Markets Enter 2026: Commodities Volatility, AI Weakness and Crypto Rebound

Source: Connect Weekly | Week ending 3 January 2026

Markets entered 2026 on an unsettled footing as Big Tech weakness, sharp moves in commodities, and renewed geopolitical risk disrupted what had been a strong close to 2025. De-risking across equities and crypto dominated the final trading days of the year, before a partial rebound led by AI hardware, energy and crypto. Early trading in Asia suggests investors are, for now, willing to look through the weekend’s geopolitical shock.

Why Markets Sold Off at the Start of 2026

Monday opened with a broad selloff led by Big Tech, dragging all three major US indices lower. Energy stocks stood out as the lone bright spot as oil prices rose on escalating tensions between the US and Venezuela.

Precious metals saw violent moves. Gold pulled back from record highs, while silver briefly touched a record $84 per ounce before reversing sharply, highlighting stretched positioning and crowded trades across the complex.

Commodities, Crypto and Cross-Asset Signals

Tuesday’s focus shifted away from index direction toward cross-asset dynamics. Silver extended its pullback as momentum cooled, though physical-market signals from Asia and China continued to point to tight supply.

In crypto, on-chain data showed long-term Bitcoin holders turning net buyers for the first time in months, suggesting selling pressure may be easing. Meanwhile, European small-cap defence stocks extended gains on fresh contract wins, and North Sea oil names staged a notable rebound as energy security re-entered the narrative.

Big Tech Weakness Closes Out 2025

Wednesday, the final trading day of 2025, saw stocks end the year on a sour note. All sectors closed lower, with technology stocks hit hardest. Every Magnificent Seven name finished in the red.

Despite the weak finish, the broader picture remained constructive. The S&P 500 gained 16% in 2025, recording 39 all-time highs, while the Nasdaq 100 rose 20%. Select stocks bucked the trend, including Trump Media on digital-token plans, Nike following insider buying, and TSMC after Nvidia requested increased H200 chip production.

AI Hardware Leads Early-Year Rebound

After Thursday’s New Year’s Day holiday, markets stabilised on Friday. The S&P 500 snapped a four-day losing streak, supported by renewed interest in AI hardware and infrastructure.

Chipmakers, memory suppliers, neoclouds and AI-adjacent energy stocks all rallied as investors leaned into a “new year, same AI” reset. Crypto rebounded alongside equities, with Bitcoin and meme coins posting strong gains. In contrast, downstream AI software and hyperscalers lagged, while Tesla extended its longest losing streak on record after disappointing delivery numbers.

Geopolitical Shock Fails to Rattle Markets

The weekend brought a dramatic geopolitical development as the US captured Venezuelan President Nicolás Maduro and announced temporary control over the country.

Despite the severity of the headlines, market reaction was muted. Oil prices dipped, Asian equity indices hit fresh record highs, and US futures traded modestly higher. Strategists broadly viewed the move as geopolitically significant but not immediately destabilising for global markets.

What Investors Are Watching Next

The first full week of 2026 brings a heavy macro calendar, led by US employment data and a series of Federal Reserve speakers that will help shape expectations for early-year policy.

Energy markets will continue to monitor developments in Venezuela, while commodities and crypto remain key sentiment barometers after last week’s sharp swings. With Asia brushing off geopolitical headlines and AI investment still acting as a structural tailwind, investors appear willing to selectively add risk — though volatility is likely to remain elevated.

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