Financial markets in Japan are reacting swiftly to growing speculation of a major tax shift ahead of an expected early election. While government bond yields are spiking over fiscal concerns, investors are pouring into food-related shares.

The anticipated move to reduce or even scrap the sales tax on food has driven gains in consumer staples, reports Bloomberg, but it’s triggering alarm in debt markets already wary of the country’s spending levels.

Food stocks rise on tax cut hopes

Shares in Japan’s food industry jumped after reports signalled a potential two-year tax exemption on food and beverages. Yamazaki Baking Co. gained as much as 7.4%, while the Topix Foods index climbed 2.2% to the day’s high.

Broader market performance was weaker, but the food sector outperformed, buoyed by expectations that tax relief would directly support consumer spending.

The tax reduction is expected to begin as early as January, according to Japanese news outlet Kyodo.

Chief Cabinet Secretary Minoru Kihara confirmed the ruling Liberal Democratic Party is evaluating the plan.

The proposal aligns with campaign strategies as both ruling and opposition parties gear up for a national vote, possibly on 8 February.

Bond market reacts to fiscal concerns

While equities in specific sectors rallied, government bonds declined sharply.

The 10 and 20-year yields rose about 10 basis points, reaching levels last seen in 1999. Meanwhile, the 30 and 40-year yields increased around 15 basis points, pushing them to record highs since their respective issuances.

This shift highlights growing doubts about Japan’s fiscal discipline.

Market participants are concerned that any cuts to the consumption tax would widen the fiscal deficit.

The government already faces a heavy debt burden, and any loss in tax income may prompt increased bond issuance.

An annual shortfall of ¥5 trillion, or $31.7 billion, is projected if the cut goes ahead.

Opposition outlines alternative funding

The Centrist Reform Alliance, a newly formed opposition group, has proposed financing the tax reduction through a government-managed fund.

This initiative is aimed at making the food tax cut more palatable to investors by offering an alternative to direct spending.

However, the plan’s details remain limited, and market response has been cautious.

With both major political blocs supporting reduced taxes on essential goods, attention has turned to how the move will be funded.

Investors are bracing for more pressure on bond prices if the government fails to outline credible fiscal safeguards.

Currency holds steady amid mixed signals

The Japanese yen saw slight gains after the US dollar weakened in response to global geopolitical tensions.

President Trump’s tariff threats against Europe, tied to unrelated negotiations, briefly affected currency markets.

However, the yen’s overall response to Japan’s domestic policy developments remains subdued.

Experts suggest that ongoing concerns about Japan’s debt and tax revenue shortfall are keeping the currency in check.

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The FTSE 100 Index held steady near its all-time high of £10,250 as the recent bull run stalled amid a new tariff war between the US and the UK. It was trading at £10,200, up by 35% above the lowest level in April last year. It has jumped by 3% this year.

FTSE 100 Index steady after Trump tariff threat 

The FTSE 100 Index reacted mildly to the new tariff threat from Donald Trump during the weekend. He warned that the US will implement additional tariffs on goods shipped from the UK and other European countries starting from February 1.

The tariff rate will then grow to 25% in June if the United States does not complete or made progress on its purchase of Greenland. 

Therefore, the ongoing performance of the Footsie is a sign that investors anticipate that the tariff threat will not be implemented. Also, the index has jumped to a record high after the US implemented its tariff last year.

Additionally, there is a likelihood that the Supreme Court will strike down these tariffs as soon as Tuesday this week.

Key catalysts for UK stocks this week 

The FTSE 100 Index will have some more catalysts this week. First, there will be some earnings this week, which will shed more color on the performance of key companies. Some of the top companies that will release their numbers this week are Burberry, JD Sports, JD Weatherspoon, Curry’s, Associated British Foods, and Harbour Energy.

These earnings will come in the same week that more American companies will publish their financial results. Some of the most notable of these companies are Netflix, GE Aerospace, Johnson & Johnson, and Procter & Gamble.

The FTSE 100 Index will react to key macro data from the UK, which will provide more information about the state of the economy. 

The Office of National Statistics (ONS) will publish the latest jobs report on Tuesday, with economists expecting the report to show that the unemployment rate improved from 5.1% in October to 5% in November.

Additionally, the UK will release the December consumer and producer inflation report on Wednesday. Economists expect the upcoming report to show that the headline CPI rose from 3.2% in November to 3.3% in December, while the core CPI moved to 3.3% as well.

If these numbers are accurate, it means that the Bank of England (BoE) will likely maintain its interest rates unchanged in the coming months. This explains why the ten-year Gilt yield has jumped from 4.3% in January 14 to the current 4.41%.

The ONS will then release the latest retail sales data on Friday this week.

FTSE 100 Index technical analysis

The daily timeframe chart shows that the FTSE 100 Index has rebounded in the past few months, moving from a low of £7,538 in April last year to the current £10,220. 

It recently moved above the important resistance level at £9,920, its highest level on November 12.

The Relative Strength Index  (RSI) and the Percentage Price Oscillator (PPO) have continued rising, with the former moving to the overbought level of 73.

Therefore, the most likely scenario is where the index continues rising as bulls target the next key resistance level at £10,500. A move above that level will point to more gains, potentially to the psychological level at £11,000.

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US spot bitcoin exchange-traded funds recorded their strongest weekly inflows in more than three months last week, underscoring renewed institutional demand even as the broader crypto market turned sharply lower at the start of this week amid escalating geopolitical tensions.

According to data from SoSoValue, US spot bitcoin ETFs attracted a combined $1.42 billion in net inflows in the week ended January 16.

This marked the highest weekly total since early October, specifically the week ended October 10, when inflows were last at similar levels.

BlackRock’s iShares Bitcoin Trust (IBIT) accounted for the bulk of last week’s inflows, pulling in $1.03 billion over the five-day period.

The surge in ETF demand coincided with a strong move higher in Bitcoin prices, with the world’s largest cryptocurrency climbing to around $97,000 toward the end of the week, up from roughly $90,500 at the start of the period.

The rebound in prices and flows suggested that institutional investors were returning to the market after year-end portfolio rebalancing and a volatile stretch in November and December.

Market participants viewed the magnitude of the inflows as a sign that demand for regulated Bitcoin exposure remains robust when macro conditions are supportive.

Spot Ethereum ETFs also saw a notable pickup in activity. Ether-linked funds recorded $479 million in net inflows last week, their strongest weekly inflow total since the week ended October 10, mirroring the recovery in bitcoin-related products.

Bitcoin pulls back on geopolitical headlines

The positive momentum, however, proved short-lived. Bitcoin retreated over the weekend and into Monday after headlines emerged around rising tensions between the United States and the European Union related to Greenland.

Bitcoin fell about 2.6% over the past 24 hours to around $92,618, down from roughly $95,400 earlier in the day.

The broader cryptocurrency market also came under pressure, with major altcoins such as Ether, Solana, and Cardano sliding in tandem with Bitcoin.

The selloff coincided with a broader risk-off move in traditional markets following mutual tariff threats between Washington and Brussels.

While crypto markets traded through the weekend and initially appeared to ignore the news, selling accelerated once Asian markets opened.

Tariff threats spark risk-off mood

US President Donald Trump said he would impose tariffs on eight European nations that have opposed his proposal for the United States to acquire Greenland.

Trump announced a 10% tariff on goods from Denmark, Sweden, France, Germany, the Netherlands, Finland, the United Kingdom and Norway, starting Feb. 1, and said the measures would remain in place until the U.S. is allowed to buy Greenland.

According to a Financial Times report on Sunday, EU capitals are weighing retaliation, including up to €93 billion ($101 billion) in tariffs on U.S. goods or restrictions on American companies’ access to the EU market.

The escalating rhetoric triggered a wave of risk aversion among traders, weighing on assets perceived as higher risk, including cryptocurrencies.

Heavy liquidations amplify the move

The downturn was exacerbated by forced liquidations across the crypto derivatives market.

In the past 24 hours, roughly $824 million in positions were liquidated, according to Coinglass data aggregated from publicly available sources.

Of that total, about $763.7 million were long positions, highlighting how heavily positioned the market had become on the bullish side.

The single largest liquidation was reported on Hyperliquid, where a BTCUSDT position worth $25.83 million was wiped out.

Bitcoin fell as much as 3.8% shortly after the Asian trading session opened, before trimming losses to around 2.5% during European hours.

Analysts noted that the move occurred during a period of relatively low liquidity, allowing sellers to exert outsized influence and trigger stop orders.

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The global economy is set to expand more than expected, according to the International Monetary Fund.

But even with stronger forecasts, the IMF warns that financial risks linked to artificial intelligence, trade shifts, and geopolitics remain.

Rapid changes in tech investment and market momentum could lead to instability if expected gains fail to materialise.

While growth appears steady for now, underlying vulnerabilities still pose challenges for the months ahead.

Uncertainty around monetary policy, shifting supply chains, and concentrated sectoral growth could all affect the pace of recovery, especially if external shocks disrupt financial conditions or investor confidence.

AI spending supports growth but brings risks

The IMF now expects the global economy to grow by 3.3% this year, slightly above its earlier forecast of 3.1% from October.

The updated figures were released on Monday in the latest World Economic Outlook.

The report points to rising business activity and strong investment in AI technologies as key factors behind the upgrade.

AI development has sparked a surge in market confidence, particularly in North America and Asia.

The stock market has gained momentum as firms increase spending on emerging tech.

However, the IMF has warned that this boom could become a risk if productivity gains fail to appear.

A market downturn triggered by failed expectations could spread across industries and hurt household wealth.

The report highlights how concentrated investment in AI leaves economies more exposed to financial volatility.

An abrupt shift in confidence could lead to broader losses, adding pressure to already fragile economic structures.

Tensions in trade and geopolitics still a concern

While the impact of recent tariffs is expected to ease over time, the IMF remains cautious.

It notes that new trade disputes could still emerge, especially as more governments move toward protectionist policies.

Such developments would reduce company profits and keep prices elevated for longer.

Although recent months have seen some improvement in global trade flows, these gains could be reversed.

Persistent geopolitical tensions are also flagged as a risk that could affect investment decisions and cross-border supply chains.

Regional outlooks show mixed trends

The IMF projects that the US economy will grow by 2.4% in 2026, higher than the 2.1% forecast made in October.

This is attributed to supportive fiscal policy and an expected reduction in interest rates.

Growth is likely to slow to 2% in 2027, as consumer spending and immigration levels moderate.

For the euro area, growth is forecast at 1.3% this year, while China’s economy is expected to expand by 4.5%.

These regions continue to play a significant role in global growth, with China’s domestic recovery making a substantial contribution to the overall outlook.

The IMF’s longer-term forecast for global growth in 2027 remains unchanged at 3.2%.

Markets show resilience amid underlying fragilities

Despite challenges, the IMF notes that the world economy has adapted well in recent years.

But it also cautions that underlying weaknesses remain, particularly in areas with high exposure to the tech sector.

The report urges caution as AI-related gains may not be as durable as markets expect.

The potential for sudden financial shocks tied to AI investment highlights the need for careful policy monitoring.

According to the IMF, while AI offers economic promise, it also introduces structural risks that should not be ignored.

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Rheinmetall share price continued rising on Monday, reaching €1,960, its highest point since October, and a few points below the all-time high of €2,010. It has jumped by nearly 40% from its lowest point in December, bringing its market cap to over €90 bilion. 

European defense stocks are soaring

Other European defense stocks also continued rising. BAE Systems’ stock rose to 2,130p, up by 35% from its lowest point in December. Babcock International rose to a record high of 1,500p, while other companies like Safran, Leonardo, and Dassault Aviation have also soared. 

Rheinmetall and other European defense stocks jumped as tensions between the European Union and the United States rose during the weekend.

Donald Trump has insisted that the US will own Greenland and has not ruled out using military force to achieve this goal. He has already warned that he will impose tariffs on some European countries starting from February 1. 

The current events and last year’s trade war has pushed more European countries to start taking their security seriously than they did in the past. European leaders believe that Washington will not be a reliable ally in the future.

Countries have already started boosting their defense spending. Germany boosted the defense budget to €108.2 billion, its biggest spending on recrd. The regulat Bundeswehr budget stands at €82.7 billion, up from €29.4 billion, while the special fund allocated €252.5 billion. 

Germany hopes that it will boost its defense budget to about 3.5% of GDP by 2029. Other countries, including France, Italy, and Spain, are also boosting their defense spending, a move that will benefit top European defense spending, including Rheinmetall. 

At the same time, the company will benefit from Donald Trump’s desire to boost US defense spending to $1.5 trillion. It supplies infantry fighting vehicles, munitions, and autonomous vehicles to the defense department. 

Revenue growth and backlog growing

The most recent financial numbers showed that Rheinmetall’s business continued doing well in the third quarter. Its backlog jumped to €80 billion, up from €54 billion in 2024 and €38 billion in 2023.

The company’s revenue jumped from €7.17 billion in 2023 to €9.7 billion in 2024. Its estimate for 2025 is expected to be between €11.3 billion and €12.2 billion, while its operating margin will get to 15.5%.

Therefore, there are signs that the company’s growth will accelerate in the coming years, with its revenue reaching €20 billion in the coming years. 

However, there is a risk that the company’s valuation has become stretched. Data show that its forward P/E ratio has jumped to over 40, and its PEG ratio has movded to 1.18. These are huge numbers, meaning that the company is priced at perfection.

Rheinmetall share price technical analysis

The daily chart shows that the Rheinmetall stock price has rebounded in the past few months. It has moved from a low of €,411 in December last year to the current €1,958. It is now hovering at the highest point since October 8.

The stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA). It is also nearing the important resistance level at €2,010, its highest point in October.

Therefore, the stock will likely continue rising and possibly retest the all-time high of €2,010. A move above that level will point to more gains, potentially to the key resistance at €2,125, the extreme overshoot of the Murrey Math Lines tool.

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Dow Jones Index futures pulled back on Monday, continuing a weakness that started on Friday. It retreated by over 300 points and moved below the key support level at $49,000. It has now dropped by nearly 2% from its highest point this year. This article looks at some of the top catalysts for the index this week.

Dow Jones Index to react to new US-Europe trade conflict

The Dow Jones Index futures pulled back on Monday as investors reacted to the new tariff war between the United States of America and the European Union.

The new conflict started on Saturday when Donald Trump warned that some European countries, like Germany and France would pay an additional 10% tariff for their support of Denmark and Greenland.

This tariff will rise to 10% on February 1, and then move to 25% until the United States completes its purchase of Greenland, a semi-autonomous region controlled by Denmark.

The European Union is considering adding tariffs worth €93 billion of its own in response to Trump’s threats, a move that will lead to a downward spiral, with Trump expected to boost his figure in case of retaliation.

Additionally, France has asked the bloc to hit the United States with its anti-coercive rules, which have never been used before. The rules include investment restrictions, which can throttle services offered by the biggest American companies like Microsoft and Meta Platforms.

On the positive side, Trump’s is set to meet with some senior European leaders at the World Economic Forum, where the two sides may announce a deal.

World Economic Forum in Davos 

The other important catalyst for the Dow Jones Index this week will be the World Economic Forum in Davos, Switzerland. This is an annual event that brings together top leaders in government and corporations to discuss key issues.

The keynote speaker in this event will be Trump, who has pledged to announce major policies, including on housing. Specifically, Trump said that he would bar institutional investors from buying residential houses, as he focuses on the affordability issue. He will also talk about his efforts to lower credit card interest rate.

The Dow Jones Index will also react to statements from other leaders in this summit this week.

Corporate earnings in the spotlight 

The Dow Jones Index will also react to the ongoing earnings season that will see hundreds of companies in the United States publish their numbers.

Netflix will be the key company to watch this week when it publishes its report, as investors will have a chance to hear the management’s view on the ongoing Warner Bros buyout.  

More American companies like GE Aerospace, Johnson & Johnson, 3M, Truist, Kinder Morgan, Intel, and Procter & Gamble will be the top companies to watch this week.

SCOTUS decision on Donald Trump’s tariffs 

The other major Dow Jones Index news this week will come out on Tuesday when the Supreme Court releases the ruling on Donald Trump’s tariffs.

Analysts have a mixed opinion on what to expect from the bank, with some of them expecting the court to end the tariffs. A Polymarket poll also expects that the court will do that, a move that would benefit American companies  

Still, the cheer would be short-lived as Trump will have other tools to implement tariffs.

The Dow Jones Index will also react to other macro data from the US, including the upcoming US inflation report and the flash manufacturing and services PMI numbers.

Dow Jones Index technical analysis

The daily chart shows that the Dow Jones Index has rebounded in the past few months. It has soared from a low of $36,700 in April last year to a high of $49,855 this year. 

The index has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It has also formed an inverse head-and-shoulders pattern whose neckline is the ascending trendline that connects the highest swings since July last year.

Therefore, the most likely scenario is where it rebounds later this year, with the next target being $50,000.

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The Trump administration on Thursday unveiled what it called the “Great Healthcare Plan,” a broad framework aimed at addressing healthcare affordability, drug prices, and insurance transparency.

While the White House described the plan as a decisive step toward reform, analysts and healthcare policy experts largely characterized it as lacking detail, politically constrained, and unlikely to deliver meaningful near-term relief.

The framework arrives amid heightened concern over rising healthcare costs, particularly as enhanced Affordable Care Act (ACA) subsidies expired last year, driving up premiums and deductibles for millions of Americans.

Thursday was also the final day of open enrollment for Obamacare plans, underscoring the timing and political sensitivity of the announcement.

A broad framework with limited specifics

According to the White House, the Great Healthcare Plan rests on four pillars: drug price reforms, health insurance reforms, price transparency for healthcare costs, and fraud protections and safeguards.

Elements highlighted by the administration include funding for health savings accounts, transparency requirements for insurers and providers to publicly post prices, and a call for Congress to codify pricing deals President Trump has made with pharmaceutical companies.

Dr. Mehmet Oz, Trump’s administrator for the Centers for Medicare and Medicaid Services, said during a call with the reporters that “Instead just papering over the problems, we have gotten into this ‘Great Healthcare Plan’ a framework that we believe will help Congress create legislation that will address the challenges”.

President Trump echoed that urgency in the call accompanying the plan’s release, saying he is “calling on Congress to pass this framework into law without delay,” adding that lawmakers “have to do it right now so that we can get immediate relief to the American people.”

However, when pressed for policy specifics, administration officials described the proposal as a “broad framework,” offering few details on implementation or legislative pathways.

Analysts see familiar ideas and political hurdles

Market analysts and policy experts were notably skeptical.

Spencer Perlman, director of healthcare research at Veda Partners, said in a MarketWatch report that the plan appears designed to signal action rather than deliver results.

“We think it is intended to demonstrate that the White House is doing ‘something’ about affordability and healthcare prices, but we believe the policies either stand little chance of being enacted by the current Congress or will have a minimal impact if enacted,” he wrote in a note.

Others echoed that view.

“Their ideas are nothing new, nothing unexpected, pretty challenging to implement,” said Kim Monk, a healthcare policy analyst at Capital Alpha Partners.

“I’m not seeing anything earth-changing.” Raymond James analyst Chris Meekins described the proposal as “a retread of previously advocated-for positions,” adding that “there is no legislative path forward for much of it, in our view.”

Healthcare policy researchers also warned that the plan does not address the most immediate pressure point: rising ACA premiums.

Cynthia Cox, a senior vice president at KFF, said in an npr report that the framework “looks much more like a compilation of Republican ideas” and “doesn’t appear to address the rising premium payments that we’re seeing.”

ACA implications

The plan’s silence on extending ACA enhanced subsidies has amplified concerns that millions could face higher costs or lose coverage altogether.

Edwin Park, a research professor at Georgetown University’s McCourt School of Public Policy, said in a Guardian report that the framework “clearly opposes extension of the expiring ACA marketplace subsidies,” warning that “roughly 4 million people will end up uninsured and many millions more will see their marketplace premiums double or increase by even more.”

Bipartisan talks in the Senate to revive the subsidies are continuing, with some lawmakers expressing cautious optimism.

Still, experts warn that without concrete legislative action, the Great Healthcare Plan may struggle to move beyond rhetoric.

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Artificial intelligence is reshaping cybersecurity faster than many companies can adjust their defences. It is helping organisations spot threats earlier, automate responses, and patch vulnerabilities more quickly.

But the same tools are also being used by cybercriminals to scale attacks, create smarter phishing, and exploit weaknesses at speed.

A new survey from corporate insurer Axis Capital highlights how this shift is creating a noticeable divide inside the leadership team.

The findings show CEOs and chief information security officers (CISOs) are increasingly approaching AI with different priorities, even though they are focused on the same business risk.

What Axis Capital’s survey found

Axis Capital surveyed 250 CEOs and CISOs across the US and UK on how AI is changing cyber risk.

The study found that CEOs tend to see AI as a pathway to productivity gains and competitive advantage, while CISOs are more likely to focus on the risks that come with deploying powerful new systems.

This includes rising exposure to data leaks, misuse of internal tools, and a wider set of attack opportunities created by rapid adoption. In simple terms, the technology that makes companies faster can also make a breach more damaging.

Why is confidence lower among CISOs

One of the clearest gaps is in confidence. Axis found that 19.5% of CEOs said they were not confident AI would strengthen their company’s cybersecurity. Among CISOs, that figure rose to 30%.

This difference is not surprising when you consider who lives closest to the day-to-day threat environment.

CISOs are often the first to see how new AI systems can create unknowns, such as sensitive data entering external models, weaker controls over employee use, or new vulnerabilities introduced by automation.

US versus UK preparedness is not the same

The survey also showed a sharp regional contrast. While 85% of US leaders said they felt prepared for AI-related threats, only 44% of UK leaders said they felt prepared.

Axis found AI is generally viewed positively on both sides of the Atlantic, but UK respondents were more cautious.

That may reflect differences in how businesses assess cyber risk, how quickly firms are adopting AI tools, or the level of internal readiness to secure them.

Why companies are raising cyber budgets now

Even with mixed confidence levels, cyber spending is moving higher.

The survey noted ransomware attacks have nearly doubled over the past two years, keeping cyber risk near the top of boardroom agendas.

Axis found that 82% of executives plan to increase their cybersecurity budgets over the next 12 months.

This suggests businesses see AI as part of the solution, but not a substitute for investment.

Tools may evolve rapidly, but companies still need stronger governance, better controls, and updated security strategies to keep up.

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Netflix is preparing to report its fourth-quarter fiscal 2025 earnings after the market closes on Tuesday, January 20, with investors focused on whether the streaming giant can sustain revenue growth as US subscriber momentum cools and strategic ambitions expand.

Analysts broadly expect a modest improvement in earnings and revenue, underpinned by continued international subscriber growth, higher prices and a growing contribution from advertising.

However, management commentary around engagement, churn and its proposed acquisition of Warner Bros. Discovery assets is likely to dominate the earnings call.

According to IG Bank estimates, Netflix is on track to post revenue of $11.97 billion for the quarter, up 16.8% from a year earlier.

Net income is projected at $2.39 billion, representing a 27.7% year-on-year increase, while earnings per share are forecast to rise 29.4% to $0.55.

Advertisement revenue is expected to reach $1.08 billion, reflecting the rapid scaling of the ad-supported tier.

Looking beyond the quarter, analysts are projecting roughly 13% revenue growth for Netflix in 2026, suggesting confidence that the company’s evolving business model can continue to deliver steady gains.

Subscriber growth shifts overseas

Although Netflix stopped disclosing subscriber numbers a year ago, estimates continue to shape market expectations.

Data from Visible Alpha suggests the platform added around 10 million net new users during the quarter, taking its global user base to more than 327 million.

The composition of that growth remains important.

Analysts say international markets continue to provide the bulk of new users, while growth in the US has softened as the market matures and competition remains intense.

In this context, pricing power and monetisation per user have become increasingly critical metrics for investors.

Netflix’s third-quarter results offered some reassurance on that front.

The company delivered double-digit year-on-year revenue growth and expanded its operating margin, helped by price increases introduced earlier in the year, ongoing momentum in the ad-supported plan and disciplined content spending.

Those dynamics now set the backdrop for the seasonally strong fourth quarter, typically boosted by holiday viewing and a heavier slate of new releases.

Pricing, engagement and churn under scrutiny

Investor focus will be firmly on whether Netflix managed to sustain engagement levels through the end of the year and whether higher-priced plans continued to lift average revenue per user without triggering a rise in cancellations.

Management said after the third quarter that price increases had been absorbed better than expected, with limited impact on churn.

Confirmation of that trend in the fourth-quarter numbers would reinforce confidence in Netflix’s ability to raise prices gradually, even in a more competitive and cost-conscious environment.

Any signs of weakening engagement or rising churn, however, could raise concerns about the limits of pricing power, particularly in developed markets.

Advertising takes centre stage

The advertising business is expected to be a central theme of the fourth-quarter release.

Netflix’s push into advertising marks a significant shift from its historically subscription-only model, and progress here carries implications for both growth and valuation.

In the third quarter, Netflix highlighted growing adoption of the ad-supported tier and improving monetisation as its in-house advertising technology continued to roll out.

The fourth quarter, which includes the key festive advertising period, should offer clearer evidence of whether advertisers are increasing spending on the platform and whether ad revenue is scaling in line with management’s longer-term targets.

Analysts say sustained momentum in advertising could strengthen Netflix’s position as a hybrid subscription-and-advertising media company, potentially supporting higher valuation multiples over time.

Content strategy remains a swing factor

Content remains another major variable influencing near-term results and longer-term sentiment.

Netflix has increasingly emphasised the importance of global, non-English-language originals in driving engagement and maintaining its scale advantage.

The fourth-quarter results should help clarify whether recent releases translated into sustained viewing and whether the platform continues to outperform traditional broadcasters and newer streaming rivals in terms of reach and relevance.

Netflix’s content strategy has evolved toward balancing big-budget flagship releases with more targeted programming designed for specific audiences, a shift aimed at improving return on content spending while keeping the library fresh.

Three signals investors should watch

Saxo Bank has highlighted three key signals for investors to watch closely in the fourth-quarter report.

First is average revenue per user.

ARPU reflects how effectively Netflix is monetising its customer base through pricing, plan mix and advertising. Even small, consistent increases can compound meaningfully over time.

Second is operating margin and cash generation.

Netflix has increasingly steered investors toward profitability and cash flow rather than pure subscriber growth.

That focus could become even more important if its proposed Warner Bros. Discovery deal progresses, given the potential for integration costs and higher content spending.

Third is churn and engagement. These metrics underpin pricing power. Services that users engage with regularly tend to have more flexibility to raise prices with limited customer loss.

Warner Bros deal looms over earnings

According to Reuters, Netflix’s plan is to accelerate revenue growth through the acquisition of Warner Bros.

Discovery’s streaming and studio assets are likely to overshadow the earnings discussion.

The $82.7 billion pursuit would give Netflix access to a deep content library, including titles such as Friends, Game of Thrones and Harry Potter.

The earnings call will be Netflix’s first since it announced the deal on December 5, and investors are expected to press management on strategic rationale, integration plans and regulatory risks.

Netflix faces competition from Paramount Skydance, which has reportedly offered $108.4 billion for Warner Bros.

Discovery, including cable assets, Netflix does not want.

The bidding process is expected to drag on for months, with regulatory scrutiny in both the US and Europe likely to be intense.

NFLX stock performance, and is it a buy before earnings?

Netflix shares have risen about 5% over the past year, underperforming the broader market after a one-time $619 million Brazilian tax charge weighed on third-quarter results.

According to Barchart, the unresolved Warner Bros. Discovery transaction is likely to remain a source of volatility for Netflix shares, potentially overshadowing the company’s near-term financial performance.

Options markets are already pointing to heightened swings, with traders pricing in a post-earnings move of about 7.3% in either direction for contracts expiring on January 23.

That implied move is slightly above Netflix’s average earnings-related swing of roughly 6.6% over the past four quarters.

Investors may also recall that the stock dropped 10.1% following the company’s most recent earnings report.

Analysts remain divided on the stock’s near-term prospects, with five Buy ratings and two Hold ratings.

Wedbush analyst Alicia Reese recently maintained a Buy rating but lowered her price target to $115, citing upside from international growth and advertising, tempered by execution and deal-related risks.

Netflix’s full-year revenue guidance is expected to come in around $51.6 billion, slightly above consensus forecasts, with earnings per share near $3.24.

Based on one-year price targets from 43 analysts, the average target price for Netflix stands at $124.80, implying an upside of about 41.7% from current levels.

GuruFocus estimates a more conservative one-year value of $96.44, suggesting a potential upside of roughly 9.5%.

Analysts remain cautiously optimistic on Netflix, with the stock carrying a “Moderate Buy” consensus rating.

While risks are clearly acknowledged, the prevailing view reflects confidence in the company’s underlying fundamentals and its progress in strengthening monetisation.

For long-term investors, the recent softness in the share price is increasingly being seen as a potential buying opportunity.

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Oil prices face mounting fundamental pressure as potential shifts in global oversupply dynamics emerge, driven by China’s decelerating stockpiling, which is tied to the rise of electric vehicles curbing oil demand.

However, short-term supply risks are expected to provide a counteracting risk premium.

Analysts with ING Group believe that even as tensions in Iran and supply risks ease, these have not disappeared yet.

Immediate geopolitical impact and volatility

The oil market’s price is currently being dictated by developments in Iran, with a barrel of Brent crude oil climbing to nearly $67 earlier this week, marking its highest point since early October.

However, Brent oil prices fell by $3 on Thursday, following the recent statements from US President Donald Trump, which led to a reduced risk of immediate American intervention.

On Friday, prices had recouped some of those losses amid uncertainty surrounding Iran and supply.

The price drop occurred because the US refrained from immediate action against Iran, despite ongoing domestic protests.

Recent speculation about potential military intervention by the Trump administration had been increasing, which had raised fears not only about Iranian oil supply but also about wider risks to supply across the Persian Gulf region.

Escalation risks: Iran and the Strait of Hormuz

The situation still carries the significant risk of escalation, according to Commerzbank AG commodity analyst Barbara Lambrecht.

This concern is fueled not only by the potential loss of Iranian exports, which had reached nearly 1.9 million barrels per day this past fall, according to Bloomberg.

A major concern is the potential for an Iranian blockade of the Strait of Hormuz if tensions escalate, as this chokepoint handles approximately a quarter of the world’s seaborne oil supply.

“Any escalation with Iran will also raise concerns about potential disruption to oil flows through the Strait of Hormuz, a chokepoint where around 20m b/d passes,” Warren Patterson, head of commodities strategy at ING Group, said in a report.

While risks have eased somewhat, they remain significant, keeping the market nervous in the short term.

If signs of a sustained easing appear, attention will likely shift back to developments in Venezuela.

Oil that was recently sanctioned or blocked is expected to gradually re-enter the world market, Commerzbank’s Lambrecht said.

The International Energy Agency’s (IEA) monthly report is expected to refocus attention on the oil market’s fundamentals next week.

This follows a week where new forecasts from the US Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries were largely overshadowed by the escalating situation in Iran.

The EIA and OPEC now share similar forecasts for global oil demand growth, both having provided an initial outlook for 2027.

However, the IEA is expected to maintain a more cautious stance, likely continuing to predict a significant oil market oversupply this year.

“However, the decisive factor for the oil price is the extent to which this oil flows into the world markets and becomes visible in swelling inventories,” Lambrecht said.

Long-term fundamentals and oversupply outlook

China appears to have significantly drawn down its reserves last year to accumulate stocks.

Conversely, stock levels in the Organization for Economic Cooperation and Development countries remain consistent with their typical range.

The fundamental outlook for oil prices could face increased downward pressure if a larger portion of overproduced oil is directed towards industrialized nations, according to Lambrecht.

This shift could occur if China reduces its stockpiling efforts, a likely consequence of rising electric vehicle adoption that simultaneously curbs overall oil demand, Lambrecht added.

Meanwhile, ING’s Patterson believes that the longer the rhetoric surrounding Iran goes on, oil prices may struggle eventually.

However, the longer this goes on without any US intervention, the risk premium will continue to fade, allowing more bearish fundamentals to dominate.

Despite ING’s bearish market outlook, the prompt ICE Brent timespread is showing strength.

“The spread held up relatively well yesterday despite weakness in the flat price,” Patterson said.

This suggests some tightness in the spot market, likely due to a decline in Kazakh oil flows from the CPC terminal.

At the time of writing, the price of West Texas Intermediate crude oil was at $59.91 per barrel, up 1.2%, while Brent was at $64.50 a barrel, also 1.2% higher from the previous close.

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