In the United States, markets rose cautiously at the start of last week after news that the Department of Justice had issued subpoenas to Jerome Powell and other senior Federal Reserve officials over the handling of the restoration of Fed buildings. The move was widely interpreted as a direct challenge to the Fed’s leadership by the Trump administration, which has been openly critical of the current trajectory of US interest rates. Markets also reacted to President Trump’s call for credit card interest rates to be capped at 10% for one year, which sent shares in Visa, Mastercard and other financial stocks lower on Monday. Despite this, both major indices moved higher as investors looked past the subpoenas and focused on the start of the first earnings season of 2026. Markets also largely shrugged off the President’s announcement of 25% tariffs on countries trading with Iran, including China and India, as the uncertain geopolitical backdrop suggested the measures may prove short-lived. Midweek, as tensions surrounding Iran briefly escalated, the President softened his rhetoric on potential US involvement, which was welcomed by investors. He also announced 25% tariffs on certain chip exports from Nvidia and AMD, allowing Washington to take a share of sales of AI processors to China. However, after remarks on Friday stating he wished to keep Kevin Hasset in his current role rather than a potential Federal Reserve chair, markets dropped as expectations fell regarding dovish Fed policy in 2026.
In earnings, the largest US financial institutions reported results for the fourth quarter of 2025, including JPMorgan, Goldman Sachs, Morgan Stanley and Citigroup. JPMorgan, the largest bank in the US and globally by market capitalisation, reported stronger-than-expected results, beating revenue estimates by 1.6% with revenues of $46.77bn. Profits fell by 7% to $13.03bn, largely due to the acquisition of the Apple Card portfolio. Citigroup posted mixed results, missing revenue forecasts by 3.75% with revenues of $19.87bn. This was largely due to the sale of AO Citibank in Russia, which resulted in a $1.1bn loss. Strong performances in investment banking and wealth management partially offset weaker results in its markets division. Goldman Sachs and Morgan Stanley also reported solid earnings, supported by strong equity trading and investment banking activity.
In corporate news, the high-profile Warner Bros. Discovery takeover battle took a new turn after Paramount, one of the companies seeking to acquire Warner, filed a lawsuit over its agreement to sell its studios to Netflix in a deal valued at $82bn. Paramount, led by David Ellison, son of Oracle founder Larry Ellison, had previously made several offers to acquire Warner, including bids exceeding $100bn, and argued that its proposal would face fewer antitrust concerns than a deal with Netflix. Elsewhere, OpenAI agreed a $10bn deal with Cerebras Systems, under which it will secure 750 megawatts of computing capacity. Cerebras develops specialised chips designed to enable AI inference at speeds significantly faster than those of market leaders Nvidia and AMD. For the week, the S&P 500 and Nasdaq closed lower, down -0.15% and -0.46% respectively.
In Europe, equity markets reached new highs on three separate occasions last week. The Euro Stoxx 50 and STOXX 600 both hit record levels on Monday evening, Tuesday afternoon, and again on Thursday morning, supported by positive investor sentiment, encouraging US inflation data and easing geopolitical risks. Markets also received a boost on Thursday from strong earnings at Taiwan Semiconductor Manufacturing Company (TSMC), a firm that underpins much of the global AI ecosystem.
In corporate news, Ørsted, the Danish-based wind energy developer, secured a major victory after a US court ruled that it could continue construction at its flagship Revolution Wind project in New York, despite its lease having been suspended by the Trump administration in late December. Ørsted shares rose by more than 6% on Tuesday following the decision, providing a welcome boost for the company, which raised $9bn in a rights issue last October to ease cash flow pressures linked to its suspended US projects. For the week, the Euro Stoxx 50 and the STOXX 600 closed 0.65% and 0.86% higher respectively.
In the United Kingdom, the FTSE 100 reached new record highs last week, supported by strong gains in the mining, energy and healthcare sectors. The index rose by 0.5% on Wednesday to close at 10,184, with Glencore climbing almost 3% and Rio Tinto gaining 1.9%. The two companies are currently in merger talks, which, if completed, would create the largest mining company in the world. Glencore first approached Rio Tinto about a merger in late 2024; however, it is now Rio that is actively pursuing a deal. Rio Tinto is the world’s largest iron ore producer, while Glencore produces more than 60 commodities across operations in over 30 countries. Although declining oil and mineral prices weighed on the index later in the week, the FTSE 100 still recorded a weekly gain of 1.16%.
