainty surrounding U.S. trade policy and renewed concerns over the Fed’s independence.
Those concerns are expected to intensify as President Trump prepares to announce a successor to Jerome Powell later this month.
Debbie Cunningham, chief investment officer for global liquidity markets at Federated Hermes, said while the administration may push for more dovish policymakers, the confirmation process should prioritize candidates’ expertise and credibility to preserve confidence in the institution.
Commodities
Oil prices edged higher after suffering their steepest annual decline since 2020 last year. Brent crude futures rose 0.25% to $61.00 per barrel, while U.S. crude gained 0.26% to $57.57 per barrel.
