YOU AM market commentary: January

After a strong 2025, the new year started in a similarly positive vein for both equity and bond markets. The MSCI All Country World Index of global equities ended January up +0.9% and global bond markets also posted a positive month, with the Bloomberg Global Aggregate Index of global fixed interest securities up +0.2% in GBP hedged terms. 

Emerging Markets were the standout performer, with the MSCI Emerging Market Index up +6.7%, with the backdrop of a weaker US Dollar, continued AI related enthusiasm and a commodity rally being a positive concoction for flows into the asset class. The spread of underlying market returns was, however, astonishing with the technology dominated MSCI Korea up +25.6% and commodity heavy Brazil up +14.5%, also boosted by indications of upcoming interest rate cuts from their punishingly high 15% level. However, the Indian equity market continued to suffer outflows from foreign investors, sending the MSCI India index down -7.0%. MSCI Indonesia also dropped -6.7% as MSCI threatened to downgrade it to Frontier Market status if authorities didn’t take steps to improve the underlying liquidity and accessibility of their equity market.

Japanese equities also enjoyed a robust month, with the MSCI Japan up +4.5% as Japan’s new Prime Minister called a snap general election to bolster support for her planned expansionary policies. UK equities also performed well (FTSE All-Share up +3.1%) as the market responded positively to a stream of better-than-expected economic data and growing hopes of further interest rate cuts to come. Miners and Defence companies led the charge, many posting strong double digit gains over the month. The one disappointing equity market was the US which, as measured by the S&P 500 index, was down -0.6% over the month, although this negative return was entirely down to the weakness of the US Dollar versus Sterling (-1.6%), mechanically reducing returns for GBP based investors. Away from equities, there was another remarkable surge in precious metal prices such as gold and silver. Despite a sharp reversal of momentum on the last day of the month, the broad commodity index, the Bloomberg Commodity Index, was up +10.3% over the month in GBP hedged terms.

All performance figures are stated in Sterling terms, unless otherwise specified.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.  

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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete.