Will the Supreme Court rein in tariffs?

Key data to move markets today

EU: Sentix Investor Confidence and a speech by ECB Vice President Luis de Guindos
UK: BRC Like-For-Like Retail Sales
USA: Speeches by Atlanta Fed President Raphael Bostic and New York Fed President John Williams
JAPAN: Current Account and Trade Balance

US Stock Indices

Dow Jones Industrial Average +0.48%
Nasdaq 100 +1.02%
S&P 500 +0.65%, with 9 of the 11 sectors of the S&P 500 up

US equity indices advanced over the course of last week. The S&P 500 rose +1.57%, the Dow Jones Industrial Average advanced +2.32%, and the Nasdaq Composite was +1.88%.

On Friday, the S&P 500 climbed +0.65%, marking its second all-time high of 2026. The Dow Jones added 238 points, or +0.48%, achieving a record close for the third time this year at 49,504.07. The Nasdaq Composite gained +0.81%.

The Russell 2000 index, which tracks small-cap stocks, was +0.78% on Friday and +4.62% for the week, underscoring the momentum of Wall Street's 'rotation trade.'

According to LSEG I/B/E/S data, 2025 Q4 y/o/y earnings are expected to be 8.8%. Excluding the Energy sector, the y/o/ earnings estimate is 9.1%.Of the 19 companies in the S&P 500 that have reported earnings to date for 2025 Q3, 84.2% reported above analyst expectations. This compares to a long-term average of 67%.

The 2025 Q4 y/o/y blended revenue growth estimate is 7.2%. If the Energy sector is excluded, the growth rate for the index is 8.0%.

In corporate news, Meta Platforms is poised to become one of the world's leading corporate purchasers of nuclear power, having entered into a series of agreements to acquire electricity from both existing facilities and forthcoming reactor projects. These arrangements include sourcing power from three established Vistra Energy plants, as well as providing support for multiple small reactors that Oklo and TerraPower intend to construct over the next decade.

Rio Tinto is currently engaged in discussions to acquire Glencore, with the goal of forming the world's largest mining company. This would have a combined market capitalisation exceeding $200 billion. These negotiations come slightly more than a year after previous merger talks between the two entities fell through.

Dutch telecommunications company Odido is reportedly considering an IPO as early as this month. As reported by Bloomberg news, this could potentially generate proceeds of approximately €1 billion or more. 

General Motors is preparing to incur an additional $6 billion in charges connected to production cutbacks within its EV and battery operations, as the financial repercussions stemming from the declining US market for EVs continue to intensify.

S&P 500 Best performing sector

Materials +1.80%, with Martin Marietta Materials +4.48%, Freeport-McMoRan +4.26%, and Vulcan Materials Company +4.18%

S&P 500 Worst performing sector

Health Care -0.58%, with Eli Lilly & Company -1.99%, Universal Health Services -1.95%, and Quest Diagnostics -1.86%

Mega Caps

Alphabet +0.96%, Amazon +0.44%, Apple +0.13%, Meta Platforms +1.08%, Microsoft +0.24%, Nvidia -0.08%, and Tesla +2.11%

Information Technology

Best performer: Intel +10.80%
Worst performer: EPAM Systems -3.57%

Materials and Mining

Best performer: Martin Marietta Materials +4.48%
Worst performer: Nucor -2.45%

European Stock Indices

CAC 40 +1.44%
DAX +0.53%
FTSE 100 +0.80%

Commodities

Gold spot +0.71% to $4,509.79 an ounce
Silver spot +3.89% to $79.95 an ounce
West Texas Intermediate +0.65% to $58.78 a barrel
Brent crude +0.46% to $63.02 a barrel

Gold prices advanced again last week as investors responded to policy shifts and heightened geopolitical uncertainties.

Spot gold rose +0.71% to $4,509.79 per ounce on Friday. It was +4.15% for the week. It had reached a record high of $4,549.71 on 26^th December.

Geopolitical risks remained pronounced, driven by escalating unrest in Iran, ongoing hostilities in Russia's conflict with Ukraine, the US' capture of Venezuela's Nicolas Maduro, and renewed indications from Washington regarding intentions to assert control over Greenland.

Silver also experienced notable gains, with spot prices increasing +3.89% to $79.95 per ounce on Friday, marking a weekly rise of +10.10%.

Oil prices experienced a modest increase of less than one percent on Friday, driven by growing concerns over supply disruptions stemming from intensifying protests across Iran and an escalation in Russian attacks on Ukrainian energy facilities. On Friday, the Russian military announced it had launched its hypersonic Oreshnik missile at targets within Ukraine, including energy infrastructure that supports the country’s military-industrial sector. In Iran, concerns regarding possible disruptions to oil output intensified as civil unrest escalated. On Thursday, Iran experienced a nationwide internet blackout amid ongoing demonstrations over economic hardship, with significant protests reported in the capital Tehran, as well as major cities such as Mashhad and Isfahan.

Brent crude futures settled at $63.02 per barrel, up $0.38 or +0.65%, while US WTI crude rose $0.29, or +0.46%, to $58.78 per barrel.

Both benchmarks had climbed more than three percent on Thursday, following two consecutive days of declines. For the week, Brent was +3.63%, and WTI +2.53%.

OPEC produced 28.40 million barrels per day (bpd) last month, marking a decrease of 100,000 bpd compared to November’s revised figures. Iran and Venezuela accounted for the most substantial declines in output.

Nevertheless, global oil inventories are expanding and oversupply remains a significant factor limiting further price increases. Unless the situation in Iran intensifies, the recent rebound in oil prices is expected to be constrained and difficult to sustain.

In addition, traders are closely watching the aftermath of Washington’s capture of Venezuela's leader, Nicolas Maduro, over a week ago. Officials from the Trump administration have stated that the US will indefinitely oversee Venezuelan oil sales and associated revenues.

Major oil companies such as Chevron, along with global trading firms Vitol and Trafigura, are vying for US government contracts to market up to 50 million barrels of oil accumulated by Venezuela’s state-run oil company PDVSA. These inventories have built up in the wake of a severe oil embargo.

Note: As of 4 pm EST 9 January 2026

Currencies

EUR -0.18% to $1.1637
GBP -0.30% to $1.3399
Bitcoin -0.86% to $90,424.53
Ethereum -1.09% to $3,802.32

The US dollar strengthened on Friday as financial markets remained cautious in anticipation of a potential Supreme Court ruling that could overturn the US President’s broad tariffs. Although the court refrained from delivering its decision on Friday, a verdict may still be forthcoming this week.

The dollar index advanced +0.28% to close at 99.14 on Friday. This was its second consecutive week of gains. It was +0.72% for the week. However, it is likely to come under pressure this week after US prosecutors launched a criminal investigation into Federal Reserve’s Chairman Jay Powell on Friday. On Sunday evening Powell issued a video statement, rejecting the “unprecedented action” from the Department of Justice (DoJ), saying it was a pretext to rein in the Fed’s independence to set interest rates and part of a series of threats and pressure from the White House. 

The euro declined -0.18% to $1.1637 on Friday and was -0.70% last week.

The British pound also weakened, falling -0.30% to $1.3399, its lowest level since 31^st December. It was -0.42% last week.

Market participants are awaiting further clarity on the UK’s economic conditions, with GDP data scheduled for release on Thursday and employment figures expected the following week. These indicators may provide additional insight into the BoE’s future monetary policy path.

The euro stabilised against the pound at 86.68 pence, though it notched its fourth consecutive weekly loss versus sterling. Earlier in the week, the euro had dipped to 86.44 pence, its lowest level since mid-September.

In Asian markets, the Japanese yen weakened following reports that Prime Minister Sanae Takaichi is contemplating a snap election for the lower house of parliament in the first half of February.

Economic data revealed that Japanese household spending unexpectedly increased in November compared to a year earlier, signalling an acceleration in consumption ahead of the BoJ’s decision to raise its policy rate to a 30-year high in December.

The US dollar reached a one-year high of ¥158.185 and finished the day up +0.64% at ¥157.88, contributing to its second consecutive week of gains at +0.68%.

Fixed Income

US 10-year Treasury -0.1 basis points to 4.175%
German 10-year bund +3.8 basis points to 2.867%
UK 10-year gilt -1.7 basis points to 4.378%

Yields on two-year US Treasuries rose on Friday following the release of employment data indicating that job growth slowed more than anticipated in December, while the unemployment rate declined. This combination of factors reinforced expectations that the Fed would maintain interest rates at their current level this month.

During December, employers added 50,000 jobs, falling short of the consensus estimate of 60,000. At the same time, the unemployment rate edged down to 4.4%, below economists’ forecast of 4.5%.

Although the Fed implemented an interest rate cut last month amidst division within the FOMC, it signalled that further reductions in borrowing costs are unlikely in the near term. The Fed minutes indicated it would await greater clarity regarding labour market conditions, which have begun to soften, persistent inflationary pressures, and anticipated economic growth in the coming year before adjusting rates further.

The yield on the two-year Treasury note, closely aligned with Fed rate expectations, rose +4.2 bps on the day to 3.536%, and briefly reached 3.543%, marking its highest level since 23^rd December.

In contrast, the yield on the 10-year Treasury note declined -2.4 bps to 4.175%, after briefly reaching 4.211%, its highest point since 4^th September. At the longer end of the curve, the 30-year Treasury bond yield fell -2.2 bps, contributing to a weekly decline of -5.6 bps.

Over the course of the week, the 10-year Treasury yield was -2.0 bps, while the two-year yield increased +4.8 bps. The yield curve flattened by 6.8 bps over the week to 63.9 bps.

According to CME Group's FedWatch Tool, Fed funds futures traders are pricing in 51.1 bps of cuts in 2026, lower than the 57.8 bps priced in the previous week. Fed funds futures traders are now pricing in a 4.4% probability of a 25 bps rate cut at January’s FOMC meeting, down from 16.6% a week ago.

Bund yields experienced a modest increase on Friday. However, they recorded their sharpest weekly decline since October, having retreated from nine-month highs amid subdued economic data releases.

Market activity was generally restrained in anticipation of the release of the US monthly nonfarm payrolls report for December.

German 10-year yields advanced +3.8 bps to 2.867% on Friday, but were -3.6 bps for the week. The premium for US 10-year Treasuries over German Bund yields stood at 130.8 bps, an increase of 1.6 bps from the previous week’s 129.2 bps.

The German 30-year yield edged up +0.4 bps on Friday to 3.473%. Last year, it reached 3.556%, the highest since July 2011 due to expectations of increased supply. The German 2-year yield, which is more responsive to monetary policy expectations, rose +1.1 bps to 2.116%. It was -3.4 bps for the week, while the 30-year yield was -6.7 bps.

The Italian 10-year yield fell -1.6 bps to 3.505% on Friday, resulting in a -11.3 bps fall for the week and narrowing the spread over Bunds to 63.8 bps, down from 71.5 bps the previous week.

The French 10-year yield was -0.7 bps, to 3.530% on Friday. It was -3.6 bps for the week, tightening the spread over Bunds to 66.3 bps from the prior week’s 71.2 bps.

Market participants continued to assign a very low probability to ECB policy easing in 2026, with current pricing suggesting approximately a 15% likelihood of a rate cut by this summer. Expectations are for the deposit rate to remain unchanged at 2% by December.

Note: As of 5 pm EST 9 January 2026

Global Macro Updates

December nonfarm payroll report. In December, nonfarm payrolls (NFP) increased 50,000, falling slightly short of the consensus estimate of a 55,000 to 60,000 gain. Additionally, figures for October and November were revised downward by a combined 76,000 positions. After accounting for these revisions, it appears that job growth in Q4 was virtually stagnant, with some estimates indicating that underlying private sector hiring may have been flat or even negative.

Employment gains remained highly concentrated in healthcare and social assistance, as well as in the leisure and hospitality sector. In contrast, retail trade experienced declines and federal employment showed no significant recovery following losses in October, contributing to the overall weaker headline figure. Furthermore, job gains were limited by an unusually modest seasonal adjustment boost during the period.

However, the unemployment rate declined to 4.4% from 4.5%. This is at least partially attributed to lower labour force participation and temporary disruptions related to shutdowns. The broader trend in unemployment remains upward.

Average hourly earnings rose 0.3% m/o/m, in line with expectations. On an annual basis, average hourly earnings increased by 3.8%, marginally above consensus forecasts.

The report likely takes a January rate cut off the table with the labour market showing tentative signs of stabilising and the unemployment rate improving.

US Supreme Court to rule on IEEPA. Contrary to expectations, the US Supreme Court did not issue a decision on Friday regarding the extent of presidential tariff authority under the International Emergency Economic Powers Act (IEEPA). The Court does not announce specific dates for rulings on individual cases, but market observers expect a decision soon since the case has been expedited. Some commentators have pointed out that the next possible date for an opinion is today, 12^th January.

The Supreme Court heard oral arguments on 5^th November, where up to six justices reportedly expressed doubts about the administration's broad interpretation of the act. Most analysts expect that Trump's IEEPA tariffs will be overturned, though some believe the decision might only affect reciprocal tariffs — which make up most of those imposed under the act — while allowing other uses to remain. Overall, analysts believe the outcome will reduce the effective US tariff rate; Yale's Budget Lab estimated it could fall from 16.8% to 9.3%.

Officials from the administration have suggested that the US President would likely seek alternative tariff authorities to preserve revenue, but these options have restrictions. Section 122 allows tariffs of up to 15% for five months, while country-specific rates under Section 301 require lengthy investigations, which the administration may not be able to complete quickly.

If the Supreme Court rules against IEEPA tariffs, previously collected tariffs — over $133 billion as of mid-December according to Reuters — may need to be refunded. However, importers who are not directly involved in the litigation could face a complicated claims process that might take several months to resolve.

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