Market drivers and catalysts
Equities: Record highs in the US and Europe, while China-led Asia rallies, but energy and geopolitics keep investors alert.
Volatility: Volatility remains low, but dense U.S. data and Friday’s jobs report keep downside protection in demand despite calm equity markets
Digital assets: bitcoin cautiously softer, ethereum firmer, ETF flows and macro data expectations steer sentiment
Currencies: US dollar mixed, Japanese yen attempts rebound in Tokyo session
Commodities: Gold and silver slip ahead of index rebalancing; crude falls on Venezuela supply; copper hits record
Fixed Income: US Treasuries stuck in range. Japanese long bond yields hit new multi-decade highs.
Macro: US ADP Employment Change, JOLTS Job Openings & ISM Services
Macro headlines
China announced export controls for “dual use” (civilian-military) exports to Japan, which could impact some 40% of overall exports to the country. This is an escalation of a conflict that started after Japan’s PM Takaichi said that it would view a Chinese invasion of Taiwan as a direct threat to Japan’s security. Japan responded angrily to the move.
Australia November CPI out Wednesday was somewhat softer than expected on the headline ata 3.4% YoY versus 3.6% expected and 3.6% in October, while the “trimmed mean” measure came in at 0.3% MoM and 3.2% YoY as expected and vs. 3.3% in October.
Germany's inflation rate dropped to 1.8% in December 2025, below November’s 2.3% and forecasts of 2.0%. Goods inflation fell to 0.4%, while services stayed high at 3.5%. Core inflation hit its lowest since June 2021 at 2.4%. The EU-harmonized CPI was at 2.0%, its lowest since July.
UK new car sales rose 3.9% year-on-year to 146,249 units in December 2025, driven by private and business buyers despite a fleet decline. Diesel and petrol sales fell, while new energy vehicles exceeded half the market. PHEVs surged 32.9%, BEVs up 8.0%, and hybrids grew 3.0%.
China's central bank plans to cut the reserve requirement ratio and interest rates in 2026 to maintain liquidity and loose monetary policy. The PBOC aims to expand domestic demand, manage financial risks, boost credit in services, provide liquidity for non-banking institutions, and stabilize the yuan.
The S&P Global Canada Services PMI rose to 46.5 in December 2025 from 44.3 in November, still contracting. Business activity and new orders fell, with employment cuts ongoing. Despite weak demand, high wage costs prompted price hikes. Inflation increased slightly, and firms remained cautiously optimistic amid tariff and policy concerns.
Trump said Venezuela will transfer 30–50 million barrels of sanctions backlogged oil to the US, with the crude sold at market value and proceeds shared between the two countries. The move is widely seen as a setback for China, Venezuela’s former top buyer, and may prompt Beijing to reassess its reliance on Latin American energy supplies.
Fed’s Governor Stephen Miran said the US central bank will need to cut interest rates by more than a percentage point in 2026, arguing monetary policy is restraining the economy. Other officials just this week said that interest rates may now be close to neutral level, highlighting a potential battle ahead.
Macro calendar highlights (times in GMT)
0830 – Germany Final Dec PMI
0855 – Germany Dec Unemployment Claims
1000 – Eurozone Dec CPI
1315 – US Dec ADP Employment Change
1500 – US Nov JOLTS Job Openings
1500 – US Dec ISM Services
1530 – EIA's Weekly Crude and Fuel Stock Report
Earnings events
Today: Constellation Brands
Thursday: Fast Retailing, Aeon, Seven and I Holdings
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: Wall Street extends its winning streak: the Dow rises 1.0% to 48,289.05, the S&P 500 (Standard & Poor’s 500) adds 0.6% to 6,944.82 and the Nasdaq Composite climbs 0.7% to 23,547.17. Chip suppliers rebound as investors rotate back into “picks and shovels” for artificial intelligence, with Micron up 10.0% and Texas Instruments up 8.4%. Moderna jumps 10.9% after Bank of America turns more upbeat, while Chevron falls 4.5% as oil eases on Venezuela-related supply headlines, with Friday’s US jobs report next.
Europe: European equities grind higher: the Stoxx Europe 600 gains 0.6% to 605.28, Germany’s DAX edges up 0.1% to 24,892.20 and the UK’s FTSE 100 jumps 1.2% to 10,122.73, all at or near records. Softer inflation signals keep rate-cut hopes alive, even as business surveys still point to sluggish growth. Novo Nordisk climbs 5.0% after starting the US rollout of a Wegovy weight-loss pill, while Daimler Truck rises 5.5% on upbeat US industry signals. Infineon adds 4.8% on the chip rebound, as Adidas slips 3.6% after a Bank of America downgrade.
Asia: Asia rides the China-led rebound: Japan’s Nikkei 225 rises 1.3% to 52,518.08, China’s Shanghai Composite adds 1.5% to 4,083.67 and the CSI 300 blue-chip index climbs 1.6% to 4,790.69, while Hong Kong’s Hang Seng gains 1.4% to 26,710.45. Hopes of fresh Beijing support and a steady yuan keep financials and property bid ahead of Lunar New Year, while tech sentiment stays firm. Ping An advances and AIA advanced 2.7% and 2.3% respectively, on the policy tailwind, as Baidu rises 1.7% on continued AI enthusiasm. Zijin Mining jumps 4.5% as copper prices hit record highs.
Volatility
Market volatility remains subdued, with the VIX closing at 14.75 on Tuesday even as equities extended their gains. At the same time, the calendar turns more demanding, with several U.S. data releases today and attention building toward Friday’s U.S. jobs report, a key input for interest-rate expectations. Geopolitical headlines around Venezuela also remain in the background, keeping a modest energy risk premium in play even if markets are not reacting forcefully yet.
SPX expected move: based on current options pricing, the S&P 500 is implying a move of roughly ±63 points (about ±0.9%) into Friday, 9 January.
Skew check (today’s expiry): downside protection remains slightly more expensive than upside, suggesting investors are still paying up for insurance rather than chasing speculative upside.
Digital Assets
Digital assets continue to trade in line with broader risk sentiment. Bitcoin is softer around $92.7k, while Ethereum is holding firmer near $3.25k. Among major altcoins, Solana is modestly lower, XRP is underperforming, and BNB is relatively resilient. Overall price action remains cautious rather than directional as investors wait for clarity from macro data later this week.
ETF flows underline this split tone. Bitcoin ETFs saw net outflows on the latest trading day, even though IBIT continued to attract inflows at the fund level. Ethereum ETFs, by contrast, recorded net inflows, led by ETHA, which continues to benefit from stronger relative demand. The message is one of positioning and patience, not panic.
Fixed Income
Japan’s government bonds rallied at the front-end of the yield curve, perhaps on the concerns of the economic impact from China’s announced export controls. Still, at the longer end of the yield curve, JGB’s remain under pressure, with the 10-year benchmark JGB yield only slightly below the cycle highs and the 30-year benchmark JGB yield hitting new multi-decade highs above 3.50% in Wednesday’s session in Tokyo.
US treasury yields remain in a constrained range, with the 10-year benchmark treasury yield easing back a couple of basis points to 4.16% and the 2-year benchmark still near the cycle lows, trading at 4.6%.
Commodities
Oil extended Tuesday’s losses with Brent trading back to USD 60 after Trump said Venezuela would turn over 50 million barrels of crude to the US, with the proceeds being shared between them, while at the same demanding the country cut its ties to China, Russia, Iran and Cuba.
Gold, silver and platinum are trading sharply lower as traders lock in profits following a three-day run of strong gains. A key near-term risk is the annual rebalancing of major commodity index funds such as the S&P GSCI and the Bloomberg Commodity Index, which runs for five business days from 8 January. This once-yearly, rules-based process realigns index weights back to predefined targets after a year of uneven performance across sectors and individual commodities. While the resulting futures flows are price-insensitive and purely technical, they can still have a noticeable short-term impact on liquidity and price action. Estimates suggest around USD 6–7 billion of gold and silver futures selling on COMEX.
Industrial metals have started 2026 strongly, with the LMEX Index tracking six metals on the London Metal Exchange up 6.2% and reaching its highest level since 2022. Nickel spiked 10% yesterday before paring gains in Asia, supported by rising risks to output in Indonesia and strong investment demand from China. Copper hit a fresh record high, underpinned by supply disruptions, renewed stimulus speculation in China, and increased shipments to the US ahead of potential tariffs, tightening availability elsewhere. Years of underinvestment and ongoing mine disruptions have left the copper market with little buffer, increasing its vulnerability to sharp price spikes.
Currencies
The US dollar is mixed – resilient versus the EUR and GBP since yesterday’s attempt to push the greenback lower, but weaker against the Japanese yen and Australian dollar, where AUDUSD posted a new cycle high after mixed CPI data Wednesday.
The Japanese yen firmed broadly during the Asian session on Wednesday, though USDJPY remains buried mid-range between 154.50 and 157.89, although EURJPY hit marginal new two-week lows below 182.90 late Wednesday in Tokyo.
