Market Update January 2026: Your Stock Market News

The year 2026 has started with an unusually high density of geopolitical events. Within just a few weeks, markets have had to digest military action, renewed territorial rhetoric and public pressure on key economic institutions. Such a concentration of headlines would typically unsettle financial markets more forcefully. Instead, markets have remained relatively resilient. This reflects a growing ability to differentiate between short-term political noise and developments that materially affect economic growth, liquidity and risk premia. For investors, the key task is therefore not to react to every headline, but to understand which geopolitical dynamics matter for asset allocation and through which channels they influence markets.

Geopolitical Developments

Geopolitical uncertainty increased meaningfully at the start of 2026 before easing somewhat over recent days. Markets have responded primarily through changes in risk premia rather than a broad repricing of growth expectations.

A major escalation point was the US operation in Venezuela and the arrest of President Maduro. Beyond the immediate shock, the critical issue for investors has been the broader implication. The event raised questions around international law and precedent, increasing uncertainty about potential diplomatic responses or retaliatory measures. From a market perspective, the impact has been concentrated in energy markets and emerging market sentiment. Oil prices incorporated a higher geopolitical risk premium, while developed equity markets reacted only briefly, reflecting the absence of immediate supply disruptions.

Tensions also intensified around Greenland following strong US rhetoric. The episode highlighted the strategic importance of the Arctic and triggered a firm European political response. This reinforced discussions around strategic autonomy, defence spending and reduced geopolitical dependency. Importantly, the tone shifted during and after the World Economic Forum in Davos. Messaging became more conciliatory and focused on negotiation rather than confrontation. This reduced near-term tail risks and supported a stabilisation in risk sentiment.

While the immediate escalation faded, the medium-term implications remain relevant. Europe’s push towards greater strategic autonomy is likely to translate into higher investment in defence, infrastructure and strategic industries. This is less a directional market driver and more a source of relative sector dispersion.

Another key development has been the renewed public confrontation between Donald Trump and the Federal Reserve. Persistent criticism of the Fed has increased investor sensitivity to institutional credibility. The most visible market impact has been in fixed income and currencies. US bond yields have incorporated a higher term premium, and the US dollar has shown intermittent weakness. Equity markets have remained comparatively resilient, supported by earnings momentum and growth expectations.

In the Middle East, unrest in Iran and escalating rhetoric have sustained a geopolitical risk premium in oil markets. Even without physical supply disruptions, energy prices have remained supported. Precious metals have benefited from this environment, as investors continue to seek protection against political and institutional uncertainty. Overall, geopolitics at the start of 2026 has increased volatility but has not derailed markets. The dominant transmission channels have been commodities, rates and currencies rather than equities. Diversification and disciplined risk management therefore remain essential.

Market Developments by Asset Class

Equities

Equity markets have started the year on solid footing. Earnings momentum remains the dominant driver, particularly in the United States, where investment in technology and artificial intelligence continues to support profit growth. Valuations remain elevated but have so far been justified by earnings delivery.

Outside the US, relative dynamics are improving. European equities have benefited from stabilising macro data and a broader earnings recovery. Emerging markets have gained renewed attention as growth expectations improve and valuation gaps versus developed markets remain attractive. A notable trend is the gradual broadening of earnings leadership beyond US mega-cap technology. Several Asian economies are showing improving profit trends, supported by domestic demand and industrial policy. This reduces concentration risk and supports a more balanced global equity outlook. Swiss equities have shown a more mixed start to the year. The market continues to benefit from its defensive characteristics, with large-cap names in healthcare and consumer staples providing earnings stability and downside protection. At the same time, the strong Swiss franc remains a headwind, particularly for export-oriented companies and cyclically exposed mid-cap stocks.

Valuations in parts of the Swiss market remain demanding, reflecting the high quality and resilience of earnings. This limits near-term upside but supports relative stability in periods of elevated uncertainty. Financials have benefited modestly from higher interest rates, while industrials remain sensitive to global growth expectations and currency developments. Overall, Swiss equities remain well positioned as a stabilising component within diversified equity allocations, offering resilience rather than high beta exposure to global growth.

Bonds

Fixed income markets face a more challenging environment. Inflation continues to moderate across most developed economies, but bond yields have moved higher due to supply pressure and concerns about political influence on monetary policy.

Investment-grade credit appears particularly unattractive at current levels. Credit spreads have tightened while issuance volumes have increased sharply. This combination offers limited compensation for duration and credit risk.

Government bonds remain sensitive to expectations of future rate cuts. Markets continue to price monetary easing later in the year, but near-term policy remains restrictive. This suggests limited short-term upside and continued volatility.

Bond allocations therefore require selectivity, careful maturity management and diversification rather than broad exposure.

Real Estate (Switzerland)

Swiss real estate remains supported by structurally limited supply and resilient demand, particularly in the residential segment. Low vacancy rates in urban areas continue to underpin stable rental income.

The stabilisation of interest rates has improved valuation visibility. While higher financing costs have reduced transaction activity in recent years, price pressure has eased and the market is normalising. Listed Swiss real estate remains sensitive to long-term yields.

Commercial real estate is more differentiated. Prime assets in central locations remain resilient, while secondary properties face ongoing pressure. Overall, Swiss real estate continues to offer diversification benefits and stable cash flows.

Commodities

Commodities have regained strategic relevance. Improving global growth expectations, elevated geopolitical risk and a weaker US dollar have supported the asset class.

Industrial metals stand out due to constrained supply dynamics. Increased merger and acquisition activity suggests that expanding supply organically remains difficult. This supports medium-term pricing for metals linked to electrification, infrastructure and technology.

Energy markets remain volatile but supported by geopolitical risk premia. Precious metals continue to benefit from political uncertainty and concerns around institutional credibility. Commodities increasingly serve both cyclical and defensive roles within diversified portfolios.

Everon Strategies and Portfolio Positioning

Income Strategy

The income strategy delivered an exceptionally strong performance in 2025, supported by both a favourable market environment and its underlying construction.

The year was well suited to income-oriented strategies. Elevated interest rates increased the attractiveness of visible cash returns, while heightened geopolitical and macro uncertainty led investors to favour companies with stable earnings and reliable dividend policies. Dividend-paying stocks also benefited from a broader rotation towards quality and defensiveness during periods of market volatility.

In Switzerland, the strategy performed particularly well. It achieved a return of 25.5%, outperforming the iShares CHDVD Swiss Dividend ETF by 6 percentage points. This outperformance was not solely driven by style tailwinds, but also by disciplined stock selection and a focus on dividend sustainability rather than headline yield. Sector positioning and balance-sheet quality further supported results in a year with high dispersion among dividend stocks. Overall, the performance underscores the strength of the income approach. While the 2025 environment provided a tailwind, the strategy’s emphasis on sustainable cash flows, valuation discipline and downside resilience was the decisive factor behind its outperformance.

Everon Income Strategy (Switzerland)

The Everon Income Strategy delivered strong outperformance in 2025, benefiting from a favourable environment for dividend-paying stocks and disciplined stock selection focused on sustainable cash flows and balance-sheet quality.

Multifactor Strategy

The multifactor strategy underperformed major benchmarks in 2025 due to its deliberate construction and a particular market regime.

Equity markets were highly concentrated, with a small number of mega-cap stocks accounting for a disproportionate share of index returns. This strongly favoured capitalisation-weighted benchmarks. By design, our strategy applies equal weighting and diversified factor exposure. This reduces structural concentration risk and promotes broader participation across stocks, but it naturally lags in periods when performance is driven by a narrow group of index heavyweights.

Momentum effects were unusually concentrated and unstable throughout the year, which further increased dispersion. These dynamics were most pronounced in North America.

This outcome is fully consistent with a disciplined multifactor approach. Factor strategies are not intended to replicate benchmark concentration, but to deliver robust, diversified returns across full market cycles. Periodic divergence from cap-weighted indices is therefore an inherent feature, not a weakness. We remain fully committed to the multifactor approach. To further strengthen robustness, we are refining the weighting implementation in North America by introducing a more blended structure that combines equal weighting with market-cap sensitivity, while preserving the core principles of diversification and factor discipline. In early 2026, the Swiss Multifactor Strategy has already outperformed the SMI by approximately 3% year-to-date, while performance in the US and European allocations is broadly in line with their respective benchmarks.

Market Breadth – S &P 500 Participation

Market participation has improved significantly at the start of 2026. Around 65% of S&P 500 stocks are outperforming the index year-to-date, indicating a broader and more balanced market structure compared to previous years.

Conclusion and Outlook for 2026

Despite an eventful and politically charged start to the year, the underlying market environment remains constructive. Economic growth is holding up better than expected, earnings momentum continues to support equities, and financial conditions are gradually becoming more supportive.

Markets currently anticipate interest rate cuts over the course of 2026, particularly in the United States and parts of Europe. While the timing and pace remain uncertain, the direction of travel points towards a more accommodative monetary stance. This expectation provides an additional tailwind for risk assets and supports valuations, especially for equities and real assets.

Geopolitical risks have increased and are likely to remain a feature of the investment landscape in 2026. However, markets have so far treated these risks as manageable rather than systemic. Commodities and real assets continue to play an important role as portfolio diversifiers and hedges against geopolitical and inflation-related risks. Fixed income requires a selective approach given valuation levels and supply dynamics.

Overall, we maintain a cautiously optimistic outlook for the year. Performance in 2026 may be front-loaded, supported by earnings growth and expectations of easier monetary policy later in the year. At the same time, higher dispersion across regions and asset classes reinforces the importance of active management.

At Everon, we remain constructive but disciplined, focusing on diversification, valuation awareness and structural growth opportunities in an environment where political uncertainty and market volatility are likely to persist.