Must read: US earnings, inflation, UK retail sales, UBS, Iran

GLOBAL MARKETS

European markets have opened flat despite geopolitical instability. Whitbread (LSE:WTB) is the top gainer on the FTSE 100 thanks to upbeat Q3 results. Other European movers include Zalando SE (XETRA:ZAL) which is up 5% thanks to a broker upgrade from Barclays and Games Workshop Group (LSE:GAW) which is down after its first-half results.

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In terms of economic data, UK retail sales grew by 1.2% in December, according to the British Retail Consortium, compared to a 12-month average of 2.3%. This is a disappointing figure during what is meant to be the most important month of the year for spending. It was described as a ‘drab Christmas’ with non-food sales falling by 0.3% versus growth of 4.4% in December 2024 as wet weather and discounting hurt spending.

According to the FT, UBS CEO Sergio Ermotti plans to step down in April 2027. He was in charge between 2011 and 2020 and was brought back in 2023 to help the Swiss lender navigate its takeover of embattled cross town rival Credit Suisse. His leadership has been a massive success judging by the bank's share price which has soared over 100% since his reappointment. Aleksandar Ivanovic, UBS’ asset management boss is being touted as Ermotti’s potential successor.

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In the United States, US futures are pointing lower after modest gains on Wall Street on Monday. Investors are gearing up for the start of earnings season, with JPMorgan Chase & Co (NYSE:JPM) set to kick things off. Elsewhere, the latest US annual inflation rate will be closely watched today, with expectations for a reading of 2.7% in December and a slight rise in the core rate to 2.7%.

Trump’s decision to open a criminal investigation into Federal Reserve Chair Jay Powell has sparked criticism even from within the Republican Party. The Fed has been operationally independent from government since 1951. Central bank independence has long been a key factor promoting effective monetary policy decisions by allowing Federal Open Market Committee (FOMC) members to decide on interest rates based on the inflationary and employment backdrop, free from political pressures. This uncertainty has further boosted demand for safe-havens like gold and silver this week.

In Asia, Japanese equities soared, with the Nikkei up over 3% at fresh all-time highs, fuelled by speculation of a snap election potentially as early as next month and as the index plays catch up with Wall Street’s rally after Monday’s national holiday in Japan.

OIL

Brent crude and WTI are staging gains, rallying to two-month highs. President Trump announced new 25% tariffs on ‘any Country doing business with the Islamic Republic of Iran’, in a move that is likely to hit its biggest trading partners like China.

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Brent has been on a downward trajectory since prices soared in 2022 following Russia’s invasion of Ukraine. More recently, a combination of a glut of supply and a subdued demand outlook have kept a lid on prices with expectations for further weakness this year.

However, mass protests in Iran in response to its economic crisis and the subsequent announcement of Trump's tariffs have created supply uncertainty from OPEC’s fourth-largest producer and a near-term increase in oil prices.