Weekly Market Review - 26-01-2026

Jan 26
5 min read

Global markets were shaped this week by a cautious risk backdrop, as investors weighed uneven economic signals, persistent inflation concerns and increasingly measured central bank rhetoric. Equity markets broadly softened outside of technology, while commodities performance diverged sharply, reflecting heightened geopolitical uncertainty and shifting expectations for monetary policy. Against this backdrop, attention remained firmly on inflation dynamics, regional economic disparities and the outlook for interest rates as markets move deeper into 2026.

Market Recap.

UK equities moved lower over the week. The FTSE 100 ETF declined 0.49%, reflecting continued weakness in internationally exposed large-cap stocks amid a cautious global risk backdrop.

US equity markets also finished mostly lower. The Dow Jones Industrial Average ETF fell 0.67%, while the S&P 500 ETF slipped 0.30% as investors weighed ongoing policy uncertainty and uneven earnings momentum. Technology stocks outperformed broader markets, however, with the Nasdaq 100 ETF rising 0.66% over the week.

News.

UK consumer trends were in focus this week after new analysis showed that disposable household incomes are rising at markedly different rates across the country. In several towns and cities, income growth has been running at more than twice the national average, reflecting stronger local labour markets and a higher concentration of better-paid roles. The findings highlight widening regional disparities in living standards and suggest that, despite ongoing cost-of-living pressures nationally, parts of the UK are seeing a more pronounced improvement in household finances, with potential implications for local spending and housing demand.

Inflation.

UK inflation remains firmly in focus after the Bank of England acknowledged it had underestimated the persistence of price pressures. Inflation peaked at 11.1% in October 2022, far above the Bank’s 2% target, and while headline CPI has eased materially since then, policymakers conceded this week that disinflation has proven slower than expected. Officials pointed to stronger-than-anticipated wage growth and lingering supply-side constraints as key factors behind the overshoot. The admission has reinforced market caution around the timing and pace of interest-rate cuts, with investors increasingly alert to the risk that inflation returns to target only gradually as policy moves further into 2026.

Central Banks.

Central bank messaging remained cautious this week, with policymakers using the World Economic Forum in Davos to underline the need for restraint despite easing inflation. ECB President Christine Lagarde reiterated that it is “too early to declare victory” over inflation, stressing that policy decisions will remain data-dependent as price pressures continue to normalise unevenly. IMF Managing Director Kristalina Georgieva echoed the message, warning that premature easing could risk reigniting inflation and undermine hard-won credibility. The comments reinforced expectations that major central banks will move carefully through 2026, prioritising inflation control over rapid policy loosening.

Commodities.

Commodities delivered a mixed performance over the latest period, reflecting heightened safe-haven demand alongside continued pressure in energy markets. Precious metals extended their gains, with gold and silver trading at or near record levels, supported by geopolitical uncertainty, tariff concerns and renewed fears over US fiscal disruption. Gold was trading around US$4,666 per ounce, while silver hovered near US$93 per ounce, as investors sought defensive assets amid elevated market uncertainty.

By contrast, energy markets remained subdued. Brent crude traded near US$64 per barrel, with WTI around US$59 per barrel, as ample supply conditions and lingering concerns over global demand continued to cap upside momentum.

Overall, precious metals outperformed amid rising uncertainty, while crude oil prices stayed range-bound, constrained by supply-side dynamics and an uneven demand outlook.

ESG.

Regulatory momentum around sustainable finance continued to build this week, with European authorities signalling further efforts to improve consistency and transparency in ESG reporting. The EU’s Joint Bank Reporting Committee set out priorities for 2026 aimed at standardising ESG disclosures across financial institutions, with a focus on reducing complexity, improving data quality and enhancing comparability for investors. The initiative is intended to address fragmentation in current reporting frameworks and ease the compliance burden on banks, while strengthening the reliability of ESG information used in risk assessment and capital allocation. The move underscores a broader regulatory push in Europe to embed sustainability considerations more firmly into financial reporting and supervision.

Geopolitics.

Global diplomacy was dominated by tensions surrounding U.S. foreign policy at the World Economic Forum in Davos. European leaders pushed back against Washington’s renewed interest in acquiring Greenland, warning of risks to territorial sovereignty and transatlantic trust. Ukraine re‑emerged on the agenda as President Volodymyr Zelenskiy sought progress on stalled peace talks, while U.S. threats of new tariffs and potential military action against Iran underscored growing geopolitical volatility.

Week Ahead.

United States: In the United States, the week’s main event is the Federal Open Market Committee (FOMC) policy decision on Wednesday, 28 January, where rate guidance and Chair Powell’s press conference will be key for market expectations. At the start of the week, markets will receive durable goods orders on Monday, 26 January, offering an early read on business investment. The week concludes with Producer Price Index (PPI) and core PPI data on Friday, 30 January, providing insight into wholesale inflation pressures.

Eurozone: Across the Eurozone, the week’s economic data schedule does not feature major official macro releases, with the typical PMI reporting cadence pointing toward early February for business activity indicators. In the absence of significant data, markets will continue to watch ECB commentary and global economic developments for cues on the euro-area outlook.

United Kingdom: In the UK, the scheduled data calendar is relatively light. While there are no major headline macro releases this week, the Office for National Statistics’ real-time economic indicators on Friday, 29 January, will offer additional context on activity trends. Absent key inflation or labour market releases, broader global data and monetary policy developments are expected to shape UK market sentiment.