After a challenging end to 2018, most global markets started 2019 with a much-needed rebound that helped global investors shake off their January blues. Key to the improved investor sentiment was a more dovish/patient outlook from the US Federal Reserve, signs of thawing in US-China trade tensions and generally better than expected corporate earnings. This was despite the IMF and World Bank lowering their global growth forecasts and more disappointing economic data in the month – particularly in China, Europe and Japan.
What happened in the markets?
- In terms of asset class returns, higher energy prices were a key driver of positive commodity market returns in January after a weak end to 2018
- Commodity prices were also supported by a weaker US dollar in the month, which was also a positive tailwind for the rebound in global equity markets particularly in Asia, Emerging Markets and the US
- January was also a better month for fixed income returns, with emerging market debt and high yield bonds benefitting most from the risk-on environment in January
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