Stocks opened the new year on a positive note with artificial intelligence and technology companies dominating market sentiment. Precious metals also advanced.
The market direction this year will be shaped by AI, the change of guard at the Federal Reserve and potential market turbulence under US President Donald Trump, according to experts.
“Stocks have entered 2026 on a positive footing, buoyed by themes that defined much of last year’s rally,” said Tony Hallside, chief executive of Dubai-based advisers STP Partners. He added that strong momentum around AI and the semiconductor sector continues to support gains, alongside renewed investor interest in precious metals.
“The broader optimism is being fuelled by expectations of improved corporate earnings and the belief that last year’s key growth drivers, particularly in technology, still have room to run. That said, markets remain mindful of potential headwinds, including uncertainty around US monetary policy and elevated valuations in some segments. As the year begins, the prevailing sentiment is cautiously optimistic,” Mr Hallside said.
Stock performance
Markets in Japan and China were closed. Broader Asian markets rallied, with Hong Kong's Hang Seng Index gaining 2.76 per cent at 1.38pm on Friday, while South Korea’s Kospi climbed 2.27 per cent. India's main stocks measure, the BSE Sensex Index, advanced 0.64 per cent and Australia’s S&P/ASX 200 rose by 0.15 per cent.
S&P 500 mini equities futures are up 0.63 per cent while Nasdaq 100 futures gained 1.09 per cent. The UK’s FTSE 100 rose above 10,000 points for the first time on Friday.
In the Gulf, the Dubai Financial Market gained 0.77 per cent and Abu Dhabi Securities Exchange was up by 0.36 per cent.
The Saudi Tadawul All Share Index, Qatar Stock Exchange, Kuwait's main market, Bahrain's bourse and Muscat Stock Exchange remained closed.
“Across the region, economic reforms are bearing fruit and driving the investment case,” Hasnain Malik, head of emerging and frontier market investment strategy at Tellimer, told The National.
“But a stable oil price, after last year’s almost 20 per cent drop, is probably key for most investors to re-engage with the largest regional market, Saudi Arabia, where valuations are the cheapest relative to historical average.”
In 2025, global equity benchmarks posted strong returns: the FTSE 100 gained more than 21 per cent, while the S&P 500 and Nasdaq 100 posted returns of 16.4 per cent and 20.1 per cent, respectively.
Easing inflation, expectations of interest-rate cuts, and resilient corporate earnings, with monetary policy, growth momentum, and geopolitics are set to be the key forces shaping equities this year, according to Vijay Valecha, chief investment officer at Dubai-based Century Financial.
Longer-term themes like AI, decarbonisation and shifting supply chains will continue to shape equity market outperformance, he said.
“Local and regional stock markets are benefiting from these positive global trends, driven by steady domestic growth, better liquidity and continuing government spending on infrastructure and economic diversification,” Mr Valecha added.
“In the Gulf, strong government finances, high energy income and new initial public offerings are keeping market confidence high.”
Mohanad Yakout, senior market analyst at Scope Markets, said investors are also benefiting from strong liquidity, resilient consumer spending in major economies and the “January effect”, where fresh capital flows into markets.
Gold and silver extend rally
Precious metals extended their rally from last year, with spot gold up 1.16 per cent to $4,375.16 an ounce, while spot silver jumped 3.33 per cent to $73.84 per ounce.
Bullion’s rise in 2025 was its biggest in 46 years, while silver and platinum made their largest gains on record.
“2025 was a year that will be remembered as a landmark period for precious metals, with gold and silver overwhelmingly outpacing broader financial markets,” according to Mr Valecha.
“This strong run in precious metals was supported by several key factors working together. Interest rate cuts around the world made non-yielding assets like gold and silver more attractive, while continuing geopolitical tensions and economic worries pushed investors towards safe-haven options.
“Central banks' persistent buying of gold in their treasuries also added to the positive momentum. Investor interest has also been clearly visible in ETFs, with gold-backed funds seeing 15.6 million ounces of net inflows and silver ETFs adding 148.3 million ounces, showing solid confidence from both retail and institutional investors.”
Bitcoin gains
The overall optimism also spilt into cryptocurrencies. Bitcoin, the world’s largest cryptocurrency, gained 1.37 per cent to trade at $88,696.64.
The digital asset reached a new all-time high of approximately $126,000 in early October, supported by growing optimism around regulation and strong inflows into newly launched spot Bitcoin ETFs. However, these gains were reversed in the fourth quarter as risk-off sentiment took hold.
“Looking ahead to 2026, the crypto sector continues to evolve as more financial activity moves on-chain,” said Farhan Badami, market analyst at eToro.
“Supported by clearer regulation and growing participation from banks and FinTech firms, crypto is increasingly being viewed not as a short-term trade, but as a long-term allocation within a diversified investment portfolio.”
