January began with heightened volatility across global markets, as investors navigated geopolitical shocks, including Venezuela’s sudden political upheaval and rising tensions between the US and Europe over Greenland, yet equities ultimately outperformed, supported by resilient economic data. In the US, the S&P 500 and Nasdaq rose 1.4% and 1.0%, respectively and European markets fared better, with the Euro STOXX 50 and FTSE 100 up by 2.8% and 3.0%, respectively, helped by a rotation into Value, including cyclicals and energy, as investors looked beyond last year’s narrow US tech-led rally. Fixed income markets absorbed a significant policy shift as US President Trump moved to appoint Kevin Warsh as the next Chair of the Federal Reserve Bank (Fed), a choice broadly interpreted as more hawkish. While the Fed kept rates on hold in January, its messaging maintained a cautiously dovish tone, acknowledging softer labour market indicators. US 10 year Treasury yields rose by 7bps, and UK gilt yields edged up by 4bps, as markets reassessed the timeline for future easing. Commodities told the clearest story of the month: Brent crude oil surged 14.8%, driven by a renewed geopolitical risk premium tied to unrest in Venezuela and escalating tensions with Iran. Gold gained 8.8%, reflecting safe haven demand although reversed sharply as the hawkish Fed nomination strengthened the US dollar, with prices dropping 8-10% in a matter of hours. Currency markets saw the pound appreciate by 1.6% and 0.7% against the US dollar and euro respectively.

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