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Gold, equities reach records as geopolitical risks mount

Gold surged to a new all-time high at the start of the week as investors sought safety amid rising geopolitical and policy uncertainty, even as major equity indices in the US, Europe and Japan continued to notch fresh records. On Monday, Wall Street extended its rally despite escalating tensions between US President Donald Trump and Federal Reserve Chair Jerome Powell, while the EuroStoxx 50 and Switzerland’s SMI also advanced to new peaks. In Asia on Tuesday, equities were broadly higher with Japan’s Nikkei 225 jumping to a record level on tech strength and speculation about a snap election, while oil prices climbed further as unrest in Iran underpinned a higher risk premium. Geopolitical concerns intensified after Trump’s announcement that the United States will impose a 25% tariff on trade with any country that continues doing business with Iran. Investors will now look to US bank earnings, including JPMorgan and Bank of New York Mellon, as well as key US inflation data later on Tuesday for further direction.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

Gold

Gold prices surged to a new record, with spot prices exceeding USD 4600 on Monday, before retreating to around USD 4580 in Tuesday trading. The move came as investors sought safety amid a US Department of Justice investigation into Federal Reserve Chair Jerome Powell over a USD 2.5 billion renovation of the Fed’s Washington headquarters and his congressional testimony, raising speculation that a change of Fed leadership could bring faster interest-rate cuts. Adding to geopolitical unrest was Trump's announcement late Monday that the United States will levy a 25% tariff on all trade with any country that continues to do business with Iran. Recent US geopolitical moves have led to large market swings, with Venezuela’s benchmark Indice Bursatil de Capitalizacion rising more than 130% since the capture of former president Nicolás Maduro by US forces on 3 January and reaching record levels on Monday as investors anticipate an economic turnaround. Oil futures also extended their advance on Tuesday, with Brent rising 0.8% to USD 64.40 and West Texas Intermediate gaining 1.2% to USD 60 per barrel as contracts approached recent seven-week and one-month highs, respectively. The latest gains reflect a growing supply risk premium linked to the largest anti-government protests in Iran in years.

Japanese stocks hit new high

Asian equities advanced on Tuesday, with technology shares leading gains and Japan’s Nikkei 225 jumping 3.1% to a record high near 54,000 points. The Nikkei rally was underpinned by local reports that Prime Minister Sanae Takaichi may call a snap election as soon as February, which investors expect would strengthen her ruling coalition and clear the way for additional fiscal stimulus. Sentiment across the region benefited from recent record closes on Wall Street and optimism around artificial intelligence, boosting Hong Kong’s Hang Seng (+0.5%), where newly listed Chinese AI and chip names such as GigaDevice Semiconductor and other so-called "AI tigers" posted strong gains, and lifting major Chinese internet stocks including Alibaba, Baidu and Tencent. In contrast, China’s CSI 300 was trading 0.9% lower. Technology strength also supported markets in South Korea and Australia, with the Kospi up 1.5% and the S&P/ASX 200 0.6% higher. Meanwhile, India’s Nifty 50 was flat after softer-than-expected December consumer price inflation reinforced expectations for further Reserve Bank of India rate cuts but also highlighted underlying economic weakness amid already elevated US tariffs and the prospect of further hikes.

US equities continue record rally

US stocks started the week with modest gains on Monday, with the Dow Jones Industrial Average rising 0.2% to a fresh closing high, the S&P 500 adding 0.2% and the Nasdaq 100 edging up 0.1%. Trading was overshadowed by the escalating confrontation between Trump and Federal Reserve Chair Jerome Powell, after the US Department of Justice threatened Powell with indictment, which he dismissed as political pressure on monetary policy, and by Trump’s call for a one-year cap on US credit card interest rates that sent Visa, Mastercard and American Express shares tumbling. Bank shares including JPMorgan and Citigroup also weakened ahead of the start of the US earnings season this week.

Euro-area stocks extend record run

Euro-area equities posted moderate gains on Monday, with the EuroStoxx 50 adding 0.3% to close at 6016.65 points after moving above the 6000 mark for the first time at midday. Markets outside the euro area also inched higher, as Switzerland’s SMI ended firmer at a new peak and British stocks finished just short of a record high. Sector-wise, leisure and travel stocks fell about 1.5% as their recent rally continued to consolidate, and utilities also weakened, while basic resources outperformed with a 1.8% rise.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from JPMorgan and Bank of New York Mellon.

Economic data in focus: US Consumer Price Index (14:30) and US new residential sales (16:00).

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Editor: Alessandro Fezzi
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