United States — Broadening Market Dynamics Amid Elevated Uncertainty

US equities posted gains across major indices in January, with the S&P 500 up 1.4%, Dow Jones Industrial Average up 1.7% and Nasdaq Composite up 0.9% for the month.

Despite headline volatility linked to geopolitical developments, the underlying narrative of the month was one of broadening market participation. Nasdaq’s January review highlighted those small‑ and mid‑capitalisation equities, along with equal‑weight indices, outperformed their cap‑weighted counterparts, signalling a rotation toward a more inclusive market structure that contrasts with the narrow mega‑cap leadership seen in 2025.

Macro conditions remained supportive. Inflation continued easing and labour markets held stable, enabling the Federal Reserve to maintain its wait‑and‑see stance and keep monetary policy unchanged at the January meeting. This stability in policy settings, coupled with ample liquidity, supported value‑oriented sectors and cyclical areas of the market.

Though several sessions experienced volatility—including those linked to scrutiny over technology spending and speculative commodity-driven moves—US indices ultimately retained their monthly advances, reflecting confidence in earnings resilience.

Strategic View:
US equities remain a cornerstone of global portfolios; however, elevated valuations underscore the need for selectivity. Investors should balance exposure to structural growth themes, including AI and automation, with allocations to quality mid‑caps and cyclicals as market breadth continues to improve.

Europe — Stabilising Growth and Gradual Repricing

European markets delivered a mixed performance in January. The DAX recorded modest gains, whereas the CAC 40 experienced slight declines. Nevertheless, the underlying economic outlook appeared more stable than in preceding months. European equities extended their multi‑month winning streak into late January, supported by firmer sentiment and steady earnings expectations.

Eurozone GDP growth surprised to the upside year‑on‑year, reinforcing expectations that Europe may enter 2026 on stronger footing. Meanwhile, inflation continued its downward trend toward the European Central Bank’s target, supporting the case for the ECB’s neutral monetary stance.

Strategic View:
Europe continues to offer a meaningful valuation discount relative to the United States. With inflation stabilising and growth showing tentative resilience, selective opportunities exist among defensive global companies and industrials with robust external demand exposure.

United Kingdom — Constructive Start Despite Inflation Pressures

UK equity markets began the year positively, with the FTSE 100 adding 2.9% to gains as investors responded to stable earnings expectations and supportive currency dynamics. Although inflation edged marginally higher, the market benefited from similar breadth improvements seen across developed markets.

Strategic View:
The UK remains attractive for investors seeking valuation support and stable dividend characteristics. Energy, financials and globally diversified multinationals continue to present the most resilient opportunities.

Asia ex‑Japan — Selective Strength Amid China’s Mixed Signals

Asia produced a strong January performance overall. Chinese and Hong Kong equity markets—reflected in the Shanghai Composite up 3.8% and Hang Seng Index stronger by 6.9% —posted significant monthly gains despite late‑month volatility tied to commodity price fluctuations.

 China’s PMI data conveyed a more subdued economic message, however, with both manufacturing and non‑manufacturing PMIs slipping below 50. This marked a move back into contraction territory, indicating persistent softness in underlying domestic demand. Nonetheless, expectations around continued policy easing and favourable commodity trade dynamics provided meaningful support for Asia’s broader equity performance.

Performance data confirms that emerging markets outpaced developed peers in January, supported by a weaker US dollar and improving liquidity conditions.

Strategic View:
Opportunities within Asia ex‑Japan are most compelling in markets benefiting from policy easing cycles, strong technology supply‑chain positioning, commodity‑linked earnings tailwinds and relative currency stability.

Japan — Strong Momentum Supported by Structural Improvements

Japan was among the strongest global performers in January. The Nikkei continued its upward trajectory up over 5.9%, supported by robust corporate reforms, improved governance standards, and a favourable policy outlook. Inflation moderated significantly into the year‑end, helping sustain real incomes and domestic demand.

Strategic View:
Japan’s structural investment case remains compelling. Strong corporate balance sheets, buyback activity, governance reforms and improving capital efficiency continue to underpin the equity market. Valuations are less attractive following strong multi‑year gains, but selective opportunities persist.

South African Equities

South African equities sustained their positive trajectory in January with the ALSI up 3.6%, buoyed by firmer global commodities, a softer USD and resilient global risk appetite. Local market performance remained supported across key trading sessions.

Sector performance followed global patterns:

• Resources up 13.2%, led the local market, supported by elevated metals prices and renewed interest in gold and PGMs.
• Financials advanced 2.9%, benefiting from subdued inflation and constructive investor sentiment.
• Industrials were down 4.1%, reflecting both global supply chain realignments and domestic demand-related challenges.

These qualitative dynamics are consistent with broader commentary on the concentration of returns within resource‑linked sectors and the more modest performance of domestic SA‑inc. companies.

Inflation remained contained and the South African Reserve Bank kept the policy rate steady during its January meeting, aligning with the global trend toward stability rather than further tightening.

Strategic View:
Maintain exposure to high‑quality resource counters and financials. Selectivity remains important in industrial names. South Africa continues to offer attractive real yields, but fiscal credibility and structural reforms remain key determinants of sustained rerating potential.