Global Market Outlook
Global markets faced a renewed wave of political and macroeconomic uncertainty as developments in the United States triggered sharp moves across equities, currencies, and commodities. Trade tensions resurfaced after former US President Donald Trump announced plans to impose tariffs on eight European countries, reportedly tying the move to broader geopolitical negotiations involving Greenland. The announcement unsettled risk sentiment and reinforced concerns about an increasingly unpredictable global trade environment.
US financial markets reacted swiftly. Equity markets declined, the US dollar weakened with the dollar index falling to around 99, and investors rotated aggressively into defensive assets. Gold and silver both surged to new record highs, highlighting a renewed demand for safe-haven protection amid rising policy and geopolitical risk.
US Policy Uncertainty and Cooling Industrial Momentum
Political uncertainty in the United States intensified further as Donald Trump weighed in on the leadership outlook for the Federal Reserve, adding to market unease around future monetary policy direction and institutional independence. The combination of trade threats and monetary uncertainty weighed on confidence and contributed to a broader risk-off tone.
US economic data reinforced a more cautious outlook. Industrial Production growth slowed sharply, falling to 2.0 percent year on year from 2.7 percent previously. Manufacturing Production also eased, pointing to cooling momentum across the industrial sector. At the same time, inflation pressures remain unresolved, with Core Producer Prices holding elevated at 2.9 percent year on year. This combination of slowing growth and persistent inflation continues to complicate the Federal Reserve’s policy outlook and limits the scope for near-term easing.
China Data Supports Stability and Commodity Demand
Economic data from China provided a more constructive counterbalance to global uncertainty. Industrial output rose 5.2 percent year on year, surpassing expectations and marking an acceleration from the prior month. Manufacturing activity remained the primary driver, supported by ongoing policy measures aimed at stabilising growth and supporting domestic demand.
Retail sales increased modestly, rising 0.9 percent year on year and slightly missing expectations, highlighting that consumer demand remains uneven. However, headline growth remained resilient, with GDP expanding 1.2 percent quarter on quarter, exceeding forecasts and marking the strongest pace of expansion in three quarters.
These data points suggest that China’s economy is gradually turning a corner. Continued fiscal support, accommodative liquidity conditions, and targeted stimulus measures from the People’s Bank of China are helping to stabilise growth and reinforce a more constructive medium-term outlook. Improving activity across manufacturing, mining, and infrastructure-intensive sectors is increasingly supportive of broader commodity demand.
Energy Markets React to Geopolitical Risk
Oil markets experienced renewed volatility as geopolitical tensions involving the United States and Iran escalated. Prices rose around 1 percent over the week, reflecting concerns that up to 3.3 million barrels per day of Iranian supply could be at risk should tensions intensify.
While no immediate supply disruption has materialised, the situation highlights how sensitive energy markets remain to geopolitical developments. With global spare capacity limited, any sustained disruption in key producing regions would tighten supply conditions and potentially add further inflationary pressure to the global economy.
Gold Remains Firm as Policy and Geopolitical Risks Converge
Gold continues to benefit from a powerful combination of macro forces. Renewed tariff threats and trade uncertainty have lifted political risk, while persistent inflation pressures and a weaker US dollar have increased the appeal of hard assets. Uncertainty surrounding Federal Reserve leadership and policy direction has further reinforced demand for inflation protection and portfolio diversification.
Geopolitical tensions, particularly in the Middle East, have added another layer of support, driving safe-haven flows into precious metals. In addition, ongoing central bank gold purchases continue to provide a strong structural underpinning, allowing prices to push to new record highs.
Looking Ahead
The week ahead features a heavy calendar of economic releases as markets work through data delays caused by the recent US government shutdown. In the United States, attention will focus on personal income and spending data, inflation readings, and updated growth estimates. PMI surveys across major economies will provide timely insight into global activity trends, while central bank decisions and key earnings reports will help shape near-term market sentiment.
Overall, the global backdrop remains defined by elevated uncertainty, cooling growth in developed markets, resilient but uneven recovery in China, and rising geopolitical risk. In this environment, defensive assets, diversification, and disciplined risk management are likely to remain central themes as markets navigate the early stages of 2026.
Disclaimer
This article is provided for general informational purposes only and does not constitute investment advice. Market conditions are subject to change without notice. Investors should carefully consider their financial situation and seek independent professional advice before making any investment decisions.