Geopolitics in focus at the start of 2026, markets resilient despite uncertainty
13 JAN, 2026
By Anthony Willis, Investment Manager, Columbia Threadneedle Investments
From a geopolitical news flow perspective, the opening of 2026 is proving particularly intense, with attention focused on several fronts, including Venezuela, Iran, and Greenland. This comes within a context where, at least so far, financial markets have shown a strong ability to absorb events, remaining broadly unshaken.
Just over a week after the removal of Venezuelan President Maduro by the United States, talks are now emerging between major US oil companies and President Trump to assess possible future developments. At present, there appears to be no intention by the US administration to intervene directly, beyond allowing the new Venezuelan president, Delcy Rodríguez, to retain control of the country, while maintaining an implicit threat of intervention in the background.
It is nevertheless clear that any increase in Venezuelan oil supply would require a long timeframe, significant capital expenditure, and above all a stable political environment before US companies could commit substantial financial resources. The recent rise in oil prices observed toward the end of last week reflects expectations that this will be a complex and lengthy process.
At the same time, developments in Iran continue to dominate headlines. Protests that began in late December, initially triggered by the closure of numerous businesses in protest against rising living costs, have steadily intensified. The Iranian currency, the rial, has depreciated by approximately 40% since last summer, and discontent now appears to be broadening into a more general challenge to the government. Calls for change are becoming more explicit, while levels of violence are increasing.
In this context, statements by the United States regarding a possible form of intervention represent a significant risk factor, as any escalation could materially damage market sentiment, particularly given the likely response from Iran toward both the United States and Israel.
With regard to Greenland, there appears to be ample scope for a compromise solution. While Greenland is an autonomous territory, it is part of Denmark and therefore of NATO, making it already a US ally in practice. Washington has maintained a military presence on the island for more than seventy years. Although the current contingent is limited to around 200 personnel, it has been significantly larger in the past and could be rapidly reinforced should concerns grow over Chinese and Russian influence in the Arctic region.
More sensitive, however, is the news that emerged over the weekend suggesting that Federal Reserve Chair Jay Powell may be subject to criminal charges related to alleged misleading statements made to Congress regarding the costs of renovating the central bank’s headquarters. This likely represents the most immediate threat to market sentiment, as past experience shows that any doubt surrounding the independence of the Federal Reserve is swiftly penalized by investors.
Powell has strongly rejected the accusations, arguing that the issue does not involve cost overruns or alleged fraud, but is instead linked to pressure for further interest rate cuts. A perception of diminished central bank independence poses a tangible risk to financial markets, as already hinted by the recent upward movement in gold and silver prices.
