Global markets entered 2026 with elevated volatility, driven partly by geopolitical and policy‑related developments. While political headlines amplified market sensitivities, underlying economic data and sector rotation ultimately drove performance. Despite the challenging backdrop, major equity indices delivered solid gains.

United States

US markets ended January higher despite considerable political turbulence. President Trump’s aggressive policy actions, including nationwide Immigration and Customs Enforcement (ICE) raids leading to civil unrest, threats of punitive tariffs on Canada should it pursue trade agreements with China and controversial foreign policy moves such as the proposed annexation of Greenland and the extra‑judicial capture of Venezuela’s President, created significant uncertainty.

Investors focused on the resilience of the US economy, however, and the possible inflationary consequences of shifting tariff policy. For the month:

• Dow Jones Industrial Average: +1.7%
• S&P 500: +1.4%
• Nasdaq: +0.9%

Retail sales showed strength, rising 0.6% in November after a revised 0.1% decline in October. Against this backdrop, the Federal Reserve held rates steady at its 28 January meeting, in line with expectations.

United Kingdom

Inflation moved modestly higher:

• Headline CPI: 3.4% (Dec), up from 3.2%
• Core CPI: 3.2%, unchanged and in line with expectations

Despite elevated inflation, equity markets remained supported by earnings resilience and currency dynamics.

Europe

European markets were mixed:

• DAX Index: +0.2%
• CAC 40: –0.3%

Eurozone inflation slowed:

• Headline CPI: 1.9% (Dec), down from 2.1%

Economic growth surprised positively, with Q4 2025 euro‑area gross domestic product (GDP) rising 1.3% year‑on‑year, ahead of the 1.2% consensus expectation.

Asia

China

Asian markets finished the month strongly despite volatility in Chinese equities following a sharp decline in the gold price on 30 January.

• Hang Seng Index: +6.9%
• Shanghai Composite Index: +3.8% (best month since Aug 2025)

Economic data softened:

• Manufacturing Purchasing Managers' Index (PMI): 49.3 (Dec: 50.1)
• Non‑manufacturing PMI: 49.4 (Dec: 50.2), lowest since Dec 2022

PMI readings below 50 indicate contraction.

Japan

Japanese equities surged, driven by a weaker yen, potential fiscal stimulus and supportive expectations around corporate reform.

• Nikkei 225: +5.9%, hitting a record close above 54,000 on 14 January

Inflation moderated sharply:

• Headline CPI: 2.1% (Dec), down from 2.9%

South Africa

Sector performance

• Resources: +13.2%
• Financials: +2.9%
• Property: +1.0%
• Industrials: –4.1%

Top performers

• South32: +30.1%
• Sibanye-Stillwater: +22.0%
• Glencore: +20.6%
• Implats: +20.6%
• Northam: +17.7%
• Gold Fields: +17.1%
• KAP: +16.1%

Lagging shares

• Sappi: –26.9%
• Richemont: –14.5%
• Naspers: –10.2%
• Bytes: –9.5%
• Prosus: –9.1%

Local economic data

South African inflation remained broadly contained:

• Headline CPI: 3.6% (Dec), from 3.5% in November. The main contributors to the increase were housing & utilities (4.9%), food & non-alcoholic beverages (4.4%) and insurance and financial services (7%).
• Core CPI: 3.3% (Dec), from 3.2% in November

The print came in below expectations, reinforcing the view that inflation has peaked and is likely to moderate modestly in the near term. The average inflation rate for 2025 was 3.2%, marking the lowest level in 21 years and below the central bank’s 3.3% forecast. 

As anticipated, the South African Reserve Bank’s Monetary Policy Committee held the repo rate at 6.7% at its January meeting.