General Market Analysis – 16/01/26

US Stocks Climb on Tech Optimism – Dow up 0.6%

Wall Street rebounded strongly overnight, led by technology stocks, after TSMC — the world’s largest producer of advanced AI chips — forecast robust growth into 2026. The Dow Jones rose 0.60% to close at 49,442, while the S&P 500 added 0.26% to 6,944 and the Nasdaq gained 0.25% to finish at 23,530. US Treasury yields moved higher following stronger-than-expected economic data, providing support to the US dollar. The 2-year Treasury yield climbed 5.5 basis points to 3.565%, while the 10-year yield rose 3.8 basis points to 4.170%. The stronger yield backdrop helped lift the US dollar index by 0.23% to 99.36. Commodity markets saw sharp moves, with oil prices tumbling after comments from President Trump eased concerns over potential US military action against Iran. Brent lost 3.94% to $63.89 per barrel, while WTI slumped 4.56% to $59.19. Gold also edged lower, slipping 0.25% to $4,616.15 as improved risk sentiment and higher yields weighed on demand, pulling prices back from recent record highs.

Earnings In Focus for US Stock Markets
US stock markets are focusing strongly on the first earnings reports to hit the newswires in 2026 in the coming weeks. Stellar earnings and projections throughout 2025 helped all three of the major US indices hit all-time highs in the last year, and they are still trading near those elevated levels. However, updates in the coming weeks could do a lot in determining where the indices head in the coming weeks and months. Major banks have kicked off the season this week with mixed results, but we will see a more diverse batch of companies in the coming weeks, with Netflix and Intel probably the pick of the bunch before we hit the full ‘Magnificent 7’ that dominated moves in the last year. In general, S&P 500 companies are expected to increase earnings by 15% in 2026, and any disappointments from already high valuations could see some sharp corrections in the market. However, for the moment, it has largely been a case of ‘carry on as 2025’ for the start of this year, and the bulls are still in control – how long that lasts could well be decided by earnings updates in this quarter.

Quiet Calendar Day to Close Out the Trading Week
Looking ahead, the macroeconomic calendar is relatively quiet today. However, markets are likely to remain sensitive to geopolitical headlines, with traders closely monitoring any developments that could impact risk sentiment across asset classes. The Asian session has very little in the way of scheduled events; however, focus remains strongly on Japanese markets and the potential for a snap election and its implications, with the yen remaining sensitive to any updates. The European session will see a strong focus on UK markets, with Bank of England Governor Andrew Bailey scheduled to speak midway through the day, while US markets will focus on updates from Fed members Susan Collins, Michelle Bowman, and Phillip Jefferson.

Explore all upcoming market events in the Economic Calendar.

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