Weekly Market Review - 05-01-2026

Eloise Bell
Jan 5
4 min read

As markets move into the opening weeks of 2026, investors are recalibrating expectations following a volatile end to the previous year. Early trading has been shaped by shifting risk sentiment, renewed geopolitical uncertainty and a reassessment of growth and inflation dynamics across major economies. With central banks, commodities and labour-market data back in focus, the year has begun with a cautious tone as markets look for clearer signals on the outlook ahead.

Market Recap.

The FTSE 100 ETF rose 0.87% over the week, reflecting modest strength in UK equities. In the United States, markets were weaker, with the Dow Jones Industrial Average ETF falling 0.49%. The S&P 500 ETF slipped 0.75%, while the Nasdaq 100 ETF declined 1.08%, as technology and growth stocks came under pressure.

News.

UK food retailers reported a resilient Christmas trading period, with discount supermarkets continuing to outperform as households remained highly price-conscious. Aldi UK said festive sales reached £1.65bn in

the four weeks to Christmas Eve, up 3% year-on-year, with sales in the week to Christmas Eve rising by more than 5%, supported by strong demand for its premium own-label range.

Lidl GB also delivered a strong performance, reporting a 10% year-on-year rise in Christmas sales, with turnover exceeding £1.1bn over the four weeks to 24 December. Customer numbers rose sharply, with nearly 51 million shoppers, up 8% from a year earlier.

The figures highlight continued resilience in essential food spending but also underline intensifying competition across the sector, with value-led retailers benefiting as consumers prioritise affordability heading into the new year.

Inflation.

Inflation remained in focus in Europe this week as Bulgaria completed its transition to the euro, heightening sensitivity around prices and the cost of living. The changeover has drawn public attention to inflation after a period of elevated price growth, particularly amid concerns that prices could be rounded up as the lev is replaced by the euro.

Authorities introduced dual pricing and consumer-protection measures to improve transparency and limit price increases, with retailers required to display prices in both currencies. The episode highlights how inflation is shaped not only by official data, but also by perception and confidence as Bulgaria becomes the eurozone’s 21st member.

Central Banks.

The European Central Bank was in focus this week as eastern European countries stepped up efforts to gain greater influence within the institution. The push comes as Bulgaria joins the euro, increasing the region’s presence within the bloc despite no representative from eastern Europe ever having served on the ECB’s Executive Board.

As one former senior official noted, “Every country has the same vote in the Governing Council, so it makes sense to think that there needs to be some balance also on the top positions.” For markets, the developments highlight shifting internal dynamics at the ECB, with broader representation potentially shaping future policy debates around inflation and financial stability.

Commodities.

Commodities delivered a mixed performance over the period, with precious metals strengthening amid heightened geopolitical risk. Gold moved sharply higher, trading around US $4,430/oz, supported by increased demand for safe-haven assets. Silver also advanced strongly, rising to around US $52/oz, reflecting a broader rotation into defensive metals.

In contrast, energy markets were weaker. Oil prices edged lower as investors assessed that ample global supply would likely offset near-term disruption risks. Brent crude slipped to around US $60.30/barrel, while WTI traded near US $57.50/barrel. Overall, precious metals benefited from risk-off sentiment, while crude prices remained constrained by supply dynamics and demand uncertainty.

ESG.

Environmental policy moved back into focus this week after the European Union signalled plans to introduce stricter controls on plastic imports from 2026. The measures aim to tighten oversight of plastic waste entering the bloc and ensure imported products meet EU environmental and recycling standards.

The proposals reflect growing concern over the environmental impact of plastic consumption and uneven regulatory standards across global supply chains. For businesses, the move is expected to increase compliance requirements and costs, particularly for manufacturers and exporters reliant on plastic packaging. For investors, the development reinforces the EU’s commitment to strengthening sustainability regulation, with implications for materials, consumer goods and logistics sectors as companies adapt to a tougher environmental framework.

Geopolitics.

Markets turned more risk-aware this week following the capture of Venezuelan President Nicolás Maduro by US forces, a development that significantly increased geopolitical uncertainty. The escalation prompted a move into defensive assets, with investors seeking protection amid concerns over wider regional and global implications.

Gold prices rose sharply as demand for safe-haven assets increased, while silver also recorded strong gains. Defence stocks across Europe moved higher as markets began to price in the prospect of increased military spending in response to heightened security risks.

In contrast, oil prices edged lower, as investors assessed that ample global supply would likely offset any near-term disruption from Venezuela. Years of underinvestment and declining output have reduced the country’s influence on global oil markets, limiting the immediate impact of the intervention on energy prices.

Week Ahead.

United States: In the United States, focus turns to the labour market during the first full trading week of the year. Initial jobless-claims data on Thursday, 8 January, will provide an early read on employment conditions after the year-end slowdown. Attention then shifts to Friday, 9 January, when December’s nonfarm payrolls report, unemployment rate and average earnings are released, key to assessing whether labour-market cooling is continuing as markets gauge the Federal Reserve’s early-2026 policy outlook.

Eurozone: Across the Eurozone, the week features limited headline data. Markets will monitor any updates from Eurostat and central-bank communication for guidance on inflation and growth trends as the region enters 2026. In the absence of major releases, attention is expected to remain on broader sentiment indicators and the evolving policy outlook at the European Central Bank.

United Kingdom: In the UK, the official data calendar is relatively light during the week. With no major ONS releases scheduled, market attention is likely to focus on private-sector surveys and commentary from policymakers for signals on economic momentum at the start of the year. Investors will also monitor updates from the housing and retail sectors for early insight into post-Christmas consumer behaviour.