USA
The week’s macro narrative was “growth cooling, but not collapsing,” which kept the soft-landing base case intact and supported risk assets. Labor data were mixed: ADP showed only a modest rebound in private hiring (+41k in December), reinforcing the idea that jobs momentum is slowing, while Friday’s official report kept the unemployment rate low (down to 4.4% in December) but highlighted softer job creation and downward revisions—enough to revive “bad news is good news” hopes around eventual Fed easing. On the activity side, ISM Services pointed to resilient demand and sticky input costs—good for growth, but a reminder that inflation pressures hadn’t fully disappeared. Geopolitics also mattered: a U.S. operation in Venezuela drove a sharp bid in energy/defense, helping cyclicals and the Dow early in the week. Net result: major indices posted strong weekly gains—S&P 500 +1.6%, Nasdaq +1.9%, Dow +2.3%—as markets framed softer jobs as reducing upside risk to yields without signaling recession.
Europe
European equities rode the global risk-on impulse, with leadership from cyclicals and exporters as investors leaned into a “stabilization” view for growth while assuming the ECB remains broadly sidelined near term. By week’s end, the scoreboard was decisively positive: STOXX Europe 600 +2.23%, DAX +2.86%, CAC 40 +1.89%, FTSE 100 +1.82%, IBEX 35 +0.92% (all weekly). The UK market was additionally boosted by commodity sensitivity: the FTSE 100 hit a record above 10,000 during the week, supported by energy and defense gains tied to Venezuela-related headlines and a higher oil-risk premium. Overall, Europe’s outperformance reflected (1) cyclicals catching up as global growth fears eased, (2) commodity/defense tailwinds, and (3) positioning that was still not “too hot,” allowing a strong first full week of 2026 to extend.
Japan
Japan’s first full trading week was volatile but constructive, with global tech strength and a weaker yen underpinning exporters and semis. The week opened with a strong restart to 2026: Nikkei closed Jan 5 at 51,832.80 (+2.96% day/day) and TOPIX at 3,477.52 (+2.01%), both reflecting broad-based risk appetite. After midweek consolidation, indices ended modestly higher on the week: from Jan 5 to Jan 9, Nikkei ~+0.2% and TOPIX ~+1.1% (based on closes). The message from price action was that Japan continued to behave like a high-beta play on global growth/AI and currency trends—less about domestic data prints this particular week, more about positioning into cyclicals/tech as global recession odds were repriced lower.
China
China’s data flow reinforced a “patchy demand, targeted policy support” picture. A private services PMI slowed slightly to 52.0 in December (still expansion), with softer new business and continued employment weakness—consistent with uneven domestic momentum. Inflation prints showed the same duality: headline CPI rose to 0.8% y/y in December while the PPI stayed in deflation (-1.9% y/y), underscoring ongoing excess capacity even as food-driven CPI firmed. Markets reflected this split: Mainland risk assets did well—Shanghai Composite ~+2.4% from Jan 5 to Jan 9—while Hong Kong lagged, with Hang Seng ~-0.4% over the same window amid financial/property sensitivities and idiosyncratic event risk (e.g., HSBC’s move to take Hang Seng Bank private). Bottom line: China/HK ended the week with Mainland strength driven by improving sentiment and policy expectations, but Hong Kong restrained by sector mix and deal/property overhangs, keeping the regional equity signal more mixed than the U.S./Europe.