In January 2026, global markets displayed a robust 'risk-on' sentiment, with various international indices surpassing the FTSE All-World benchmark. This period was characterized by notable performances in the Asia-Pacific region, Japan, emerging markets, the Russell 2000, and both UK and European equity markets. Concurrently, the Russell 1000 index lagged behind. The fixed income landscape also showed distinct trends, with high-yield bonds denominated in USD and GBP outperforming their investment-grade counterparts. However, an interesting divergence was observed in the Eurozone, where investment-grade bonds exceeded high-yield returns. The report also highlights the significant volatility in precious metals, as gold and silver experienced sharp corrections after an earlier surge, alongside a rebound in oil prices driven by supply disruptions. The month concluded with a depreciating US dollar, which ultimately bolstered the returns of ex-US assets when measured in USD terms, reflecting a dynamic and geographically diverse market environment.
January 2026 presented a complex yet generally positive picture for global financial markets, with investor confidence seemingly undeterred by ongoing geopolitical tensions. Equities, particularly those outside the United States, demonstrated strong leadership. The Asia-Pacific region, alongside Japan and various emerging markets, delivered impressive returns, indicating a broad-based international recovery or growth acceleration. The UK and European markets also showed resilience and strength, contributing to the overall positive momentum beyond North American borders. This performance underscores a shift in market leadership, suggesting that investors are increasingly seeking opportunities in diverse geographical regions, potentially driven by varied economic recovery paces and policy environments.
The commodities sector experienced mixed fortunes during the month. Oil prices, after a period of fluctuation, saw a significant rebound. This surge was primarily attributed to multiple supply shocks, which tightened global crude availability. However, the report cautions that underlying concerns about structural oversupply persist, indicating that the long-term trajectory of oil prices remains subject to significant headwinds. Meanwhile, precious metals, specifically gold and silver, underwent a sharp correction towards the end of January. Following a strong rally in the fourth quarter of the previous year and the early part of January, these assets faced a downturn amid growing 'bubble fears,' suggesting that their rapid ascent may have been unsustainable in the short term. These movements highlight the intrinsic volatility of commodity markets, influenced by a blend of supply-demand dynamics and investor sentiment.
In the fixed income sphere, high-yield bond markets in both USD and GBP denominations showcased superior performance relative to their investment-grade counterparts. This trend suggests a higher appetite for risk among bond investors, seeking greater returns in a yield-constrained environment. Conversely, the Euro bond market presented an interesting anomaly, where Euro investment-grade bonds outshone Euro high-yield bonds. This divergence could be indicative of specific regional economic conditions or investor preferences within the Eurozone, favoring stability over higher risk-adjusted returns. Over a broader 12-month horizon, high-yield sectors generally maintained their lead over investment-grade, reinforcing the theme of persistent risk-seeking behavior among investors.
Furthermore, currency movements played a pivotal role in shaping asset returns. The US dollar, which had strengthened considerably in the latter half of 2025, experienced depreciation throughout January. This weakening of the dollar had a direct and positive impact on the USD-denominated returns of assets held outside the United States. For investors holding international assets, a weaker dollar translates into higher returns when those assets are converted back into USD, thereby enhancing the attractiveness of non-US investments. This currency dynamic further amplified the outperformance of international markets relative to the US, contributing to the overall narrative of diversified market leadership in the early part of the year.
The overall market environment in January 2026 was characterized by resilience and shifting dynamics. Despite potential geopolitical headwinds, the global equity markets demonstrated strength, particularly in regions outside the US. Commodity markets experienced volatility, with oil recovering from supply shocks and precious metals undergoing a correction. The fixed income sector saw high-yield bonds generally outperform, with a notable exception in the Eurozone. Crucially, the depreciation of the US dollar proved beneficial for international investments, underscoring the interconnectedness of global financial markets and the importance of diversification in navigating evolving economic landscapes.