January 2018

• Global markets began 2018 strongly as synchronised global growth, tax reform optimism and robust corporate earnings supported investor sentiment.
• U.S. equities continued reaching record highs, led by technology and cyclical sectors.
• European and Japanese markets benefited from strong manufacturing activity and export demand.
• Emerging markets outperformed amid continued dollar weakness and improving trade conditions.
• Commodity prices strengthened further, particularly oil and industrial metals.
• Bond yields rose as investors anticipated stronger inflation and continued central bank tightening.

Asia (ex. Japan)

Asian markets outside Japan delivered strong gains in January as export growth and technology demand remained exceptionally supportive. Chinese economic activity remained stable despite ongoing deleveraging efforts by policymakers.

South Korea and Taiwan benefited from strong semiconductor demand, while India advanced on improving business confidence and reform expectations. Regional currencies strengthened alongside improving capital inflows.

Europe

European equities advanced as economic data remained highly supportive across the eurozone. Manufacturing activity and business confidence stayed near multi-year highs, reinforcing optimism regarding regional growth.

The euro strengthened against the U.S. dollar due to improving growth expectations and discussions surrounding eventual ECB policy normalisation. Bond yields moved higher alongside improving inflation expectations.

United States

U.S. equities surged higher in January as investors responded positively to corporate tax reform and strong earnings growth. Technology and industrial sectors led gains amid optimism regarding economic expansion.

Treasury yields rose sharply as investors anticipated stronger inflation and additional Federal Reserve rate hikes. Economic indicators remained broadly positive, particularly within employment and consumer spending.

United Kingdom

UK equities posted modest gains as global growth supported commodity and multinational sectors. Sterling strengthened moderately, limiting some currency-related export benefits.

Inflation remained above target while consumer spending slowed slightly. The Bank of England continued signalling that gradual policy tightening would likely be required.

Japan

Japanese equities advanced strongly as exporters benefited from robust global trade conditions and strong corporate earnings. Investor confidence remained elevated despite modest yen appreciation.

The Bank of Japan maintained highly accommodative monetary policy and yield curve control, reinforcing supportive financial conditions.

Emerging Markets

Emerging markets significantly outperformed developed peers in January as improving global trade, strong commodity prices and dollar weakness supported investor inflows.

Asian markets led gains due to strong technology demand, while commodity exporters benefited from rising oil and metals prices.

Commodities

Commodity prices strengthened during January as improving global growth supported demand expectations. Oil prices reached multi-year highs due to strong demand and OPEC production discipline.

Industrial metals remained strong on robust manufacturing activity, while gold prices advanced due to dollar weakness and rising inflation expectations.