January brought about a quick halt to November and December’s euphoria as it digested whether the market had gone too far in anticipating a flurry of rate cuts later in the year.

The Gilt market sold off and investors took profits (albeit short-term) on equities. The Bank, Fed and ECB all held their rates, with two members of the MPC voting for a hike. US non-farm payrolls massively exceeded expectations (creating c.350k new jobs) and all-in-all the prospect of a spring rate cut looks more and more distant.

As a consequence, the FTSE 100 was -1.3% and the FTSE Small Cap -2% on the month. The European and US indices all fared better, being slightly positive for the month. The Japanese markets led the way with the Nikkei 225 up 8.4% over the month, off the back of inflation data, slowing down to below the BOJ’s 2% target for the first time in two years. 

In the UK the Industrials and Staples names led the way. The Supermarkets had a particularly strong festive period with Marks & Spencer deemed the winner whilst the Miners took the most pain in January. 

We will continue to focus on the fundamentals of our holdings and take action as and when results are announced, although in the short term the actions (or inactions) of the Central  banks will hold the most sway over the direction of the market. 
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.