Weekly market update: Markets hold steady as US foreign adventures dominate the start of 2026
This week markets were remarkably calm in the face of dramatic US intervention in Venezuela. The US president's Caribbean adventures had little immediate impact on global markets. The promise to take control of Venezuela’s oil industry and the seizure of a small number of oil tankers may cause a headache for countries trying to get around international sanctions but this had almost no impact on global oil markets. Despite Venezuela’s huge oil reserve’s its annual output is very modest (around 1% of world production) and it will take time and a lot of money to increase capacity. The only sign of movement in defensive assets was in the rising price of gold.
The longer-term implications of the president's actions will be more significant. The range of potential outcomes is huge as there are so many moving parts and so many interested parties. Factor in US belligerence towards Denmark over control of Greenland and the long-term impact is even harder to determine. In the meantime, global equities have gained and bonds markets have been steady. A cynical approach would be to put this down to complacency. But, with so much uncertainty, investors are dealing with the information they have and will deal with longer-term implications when the outlook become clearer.
Venezuela: Markets calm in the face of US intervention
Global markets have been notably calm following the US capture of Venezuelan president Nicolas Maduro. The surprise intervention resulted in Maduro and his wife appearing in a New York courtroom on drugs and racketeering charges after US forces seized them in a raid on the presidential compound in Caracas. This was a big escalation in the US pressure on the country following the seizure of several oil tankers accused of breaking global sanctions. Although Venezuela has the world’s largest oil reserves there has been little movement in the price of oil as Venezuela’s current output is relatively small and global oil supply is expected to exceed demand growth this year. Venezuela’s oil infrastructure also needs considerable investment after years of neglect.
China condemned the intervention though Western allies offered only muted responses and markets were largely unmoved. US oil majors gained as Washington pressured them to help fund the modernisation of Venezuela’s oil infrastructure in return for commercial rights.
Global: European markets lead equities higher
Global equity markets have had a bright start to 2026, despite geopolitical tensions and disappointing US economic data. Europe and China have delivered some of the week’s standout gains. In Europe, sentiment has improved as investors respond to a brighter growth outlook, with Germany expected to lead the region. Berlin has reiterated its commitment to modernising infrastructure and lowering energy costs, helping the DAX outperform. Eurozone banks and defence sectors were among the best performers.
In China, investors have welcomed promises of government support for key industries and an expectation that the central bank will ease interest rates and encourage more bank lending. More active retail investors have also helped lift the CSI 300 to a four‑year high, following successful IPOs by several Chinese artificial‑intelligence firms. Meanwhile, gains in the UK and US were more modest, though the S&P 500 still reached a new record and the FTSE 100 crossed 10,000 points for the first time.
Autos: EVs gain market share, car makers brace for falling sales
Rising prices, falling consumer confidence and concerns about affordability are expected to see new car sales in the US fall for the first time since 2022. A forecast from US car services group Cox Automotive has likely sales of 15.8 million units, down from 16.3 million in 2025. Electric vehicle sales expected to fall faster than for combustion engines as government subsidies and incentives are removed and US car manufacturers have massively reduced plans for EV manufacturing.
Elsewhere, EVs continue to grow their market share as Chinese firm BYD became the world’s biggest EV car maker. Tesla’s annual global sales fell 9% in 2025 to 1.8 million as BYD sales increased 28% to more than 2.2 million. Global growth of EVs is expected to slow in 2026 with annual sales tipped to increase around 13% to 24 million. Sales increased by 22% in 2025. In China, growth is set to cool as the government scales back some incentives. European sales are also forecast to slow as the EU extends its timetable for phasing out petrol and diesel engines. In the UK, a surge in Chinese imports drove a sharp rise in EV sales in 2025. EVs made up 23% of new car sales last year, as total new car sales topped two million for the first time since 2019.
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