January 2020

• Global markets began 2020 positively as improving trade sentiment and accommodative central bank policies continued supporting investor confidence.
• U.S. and global equities reached new record highs early in the month before concerns surrounding the emerging coronavirus outbreak in China triggered increased volatility.
• Technology and growth sectors continued outperforming across major markets.
• Bond yields declined modestly late in the month as investors moved toward safer assets.
• Emerging markets experienced mixed performance due to growing uncertainty surrounding the virus outbreak.
• Gold prices strengthened while oil prices weakened sharply toward month-end.

Asia (ex. Japan)

Asian markets outside Japan began January strongly as optimism surrounding the U.S.-China “Phase One” trade agreement supported regional sentiment. Chinese economic conditions showed early signs of stabilisation following extensive policy support throughout 2019.

However, markets weakened sharply late in the month after the coronavirus outbreak in Wuhan raised concerns regarding economic disruption, travel restrictions and slowing regional demand. Chinese authorities introduced emergency measures aimed at containing the outbreak and stabilising financial markets.

Europe

European equities initially advanced during January as accommodative monetary policy and improving trade conditions supported investor sentiment. Economic indicators remained relatively stable, though manufacturing activity continued lagging broader economic conditions.

Late in the month, growing concerns regarding the spread of coronavirus reduced risk appetite and pressured cyclical sectors, particularly travel, luxury goods and industrial companies exposed to Chinese demand.

United States

U.S. equities reached fresh record highs during January as strong corporate earnings and resilient consumer spending supported economic optimism. Technology companies continued leading market gains, while the Federal Reserve maintained a supportive monetary stance.

Investor sentiment weakened toward month-end as fears surrounding the coronavirus outbreak increased uncertainty regarding global growth and supply chain disruptions. Treasury yields declined as investors moved toward safer assets.

United Kingdom

UK equities delivered mixed performance during January as the United Kingdom formally exited the European Union at the end of the month, ending years of political uncertainty surrounding Brexit.

Despite the historic milestone, investor attention increasingly shifted toward the emerging coronavirus outbreak and its potential impact on global trade and economic activity. Sterling remained relatively stable during most of the month.

Japan

Japanese equities advanced early in January as exporters benefited from improving global trade conditions and supportive monetary policy. However, markets weakened significantly later in the month due to concerns surrounding the coronavirus outbreak and slowing Asian demand.

The Bank of Japan maintained its highly accommodative policy framework while closely monitoring potential economic risks associated with the outbreak.

Emerging Markets

Emerging markets delivered mixed performance during January as improving trade optimism early in the month was offset by growing fears surrounding the coronavirus outbreak.

Asian emerging markets faced increased pressure due to their close economic ties with China, while commodity-exporting economies weakened as oil and industrial metals prices declined late in the month.

Commodities

Commodity prices experienced significant volatility during January. Oil prices weakened sharply late in the month due to concerns that the coronavirus outbreak would reduce global demand and disrupt economic activity.

Industrial metals also declined as investors anticipated slower Chinese manufacturing demand, while gold prices strengthened as safe-haven demand increased amid rising uncertainty.