The start of 2026 saw several developments that moved risk appetite. Discussions between the U.S. and EU regarding Greenland triggered tariff threats that were later withdrawn, reducing near-term escalation risk. In Venezuela, ongoing tensions escalated after the U.S. detained President Maduro. This followed months of tighter enforcement of oil related sanctions. Iran experienced large-scale protests and a significant response from the authorities, including an internet shutdown. Across all three situations, what matters to markets relates more to the implications these and other events in aggregate mean for shifting global geopolitical forces, than to the specific events themselves.
Equity markets remained broadly stable despite headline noise. Developed-market equities started the year on relatively firm footing. Japan outperformed, supported by expectations of additional fiscal support after Prime Minister Takaichi called snap elections, which delivered a supermajority to the ruling party on 8 February. Global performance differed across sectors: companies linked to AI-related hardware, notably semiconductors, generally saw stronger gains supported by AI capex, whereas some software stocks lagged. These differences reflected shifts in earnings expectations, and an investor reassessment following recent upgrades in agentic coding tools, which raised disruption risks for some software models.
Currency markets experienced noticeable swings, led by the U.S. dollar. The DXY index fell more than 3% from its mid-January level before partially recovering. Policy signals from the U.S. authorities, shifts in rate expectations, and ongoing reserve diversification contributed to the volatility. Gold also benefitted as an alternative store of value.
Early U.S. earnings reports indicated a steady economic backdrop. With around half of large U.S. companies having reported Q4 2025 results so far, early data points to broad-based earnings growth, with technology-related firms showing momentum. Banks, which tend to reflect real-time economic conditions, reported results consistent with stable consumer spending and generally healthy credit conditions. Upcoming reports from technology, industrial, and consumer-focused companies will offer further insight into business investment trends and household demand as 2026 progresses.
| Title | File Type | File Size |
|---|---|---|
| Global Markets Overview: February 2026 | .5 MB |
David Hoile has been the Global Head of Asset Research since 2006 – it is the economics and capital markets research department for Investments and Willis Towers Watson. His role and team cover a variety of responsibilities, including: research and forecasts for all major economies; asset market forecasts over short and long-term horizons, stress tests and appropriate financial portfolio strategy responses; and analysing the risks and opportunities from climate change and broader sustainability-related trends for economies, industries, and asset markets.
