Global Market News
Global Equities Decline
Global equities declined this week, but held near highs as a rotation, particularly in the US, from growth to value stocks continued. The S&P 500 and Nasdaq decreased 0.38% and 0.66%, respectively, and the Dow Jones dropped 0.29% on the week. The U.S. 10-year Treasury note rose to 4.23%, while the price of a barrel of West Texas Intermediate crude oil increased slightly to end the week at $59.45. Volatility, as measured by the CBOE Volatility Index, rose slightly over the week, closing Friday at 15.86.
China Reports Record Trade Surplus
This week, China reported a record trade surplus of $1.2 trillion in 2025, highlighting both the strength and the global impact of its export‑driven economy, which has proven resilient despite escalating US tariffs and trade tensions. Chinese exporters have swiftly shifted away from the US—where exports fell nearly 20%—toward emerging markets in Southeast Asia, Africa, and Latin America, while China continues to dominate key industries such as electric vehicles, batteries, solar panels, and advanced manufacturing. China’s export earnings increasingly flow through private Chinese firms, banks, and investors rather than the central bank, fueling an unprecedented surge in overseas asset purchases while amplifying risks of sudden capital reversals if the yuan strengthens. However, the country remains sensitive to sluggish domestic demand, which makes the country heavily dependent on global markets.
International Developments
Washington Announces Additional Iran Sanctions As Crackdown On Protests Continues
U.S. President Donald Trump announced a new U.S. trade policy imposing a 25% “secondary tariff” on any country doing business with Iran, effective January 12, 2026, aiming to isolate Iran further amid its deadly crackdown on nationwide protests that began in late December 2025 and have reportedly killed between 2,600 and 3,400 people under a government‑imposed digital blackout. As the unrest escalated, Trump signaled he was considering military action, telling protesters that “help is on the way” and repositioning some U.S. troops in the region. However, by midweek, Trump softened his tone after receiving assurances that Iran would halt killings and executions, saying he would wait to see whether conditions improved, which helped ease market fears of imminent U.S. military action.
Dispute Over Greenland Sparks Ongoing Diplomatic Tension
High-stakes diplomatic meetings between the United States, Denmark, and Greenland on Wednesday concluded with a “fundamental disagreement” over the future of the island. Danish Foreign Minister Lars Løkke Rasmussen and Greenlandic Foreign Minister Vivian Motzfeldt reiterated that Greenland is not for sale, emphasizing the kingdom’s sovereignty and the Greenlandic people’s self-determination. The White House maintained that acquiring Greenland remains a top national security priority to counter Russian and Chinese influence in the Arctic. While no breakthrough was reached regarding President Trump’s renewed push for a takeover, all three parties agreed to establish a high-level working group to continue dialogue. The group will explore how to address U.S. security concerns while respecting Denmark’s “red lines”. This group is expected to meet within a few weeks. Simultaneously with the talks, Denmark announced an increased military presence in Greenland, along with allies France, Germany, Norway, and Sweden, who began sending small numbers of troops to the island in a symbolic show of solidarity with Copenhagen.
Gaza Peace Plan Enters Phase II
Phase 2 of the Gaza peace plan was launched this month and focuses on transitioning from ceasefire to demilitarization, technocratic governance, and reconstruction. The plan calls for establishing a Palestinian technocratic committee to administer Gaza, as well as oversight by a “Board of Peace,” chaired by President Trump. The plan also envisions a multi-year effort estimated to cost over $50 billion. Initial projects include building artificial islands with rubble to clear land for new construction. Current sticking points include the return of the remains of the final Israeli hostage, the disarmament of Hamas, and the withdrawal of the Israeli military, with the last two points contingent on each other. While Hamas has expressed support for transferring governmental functions to the technocratic committee, it has sent mixed signals regarding full disarmament, with some officials suggesting a freeze or storage of weapons rather than total surrender. Despite moving to Phase 2, both sides have reported ongoing ceasefire violations, including recent Israeli strikes in Deir el-Balah that killed ten people.
US Social and Political Developments
Justice Department Launches Investigation into Powell
Early this week, it was announced that the Justice Department had launched a criminal investigation into Federal Reserve Chairman Jerome Powell surrounding his testimony about cost overruns on Federal Reserve building renovations. Powell called the probe a political pretext aimed at pressuring him to cut interest rates, drawing strong support from global central bankers, major U.S. bank CEOs, and Republican senators—including Thom Tillis—who vowed to block any Trump Fed nominees while the investigation is ongoing. Markets remained relatively calm despite the revelations, and Trump said it was “too early” to determine Powell’s fate, while his potential successor, Kevin Hassett, publicly hoped the investigation would amount to nothing and pledged to uphold Fed independence if chosen. The outcome could have significant implications for Federal Reserve independence, interest rate policy and the balance of power between the central bank and the Trump administration.
Freeze on Immigrant Visas
The Trump administration has announced it will suspend immigrant visa processing for citizens of 75 countries, citing concerns that migrants from those nations rely on U.S. welfare at unacceptable rates, marking a major escalation of its restrictive immigration agenda. The State Department said the freeze, set to begin January 21st, will remain in place until the government can ensure new immigrants will not impose economic costs, and will affect countries including Somalia, Haiti, Iran, and Eritrea, with reports indicating others such as Brazil, Nigeria, and Egypt are also included. The policy does not apply to temporary tourist or business visas but could block roughly half of all legal immigrants, according to immigration analysts. The move follows a series of aggressive actions since President Trump returned to office, including mass visa revocations, sharp cuts to refugee admissions, and large-scale deportations, prompting critics to warn that the United States is entering the most restrictive period for legal immigration in its modern history.
Corporate/Sector News
Taiwan Invests in U.S. Chipmaking While U.S. Approves Nvidia Exports to China
Taiwan has struck a major trade deal with the Trump administration that lowers U.S. tariffs on Taiwanese goods to 15% in exchange for up to $250 billion in Taiwanese semiconductor and tech investments in the United States, plus another $250 billion in government-backed credit guarantees, deepening cooperation around U.S.-based chip production led by TSMC’s expanding Arizona operations amid surging global AI-driven chip demand. While U.S. officials frame the agreement as a boost to American manufacturing resilience, it has sparked debate in Taiwan, where advanced chips are both an economic cornerstone and a strategic buffer against China, with critics warning that shifting more production to the U.S. could weaken Taiwan’s long‑term leverage. At the same time, the Trump administration has approved controlled exports of Nvidia’s H200 AI chip to China, allowing shipments under strict limits—capping sales to no more than half of U.S. volumes, requiring third‑party testing, domestic supply certification, and security assurances from Chinese buyers—to balance national security concerns with maintaining U.S. commercial competitiveness. Although the administration argues that regulated exports prevent China from accelerating domestic alternatives, critics caution that enforcement will be challenging and that the policy may temporarily boost China’s AI capacity while offering only a fragile, short‑term export‑control compromise.
Japan Begins Deep Sea Mining Project
Japan has begun a landmark test to mine rare earth rich seabed mud from deep Pacific waters in an effort to reduce its heavy dependence on China at a time of rising geopolitical tension. A Japanese research vessel has set sail to waters near Minami Torishima (1,900km south-east of Tokyo) to attempt continuous extraction from depths of about six kilometers. The vessel will target deposits believed to hold one of the world’s largest reserves of rare earths used in electric vehicles defense systems and clean energy technologies. The move comes as relations with Beijing deteriorate and as China tightens export controls on dual use items. At present, Japan remains vulnerable given that more than 70% of its supply currently comes from China. While Tokyo argues seabed mining could be cleaner than land-based alternatives, the project faces environmental concerns, high costs and technical uncertainty. Commercial production is unlikely before 2030, however, if successful, officials and analysts say the effort could greatly strengthen Japan’s economic security and allyships.
Saks Global Files for Bankruptcy
Saks Global, the parent company of Saks Fifth Avenue and Neiman Marcus, has filed for Chapter 11 bankruptcy less than a year after merging the two luxury department store chains in a 2.7-billion-dollar deal. Originally intended to create a dominant high end retail group, the filing was followed by a prolonged slump in luxury demand, mounting debt, missed supplier payments and a failed effort to stabilize finances through restructuring. Ultimately, this culminated in the company’s inability to meet a $100 million debt payment due in December. Sales fell sharply and losses widened as strained relationships with vendors limited inventory, forcing leadership changes and leaving the retailer short of options. Backed by about $1.75 billion in new financing, Saks plans to restructure under new management and reassess its store footprint. The likely solution will emerge as a smaller operation, as its collapse underscores the continued decline of traditional department store models and luxury brands.
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Source: Bloomberg
