It was a busy week on global markets. Europe continued its march toward new all-time highs, while Wall Street struggled with the banking earnings season and a particularly active President Trump in his comments. In China, however, the authorities decided to apply the brakes on a rally that was perhaps running too fast. Let's see what happened.

Europe: the race doesn't stop

European markets had another remarkable week. The STOXX 600 hit 614.38 points, a new all-time high that caps a decidedly strong start to 2026. The German DAX closed at 25,297 points, while the Euro STOXX 50 settled at 6,029 points. But the most interesting thing isn't the numbers themselves, but the context in which they were reached.

While the headlines are buzzing about possible US military intervention in Iran, tensions over Greenland, and the capture of Venezuelan President Maduro, European stock markets seem to be living in a parallel dimension. Investors have simply shrugged their shoulders in the face of all this. And this isn't naivety: the reasoning is that as long as oil doesn't suffer significant shocks and central banks maintain accommodative policy, the fundamentals will hold up.

The real star of the week, however, was the technology sector. ASML, the Dutch chipmaking machinery giant, soared 6-7% following stellar results from TSMC, which reported a 35% increase in fourth-quarter profits. Semiconductors continue to be the barometer of AI enthusiasm, and that barometer is reading very high.

Also noteworthy is the pharmaceutical sector: Bayer gained 7% after Finnish partner Orion forecast strong growth for its drug darolutamide. AstraZeneca and Sanofi both closed up 2.5%. In the mining sector, Glencore hit a new 52-week high amid speculation about a possible mega-merger with Rio Tinto that would create the world's largest mining group.

USA: Wall Street between banks and uncertainties

Across the pond, the music was different. The S&P 500 closed the week in negative territory, settling at 6,940 points on Friday, a decline of 0.06%. The Dow Jones lost 0.17% to close at 49,359 points, while the Nasdaq fell 0.06% to 23,515 points. Small numbers, yes, but they interrupt a positive streak and reflect a decidedly eventful week.

The market opened sharply lower on Monday after the Department of Justice announced the opening of a criminal investigation into Federal Reserve Chairman Jerome Powell. The investigation reportedly concerns his remarks before the Senate regarding the renovation of the Fed's buildings, but Powell himself characterized the move as a further attempt by the Trump administration to influence monetary policy. Markets reacted poorly, at least initially.

Bank earnings season has brought mixed results. JPMorgan beat expectations for both revenue and earnings, but the stock fell 4.2% on Tuesday. The reason? Investors were unhappy with the decline in investment banking fees and, especially, CFO Jeremy Barnum's comments, which suggested the industry might oppose Trump's proposal to impose a 10% cap on credit card rates. Goldman Sachs and Morgan Stanley, on the other hand, shone, with gains of 4.6% and 5.8%, respectively, thanks to better-than-expected trading and dealmaking results.

On the macroeconomic front, December inflation data were in line with expectations: the CPI rose 0.3% month-over-month and 2.7% year-over-year. Core inflation, excluding energy and food, rose 2.6% year-over-year, slightly below expectations of 2.8%. This reinforced expectations that the Fed will keep rates unchanged at its next meeting.

The semiconductor sector benefited from the TSMC effect: Nvidia rose 2.1%, AMD 1.9%, and Applied Materials gained 5.6%. Chips remain the beating heart of the American market, and every positive sign from the world of AI is amplified.

China: Regulators apply the brakes

The Chinese situation deserves special analysis. The Hang Seng closed the week at 26,845 points, an overall gain of 2.5%, while the Shanghai Composite lost 0.45% to 4,103 points. The Shenzhen Component gained 1.14%. But behind these numbers lies a more complex story.

The news of the week came on Wednesday, January 14: the Shanghai, Shenzhen, and Beijing stock exchanges announced they were increasing the margin requirement for leveraged purchases from 80% to 100%, effective January 19. In effect, those wishing to buy shares on margin will now have to pay the full value of the transaction, effectively eliminating leverage on new contracts. This represents a sharp reversal from the stimulus policy adopted in August 2023, when the margin requirement was reduced specifically to support volumes.

Beijing's message is clear: they want a slow and sustainable bull market, not a speculation-fueled rally. As one local fund manager summarized, the authorities want to avoid an overheated market. The move immediately dampened enthusiasm, with the CSI 300 erasing a 1.2% gain to close in the red immediately after the announcement.

The other big story of the week in China concerns Trip.com. The online travel giant, Asia's largest by market capitalization, plunged 18.7% after antitrust regulator SAMR announced the opening of an investigation into alleged abuse of a dominant position and monopolistic practices. The investigation comes just before the Lunar New Year, when hundreds of millions of Chinese will travel for the holidays. Trip.com has said it will cooperate with authorities, but the stock's decline has been brutal: the worst since its listing in Hong Kong in 2021.

On the monetary policy front, a People's Bank of China official stated that the central bank still has room to cut both banks' reserve requirements and benchmark interest rates this year. Rates on the one-year refinancing facility will fall 25 basis points to 1.25% from 1.5% starting Monday. This signals support for the real economy, even as speculation tightens.

Also noteworthy is the US-Taiwan trade deal announced this week: TSMC will build new factories in Arizona as part of a $250 billion investment, while Washington will reduce tariffs on Taiwanese products from 20% to 15%. The news has boosted sentiment on Hong Kong, even as tensions between China and the US remain a constant undercurrent.

Looking forward

Next week will be crucial for China, with the release of fourth-quarter GDP and December industrial production and retail sales data. In Europe and the United States, attention will focus on evolving geopolitical tensions and the Trump administration's rhetoric, which continues to keep markets on edge with announcements and counter-announcements. New margin rules in China will come into effect on January 20th; it will be interesting to see how volumes react.