Explore the latest trends and strategic insights in the January 2026 edition of the “Market Compass.”
Global risk assets ended 2025 on a strong note, supported by a measured policy pivot in the United States and resilient earnings in AI-linked industries. With valuations in key markets already discounting a fair amount of optimism, we expect earnings growth to be the principal driver of returns in 2026. Selectivity remains paramount: investors are likely to reward companies with robust balance sheets, durable profitability, and reliable cash flow. Just as importantly, separating sustainable innovation from narrative-driven hype will be a critical success factor as the AI theme evolves.
Fed eases while ECB holds – The Federal Reserve cut the policy rate by 0.25% to 3.5% to 3.75% at its final 2025 meeting and signaled only one additional move in the new reporting period, with a further step penciled in for 2027. The Fed also unveiled “Reserve Management Purchases” of short-term Treasuries to bolster market liquidity, echoing prior balance-sheet expansions in 2008 and 2020. By contrast, the ECB left rates unchanged as euro area inflation sits above target and policy is viewed as neutral, suggesting a cautious 2026 path.
Swiss equities sprint into year-end – Since end Q3 2025, the SPI gained about 8.8%, outpacing the EuroStoxx50 (+4.7%), DAX (+2.6%), Nasdaq (+2.6%), and S&P 500 (+2.4%). A mid-November tariff dispute settlement with the United States and a September agreement between US President Trump and the pharmaceutical industry helped reignite momentum. Pharma leaders and mid caps rallied in Q4: Roche (+26.3%), Novartis (+9.5%), BB Biotech (+24.6%), and Sandoz (+22.6%).
Micron’s beat recharges the AI complex – Micron Technology topped estimates and surged 20.7% in December, with management highlighting AI infrastructure demand exceeding memory supply and projecting roughly 40% annual revenue growth through 2028. The read-across lifted the broader semiconductor space: Lam Research (+19.4%), TSMC (+15.4%), ASML (+12.9%), and Nvidia (+10.5%). The message is clear: earnings remain the arbiter of AI’s staying power.
EV leaderboard reshuffled – Tesla ceded its global EV crown to BYD in 2025 as deliveries fell 9% to 1.64 million vehicles, marking a second consecutive annual decline. BYD sold 2.26 million EVs, up 28% year on year, driven by successful expansion in Europe. Competitive intensity and regional mix will be key profit drivers in 2026.
Silver eclipses gold – Gold rose about 65% in 2025 after a 27% gain in 2024, aided by central bank buying, de-dollarization, tariff uncertainty, and US fiscal concerns. Silver outpaced dramatically, returning 148% as it benefited from the same macro tailwinds plus structural industrial demand in electrification, semiconductors, and EVs. With the gold-silver ratio near 60, close to its long-term 60-70 average, we remain constructive on both metals in 2026. Source: Bloomberg.
What’s next and how we are positioned – Q4 2025 earnings begin in the second week of January. Results from AI leaders will likely set the tone for US equities, either extending momentum or inviting consolidation. Our tactical stance favors quality: Cash 2/5, Fixed income 4/5 with a bias to USD and EUR investment grade, Equities 3/5 with preference for the United States and select opportunities in Japan, Vietnam, and very selectively China, and Alternative investments 3/5.
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