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Fears over AI spending sparked a massive selloff that saw Amazon, Microsoft, Nvidia, Meta, Alphabet and Oracle shares collectively have more than $1tn wiped off their valuations last week.

Amazon’s market capitalisation fell over $300bn after they released their fourth quarter earnings report and announced that their capital expenditure is expected to reach $200bn in 2026, $50bn more than expected. Despite beating revenue expectations, Alphabet shares also fell after they said they expect to spend between $175bn and $185bn in 2026, more than double their 2025 capital expenditure…

At the moment, it feels like every morning brings another shock, more alarming headlines and something else to worry about. Last year, the turmoil of Liberation Day didn’t arrive until April. This year, we’re barely through January and chaos already seems to reign. Markets are being pulled in multiple directions by short-term events but, if you strip away the noise, a small number of themes continue to shape the investment landscape. AI, energy and inflation are prime examples.

Despite pressure from President Trump, the Federal Reserve voted to keep its key lending rates unchanged at 3.5% to 3.75%. The Fed’s statement was quite positive on the state of the US economy, saying activity has been “expanding at a solid pace” and that while new jobs have “remained low”, “the unemployment rate has shown some signs of stabilisation.”

On Friday, Trump nominated Kevin Warsh to replace the outgoing Jerome Powell as the new Fed Chair. Warsh worked as a Fed governor from 2006 and 2011. He’s been an open critic of the Fed in recent years…

The year started not with a whimper, but with a bang. On 3 January, Donald Trump ordered and successfully carried out a military strike in Venezuela, resulting in the ‘extraction’ of its President, Nicolás Maduro. The action has many layers and, while it’s too early to gauge the full impact on markets, the initial reaction has been muted…

Markets started the week poorly after President Trump threatened eight European Nato allies with new tariffs in his push for the US to take “ownership” of Greenland. On Tuesday, US markets had their worst day since October with the S&P 500 finishing down 2.1% and the Nasdaq falling 2.4%.

They steadied on Wednesday after Trump told the audience at Davos that he “won’t use force” to take Greenland…

Equity markets finished the year on a strong note with most regions delivering double digit returns over the period and hitting all-time highs. This was achieved despite several potential headwinds including Trump’s tariff hikes, growing concerns about technology valuations and recent concerns of a potential Chinese slowdown.
Looking at December, the UK was a strong performer, returning +2.3%, bolstered by strong corporate earnings and the hope for further rate cuts, and finished the quarter as the best performing equity market…