Financial Markets Market Wrap January 2026

Key Trends

January closed with neutral headline sentiment but elevated event risk. Markets traded on ambiguous Fed signals and Fed‑chair uncertainty, while mixed big‑tech earnings produced sharp dispersion across names. FX flashpoints — most notably USD/JPY intraday stress and associated intervention chatter — together with a discrete US–Canada rift and commodity sensitivity, elevated cross‑asset volatility. Sector rotation favored energy and battery/EV exposures as commodity and industrial narratives outperformed growth‑oriented large‑cap tech.

Notable Events

Primary market movers: Fed communications that left the near‑term rate path uncertain; a wave of mixed results from major technology firms triggering outsized single‑stock moves; short, sharp USD/JPY moves that raised yen‑intervention risk; episodic geopolitical friction (US–Canada) and commodity‑price responses that amplified risk premia.

Performance

Outcome: growth/mega‑cap tech underperformed cyclicals through repeated earnings‑led selloffs, while energy and battery/EV equities delivered relative gains. Implied and realized volatility widened materially across technology equities and JPY crosses. Short‑term rates and money‑market pricing experienced intraday repricing as markets digested Fed messages and earnings surprises.

Outlook

Early February is likely to remain event‑driven and range‑bound. Expect continued volatility around Fed communications, the next tranche of big‑tech reports and any further FX/geopolitical shocks. Tactical positioning should prioritize liquidity and convexity management, while selectively leaning into energy/battery themes where commodity and supply‑chain signals remain constructive.