Author: Spencer Maynard Wealth Management

Global equities were slightly down in January. This was due to negative returns in the US markets which fell-1.3% in sterling terms. With the US making up 70% of the global benchmark it has a significant impact on the performance of the overall global index. However, once you take out the US, the story was much more positive in every other equity market. Our home market had a strong month, posting positive returns of +3.1%, but the standouts were Asia and emerging markets which delivered +4.8% and +6.8% respectively. The dollar continued to decline, helping both regions. European and Japanese markets also posted strong returns.

Looking at the UK equity market, it was pleasing to see small caps and the Alternative Investment Market (AIM) return far more than the broader market (+4.6% & +6.8% respectively). These smaller company stocks have been out of favour with investors for some time, but expectations of further interest rate cuts from the Bank of England (BoE) should help this part of the market, which tends to be more sensitive to borrowing costs. Small-cap businesses also tend to be more insulated from geopolitical noise, which was rife over the month.

President Trump gave markets a lot to digest in January. Just two days into the year, the US launched airstrikes on military bases in Caracas and captured Venezuelan President Nicolás Maduro in a 2am raid. Within days, the US intervention in Venezuela was knocked off the headlines when Trump stepped up his campaign to take “ownership” of Greenland and threatened to impose new tariffs on eight Nato allies over their opposition to his planned takeover of the country.

Domestically, protests erupted across the US following the murders of Renee Good and Alex Pretti by ICE and Border Patrol agents. Concerns about the independence of the Federal Reserve were heightened when the Department of Justice (DOJ) launched a criminal investigation into Fed Chair, Jerome Powell. In response, Powell said he was being threatened with criminal charges because the Fed had been setting interest rates, “based on our best assessment of what will serve the public, rather than following the preferences of the president.” Later in the month, Trump nominated Kevin Warsh to replace Powell when he leaves his post in May. Warsh has backed maintaining higher interest rates in the past and markets reacted positively to what many perceive to be a safer choice than some of the other rumoured candidates. However, Warsh’s ties to Trump allies like Ronald Lauder, and the DoJ’s investigation into Powell could hold up the confirmation process.

Although most equity regions brushed off all the political drama, gold rallied extremely hard on these tensions with the asset class +13.5% over January. More broadly, commodities had a strong month delivering a return of +7.3%. Oil and gas prices rallied over double digits on the back of colder winter weather and an associated fall in storage levels.

With this general risk-on environment (despite all the geopolitical risks), fixed income markets were mainly negative with global and emerging market bonds declining slightly (around -1.8%). UK government bonds were flat.

Equity markets finished the year on a strong note with most regions delivering double digit returns over the period and hitting all-time highs. This was achieved despite several potential headwinds including Trump’s tariff hikes, growing concerns about technology valuations and recent concerns of a potential Chinese slowdown.

Looking at December, the UK was a strong performer, returning +2.3%, bolstered by strong corporate earnings and the hope for further rate cuts, and finished the quarter as the best performing equity market. The FTSE 100 went on to surpass 10,000 points for the first time after the New Year break. Europe led markets (+2.5%) on the back of increased stimulus spending and improving economic growth. Emerging Markets also fared well over the month (1.1%) and over the year. They benefitted from strong growth prospects and a weakening dollar. Over the quarter, Latin America was the best performing region benefitting from commodity producers (gold and copper) while Chinese stocks fell over concerns of a potential slowdown and signs of further weakness in the Chinese property market.

The US equity market softened -0.6% over the month but still added just under 10% for the year. 2025 was, in recent times, an outlier year where other major regions significantly outperformed the US equity market in sterling terms. This was, as noted above, largely attributed to dollar weakness as the dollar experienced its largest annual decline since 2009. Artificial Intelligence (AI) has been a dominant theme in the US driving most of the gains over the year. However corporate profits have broadly outperformed expectations and GDP growth remains quite strong compared to developed market counterparts.

Though returns across bond markets were subdued relative to equity markets, they were still positive providing a good ballast to portfolios. Government bonds (Gilts and US Treasuries) both generated gains on the view that the BoE and Fed are likely to cut rates into the New Year. Credit strategies also posted gains as corporate profits and balance sheets remain robust.

Within alternatives, infrastructure and real estate performed reasonably well over the year providing mid to high single digit returns. Precious metals had a particularly strong run in 2025 with physical gold prices rallying over 50% in 2025. This was based on several factors, including investors seeking a safe haven amid geopolitical uncertainty, Central Bank purchases as part of a broader diversification strategy, as well as weakness in the US dollar.

Markets sold off in November. Generally, it was driven by concerns over valuations in technology and Artificial Intelligence (AI). This had a marked negative effect on the US equity market, and because the US represents a large part of global index (over 70% of MSCI World is in the US) it had an impact on the broader global equity index too. The US declined -1.8%, while the global index was off -1.4%.

Equity markets though negative overall for November, rebounded from a deeper trough in the month. The US equity market was down nearly -5% at the lowest point. Markets began to recover on the back of stronger than expected economic data and expectations of a central bank interest rate-cut by the Fed in the US. Another positive was that 80% of US companies that reported third quarter earnings beat expectations. This included Nvidia, the world’s highest valued company, whose sales grew by 62% as profit exceeded expectations to reach $31.9bn.

The markets least impacted by the US and AI sell-off were Europe and the UK, which were both essentially flat. Investors in the UK had been waiting for announcements from the Autumn Budget on the 26th of the month. What was delivered whilst not great (a tax & spend budget), was not as negative as many had feared. Even though the Budget proposals are not as supportive for growth as had been hoped, they potentially provide scope for the Bank of England (BoE) to be able to cut UK interest rates going forward, which could be a positive for UK equities and the bond market.

Emerging markets and the Asian equity markets have been the leading markets so far this year. These markets sold-off – 3.1% and -2.6% in this risk-off environment. The Nikkei was hit by tensions between Japan and China. A war of words, sparked by Japanese Prime Sanae Takaichi saying Chinese action against Taiwan would prompt a Japanese military response, escalated into Beijing implementing a no-travel advisory for Japan and banning Japanese seafood.

Defensive assets delivered positive returns and good diversification for multi-asset portfolios. With equity markets retreating, and with the prospect of rate cuts from the Fed, we saw gold rebounding strongly with a return of +5.0%. At the same time fixed income markets delivered marginally positive returns.

Despite being a down month for most equity markets, we must not lose sight of the strong performance we’ve seen across the board through the year, and notably the strength in markets since the lows post Liberation Day. It was always likely at some point that markets might take a breather.

Global markets continued to rally in October. They extended gains over the three-month period despite some potential obstacles including the first US government shutdown since December 2018, uncertainties over inflation and tariffs, and worries about an AI stock bubble. Global equities posted gains of 5.5% over the month with strong results across both developed and emerging markets.

Within developed markets, Japan was the best performing region posting a gain of +6.7%. Sanae Takaichi became Japan’s first female prime minister, which was viewed as a market positive given her aims to pursue expansionary fiscal and monetary policies. The US was also a strong performer over the month with the S&P 500 returning 6.1%. This was on the back of strong corporate results, with over 80% of companies on the S&P 500 managing to report positive earnings surprises through the third quarter.

The rally was also heavily influenced by AI speculation which has been a dominant driver of economic activity both in the US and globally. This has particularly benefitted sectors in information technology (e.g. semiconductors, software, data centres) as well as utilities and energy companies that can help meet the future energy requirements for this technology. Throughout the month we did see a growing number of commentators and major institutions, including the Bank of England (BoE) and the International Monetary Fund (IMF), express concerns about an AI bubble and US tech-stock valuations. The collapse of two regional US banks also raised alarm bells about the broader health of US private credit. In the end, October turned into a rather contradictory month where US markets posted positive returns despite an array of gloomy headlines.

The UK and Europe also provided solid results, returning 4.4% and 3.9% respectively. Asia and emerging markets finished the period on a particularly strong note although there was volatility along the way as Trump’s tariff threats in early October escalated to “massive increases” on Chinese goods and the potential cancellation of bilateral talks between the US and China. However, sentiment bounced back after both sides met and agreed a deal that would pause steeper US tariffs and limit China’s export controls on rare earths materials, a key component in the AI supply chain. This boosted markets like South Korea and Taiwan that are heavily reliant on these materials. As a result, the emerging markets indices rose 6.6% by the end of October.

Although returns across bond markets were once again subdued in comparison to equity markets, they were still positive providing a good ballast to portfolios. Rate cuts in the US and controlled inflation were major contributors. The US government shutdown could have stoked concerns, but these were generally overlooked by markets. In the UK, softer than expected inflation data in October coupled with expectations of further rate cuts helped boost Gilts over the month.

One ounce of Gold went past $4,000 for the first time as investors continued to seek out the safe haven asset. Towards the end of the month, gold did go through it’s biggest sell-off for twelve years, but that wasn’t enough to stop it entering November at $4,022 per ounce.

A strong period all round – it is not often we see the central bank cutting interest rates when the economy is not in recession, which is the scenario we’re in with the US. However, this could add fuel to the fire and provide tailwinds for markets later on. It appears the thought of mid-term elections next year, is front and central in Trump’s mind and he is looking to drive the US economy and the stock market to gain support. The risks are that this could contribute to inflation, especially twinned with the impact of the tariffs. So far markets have favoured the positives over the negatives.

Despite lingering concerns from earlier tariff shocks and geopolitical tensions, equity markets rallied on AI-driven optimism, cooling inflation, and expectations of central bank rate cutting. The latter notably from the Federal Reserve in the US. Whilst at the same time, the US showed economic resilience with Gross Domestic Product (GDP) growth for the third quarter, with GDP being revised upwards to nearly 4% on an annualised basis. Positives certainly seemed to outweigh any negatives.

All equity regions delivered positive returns over the month with the best performing being the emerging markets and US posting returns of +4.2% and +2.8% respectively. US President Trump continues to talk down the strength of the dollar, arguing it would be good for US competitiveness. This coupled with interest rate cuts and challenges to the Federal Reserve’s independence all have contributed to a weaker dollar, which declined a further 2% through September. A weaker dollar is normally a positive outcome for emerging markets, and so it proved. Generally it lowers the cost of financing and debt and can be a tailwind for capital flows. Alongside this, we have seen rising consumption and positive news flow from companies in the emerging regions.

Global equities were broadly up +2.1%, with the US +2.8%. Technology and AI-heavy stocks were the leaders on the back of continued euphoria over AI-driver optimism, while expectations of further interest rate cuts could potentially provide a tailwind for markets.

Japan, Europe and the UK lagged but still posted positive returns. If we take Japan as an example – the Nikkei 225, the index of the largest 225 companies hit an all-time high, passing through the 45,000 level for the first time. More positive news on tariff deals, corporate reforms and share buybacks were some of the drivers. It was a similar situation in our home market with the FTSE 100 also hitting all-time highs. While there remains concerns about what November’s UK budget might bring, this did not hold the market back, and what was particularly pleasing to see was the domestic and small cap parts of the market outperforming large cap shares. Halfway through the month, we also saw Trump make his second UK state visit and agree to invest £150bn in the UK as part of the “Tech Prosperity Deal”.

Though returns across bond markets were subdued relative to the equity markets, they were still positive, providing a good ballast to portfolios. Rate cuts in the US and controlled inflation were major contributors. The US government shutdown could have stoked concerns but was generally overlooked by markets.

A strong month all round. It’s not often we see the central bank cutting interest rates when the economy is not in recession, which is the scenario in the US. This could potentially add fuel to the fire at a later date but is currently providing a tailwind for markets. It appears the thought of mid-term elections next year, is front and central in Trump’s mind and he is looking to drive the US economy and the stock market to gain support. The risks are that this could contribute to inflation especially twinned with the impact of the tariffs. So far markets have favoured the positive interpretation over the negatives.