US prosecutors launch criminal investigation into Fed`s P

General market commentary

Equity markets ended Friday on a strong note, with risk appetite improving into the close of the week. The S&P 500 rose 0.7%, while smaller companies continued to outperform, pushing the Russell 2000 sharply higher. US equities were supported by renewed optimism following the December jobs report, which, despite soft headline payroll growth, showed little evidence of acute labour-market stress. Outside equities, shorter-dated government bonds sold off as investors trimmed expectations for imminent Federal Reserve easing, while longer-dated bonds rallied. Commodities also moved higher, with oil boosted by geopolitical concerns and gold edging to fresh highs.

For the week as a whole, markets delivered a robust start to the year. The S&P 500 gained 1.8% over the first full week of 2026, while the Russell 2000 surged 5.8%, reflecting a notable rotation into smaller-capitalisation shares. European equity markets outperformed, reaching successive record highs despite ongoing geopolitical tensions, whereas Wall Street was more restrained, weighed down by weakness in the technology sector. The US dollar continued to strengthen, and volatility remains a key risk as investors look ahead to the upcoming earnings season and crucial US inflation data, both of which could test the durability of this early-year momentum.

Latest market and economic update

Asian equities rose modestly on Monday, led by technology shares as AI optimism persisted. Gains were limited by geopolitical and macroeconomic risks, while Japan’s market holiday kept volumes light. South Korea outperformed, Hong Kong and China advanced slightly, Australia and Singapore edged higher, and Indian futures declined.

U.S. equity futures fell on Sunday, with S&P 500 down 0.4%, Nasdaq 100 off 0.7%, and Dow futures down 0.4%, amid uncertainty over the Federal Reserve’s independence after Chair Jerome Powell flagged a DOJ probe. Markets also weighed Iran tensions, upcoming Q4 bank earnings, and December CPI data, which could guide future Fed rate decisions.

European shares ended at record highs on Friday, led by a 10% surge in Glencore and strong tech gains from ASML, Infineon and STMicroelectronics, putting the STOXX 600 on its longest weekly winning streak since May. Mining and technology equities outperformed, while weaker retailers weighed on the market amid mixed earnings and geopolitical concerns.

The U.S. dollar eased to around $1.1655 against the euro and the dollar index slipped to 98.9, ending a four-day rally after a criminal investigation into Fed Chair Jerome Powell raised concerns over central bank independence. Safe-haven demand from Iran unrest supported the dollar, but Powell’s defence of Fed autonomy and expectations of further rate cuts capped gains.

Oil prices held steady in Asian trade as investors weighed supply risks from escalating unrest in Iran against potential additional barrels from Venezuela. Brent and WTI edged up slightly after last week’s gains. Fears of disruptions through the Strait of Hormuz offset optimism over possible U.S. sanctions relief and resumed Venezuelan oil exports.

Federal Reserve Chair Jerome Powell said a Justice Department probe into the Fed’s renovation project was politically motivated and threatened central bank independence. The investigation follows pressure from President Trump for deeper rate cuts. Powell defended his record, while Trump denied knowledge and is expected to appoint a successor as Powell’s term ends in May.

Donald Trump said the United States would acquire Greenland “one way or another,” claiming Russia or China might otherwise, and insisted this would not harm NATO despite allies’ concerns. He urged Greenland to propose a deal and has not ruled out military action. Denmark and European leaders strongly rejected his demands.

US President Donald Trump is expected to be briefed on Tuesday on options to respond to protests in Iran, the Wall Street Journal reported on Sunday. Possible steps include military strikes, cyber operations, tougher sanctions and boosting online opposition. The White House declined to comment, and Reuters could not independently verify the report.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Meta Platforms has signed 20-year deals to buy power from three Vistra nuclear plants and support development of small modular reactors with Oklo and TerraPower. The agreements aim to secure up to 6.6 GW of electricity by 2035, funding plant expansions and SMR projects, making Meta a major corporate purchaser of US nuclear energy.

Chinese AI startup DeepSeek plans to launch its next-generation V4 model around mid-February, featuring advanced coding capabilities aimed at surpassing OpenAI’s GPT and Anthropic’s Claude. Following the success of its R1 model, V4 could disrupt the AI sector by offering high performance at lower cost, adding volatility to global AI markets.

U.S. President Donald Trump said he may block Exxon Mobil from investing in Venezuela after its CEO called the country “uninvestable” due to weak legal and commercial frameworks. Exxon has had assets seized there twice and wants major reforms before returning, while Trump pushes U.S. firms to invest in the country’s oil industry recovery.

TSMC reported a 20.45% rise in fourth-quarter revenue to T$1.046 trillion ($33.11 billion), beating forecasts, driven by strong AI-related demand. Gains offset weaker consumer electronics sales. Shares rose 44.2% in 2025, outperforming the market. Full earnings and updated guidance are due on 15 January, with Foxconn also reporting strong Q4 sales.

Johnson & Johnson agreed with the Trump administration to lower U.S. drug prices in exchange for tariff exemptions. It will offer discounted medicines via TrumpRx.gov and provide Medicaid access at prices comparable with other developed countries. The company also plans two new U.S. manufacturing facilities as part of its $55 billion investment programme.

GTT secured an order from Samsung Heavy Industries for two LNG carriers with Mark III Flex technology, scheduled for delivery in 2028 and 2029. The deal brings GTT’s 2023 orders to 32 units, with a strong backlog providing visibility until mid-2028, highlighting continued demand for its LNG containment systems despite slower sector growth.

Berenberg upgraded CrowdStrike to Buy, citing a recent 9% share pullback as an attractive entry point. The firm highlights strong growth potential from its unified cybersecurity platform, sector consolidation, and the strategic SGNL acquisition. CrowdStrike is expected to deliver around 15% organic growth and expanding profitability, with valuation now appearing reasonable.

UBS sees Ferrari nearing peak negative sentiment, with limited near-term downside. Q4 2025 organic sales are forecast up 4%, led by Cars & Spare Parts and double-digit growth in Sponsorship and Brand segments. Investors will watch US trends, F80 deliveries, EV updates, and personalisation. UBS maintains a buy rating, lowering the price target to $555.

Baird downgraded GE Vernova to Neutral, citing rising overcapacity concerns in the power equipment market from competitors like Doosan, FTAI and CAT. While long-term prospects remain strong, near-term pricing and supply uncertainties prompt caution. Baird cut its price target to $649, noting GEV’s 2025 gains and expected EBITDA multiple compression.

UBS upgraded L’Oréal to Buy with a €430 target, citing stronger sales momentum, market share gains in the U.S. and China, and a reduced risk profile. Like-for-like growth is expected to accelerate in 2025-26, supported by product launches and marketing, while reliance on fragrances declines and operating margins and EPS are forecast to rise.

BMO Capital Markets downgraded Adobe to Market Perform with a $375 target, citing no clear catalysts despite undemanding valuation. Intensifying competition in Creative Cloud, rising use of third-party tools, and potential slowdown among high-end users and freelancers may limit growth. Sector sentiment is expected to remain cautious in 2026.

TD Cowen initiated coverage of Constellation Energy with a Buy rating and $440 target, citing benefits from the Calpine acquisition and strong U.S. power demand. Elevated spark spreads, data centre growth, and nuclear assets support long-term contracting above market. Gas-linked PPAs add upside, though regulatory risks remain, with front-of-the-meter deals expected to dominate.

Rothschild launched coverage of Autodesk with a Buy rating and $375 target, citing growth above industry expectations. Strong design software adoption, AI features, and building information modelling support expansion, while Autodesk Construction Cloud drives nearly 20% annual growth. High pricing power and workflow integration underpin sustained long-term revenue growth.

Bank of America upgraded FedEx to Buy with a $365 target, citing benefits from cost reductions, network consolidation, and a potential end to the freight downturn. Improved demand, the $1 billion Network 2.0 savings plan, and the June 2026 FedEx Freight spin-off support earnings upside, making FDX one of BofA’s top 2026 transport picks.

Telsey Advisory Group initiated coverage of Chipotle with an Outperform rating and $50 target, citing strong restaurant economics, menu innovation, and long-term expansion to 7,000 North American units. Despite 2025 softness from consumer pressures, sales are expected to recover in Q2 2026, supported by cost moderation, loyalty improvements, and macro tailwinds.

Kepler Cheuvreux downgraded Société Générale to Reduce from Buy, citing completed catalysts and pending Ayvens privatisation. The bank’s EPS forecasts were raised, with return on tangible equity projected at 11.7% by 2028. Improved cost-income ratio, CET1 stability, and a rising dividend yield support long-term prospects, though profitability remains below the European peer average.

Williams Trading downgraded On Holding to Hold from Buy, cutting its price target to $47, citing slowing wholesale growth in the Americas and Europe. While DTC and Asia-Pacific remain strong, higher costs and overstock in wholesale channels pressure margins. Demand skews to lifestyle products, with younger consumers underperforming expectations, limiting sales and growth.

RBC Capital Markets initiated Doximity with an Outperform rating and $59 target, praising its scale, profitability and 80% US physician network. Goldman Sachs upgraded the shares to Neutral with a $49 target, citing a valuation reset. Both highlight strong margins, durable healthcare marketing growth, and AI-driven tools supporting long-term competitive advantage.

Baird upgraded Generac to Outperform, citing a 25% share pullback and attractive risk-reward. Key drivers include growth in large commercial and industrial diesel generators, recovery in core markets, and narrowing losses in clean energy. Earnings momentum is expected to build through 2026-27 as capacity ramps up and market conditions improve.

Upcoming data and events

The week ahead sees the results season begin on Tuesday, with JPMorgan Chase and Bank of New York reporting, alongside Europe’s Sika. The luxury sector follows on Thursday with Richemont. On the macro front, US December inflation is due Tuesday, while Germany’s 2025 GDP figures are released Thursday, both key for market sentiment.

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