Financial markets started the year on a dynamic note. While the expected Santa Claus Rally never materialized, major indices are still in positive territory. By early January, as of Friday morning, the S&P 500 and Nasdaq were both up just over 1%, while the Dow Jones surged by 2.5%. One can only hope the old saying — “as the year begins, so it shall go on” — holds true. That said, there are plenty of factors working against equities, with geopolitics high on the list. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
Trump appears to have “smelled blood.” Realizing that laws and international rules — which he never particularly respected — deliver limited results, he launched the new year with an aggressive show of U.S. military power, giving markets no time to ease into January. A large-scale operation in Venezuela, threats toward Colombia and Mexico, seizures of Russian tankers, ambitions regarding Greenland, and other bold ideas quickly erased the holiday mood, forcing investors to adjust strategies amid presidential unpredictability.
Many expected Trump’s Venezuela operation to move global oil markets, but so far price reactions have been muted. Energy stocks, however, are rising, led by Halliburton (HAL). Venezuela has massive oil reserves, yet its production infrastructure is severely degraded, requiring heavy investment — an opportunity for U.S. equipment suppliers. Long-term forecasts remain risky, though: geopolitics rarely follow theory. Russia has limited leverage beyond escalating in Ukraine, but China has yet to respond — and when it does, it likely won’t be impulsive.
Clear beneficiaries of global uncertainty are gold and silver. Prices continue to climb, and the more chaos, debt, money printing, and budget deficits driven by populism appear, the brighter precious metals shine — just as they have for millennia. Silver also benefits from industrial demand, suggesting today’s prices may soon seem reasonable.
Labor market data was expected to be the highlight of the week. ADP reported just 41,000 new private-sector jobs in December, below expectations, following a November decline. Compared to late 2024, job growth has slowed sharply. JOLTS showed job openings falling to 7.2 million — the weakest since September 2024 — with unemployed workers exceeding vacancies by 685,000, the widest gap since 2017 (excluding the pandemic).
The official Labor Department report showed the economy added 50,000 jobs in December versus expectations of 70,000. According to the Peterson Institute, average monthly job growth last year was just 49,000 — historically low outside recessions, partly due to immigration policy changes. The bright spot was unemployment, which unexpectedly fell to 4.4%. Overall, labor data confirms ongoing cooling, increasing the odds of further Fed rate cuts.
Finally, Trump’s tariffs returned to center stage. The U.S. Supreme Court postponed its ruling on their legality. If overturned, tariffs would need to be rolled back — a complex process that could trigger widespread refund claims and legal chaos. The stakes remain high.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
