January 2019

• Global markets rebounded strongly in January following the severe sell-off seen in late 2018, as central banks adopted more accommodative tones and investor sentiment improved.
• The Federal Reserve signalled greater flexibility regarding future interest rate increases, easing concerns about overly aggressive monetary tightening.
• U.S. equities recorded one of their strongest January performances in decades.
• European and Asian markets recovered alongside improving risk appetite and hopes for progress in U.S.-China trade negotiations.
• Emerging markets benefited from weaker dollar conditions and stabilising capital flows.
• Commodity prices, particularly oil, rebounded from December lows as growth fears eased modestly.

Asia (ex. Japan)

Asian markets outside Japan rebounded strongly during January as investor sentiment improved following supportive signals from major central banks and optimism surrounding U.S.-China trade negotiations. Chinese authorities introduced additional stimulus measures, including reserve requirement cuts and fiscal support initiatives aimed at stabilising growth.

Technology-heavy markets such as South Korea and Taiwan recovered sharply after steep declines in late 2018, while India benefited from improving domestic demand and lower inflation pressures. Regional currencies also stabilised as dollar strength moderated.

Europe

European equities recovered during January as fears surrounding global monetary tightening eased significantly. Investors responded positively to more accommodative commentary from the Federal Reserve and the European Central Bank.

Economic growth data remained relatively soft across the eurozone, particularly within manufacturing sectors, though improving global sentiment and hopes for trade progress helped support risk assets. Political uncertainty surrounding Brexit and Italy’s fiscal position continued to create periodic volatility.

United States

U.S. equities staged a powerful rebound in January after the severe declines of December 2018. Investors welcomed the Federal Reserve’s shift toward a more patient policy stance, which reduced concerns about excessive tightening.

Corporate earnings remained generally supportive despite signs of slowing growth, while labour market conditions continued to be strong. Treasury yields declined modestly as markets adjusted expectations for fewer interest rate increases during 2019.

United Kingdom

UK equities advanced during January as global risk appetite improved and sterling volatility moderated slightly. Brexit uncertainty remained the dominant domestic theme, with ongoing parliamentary debates and negotiations continuing to influence sentiment.

Economic conditions remained mixed, with slower business investment offset by relatively stable employment and consumer spending trends. The Bank of England maintained a cautious stance amid persistent political uncertainty.

Japan

Japanese equities rebounded strongly in January as improving global risk sentiment and expectations for accommodative monetary policy supported exporters and cyclical sectors.

The Bank of Japan maintained its ultra-loose monetary policy stance while acknowledging weaker global growth conditions. A stabilising yen also helped improve corporate earnings expectations following the volatility seen late in 2018.

Emerging Markets

Emerging markets performed strongly during January as investor confidence returned following the sharp sell-off in late 2018. A weaker U.S. dollar, improving trade optimism and supportive Chinese stimulus measures helped attract capital inflows.

Asian markets led gains due to technology sector recovery and stronger regional demand expectations, while commodity-exporting economies benefited from stabilising oil and metals prices.

Commodities

Commodity prices rebounded in January following steep declines in late 2018. Oil prices recovered strongly as OPEC production cuts and improving market sentiment reduced fears of severe oversupply.

Industrial metals also advanced modestly due to optimism surrounding Chinese stimulus and trade negotiations, while gold prices remained firm as investors continued seeking diversification amid lingering uncertainty.