Outlook
Market Review – January 2026
3 min read 10 Feb 26
For more information on the financial terms used in this article, please consult the glossary.
January was another good month for stockmarkets around the world, with gains led by some emerging markets. In fixed income (also referred to as bonds), US Treasury (US government bonds) and UK Gilt (UK government bonds) returns were muted, but European sovereign bonds (bonds issued by European governments) were buoyed by weaker-than-expected inflation. The US dollar weakened against every other G10 currency (the ten most heavily traded currencies in the world) in January.
Emerging market equities (company shares in developing economies) led stockmarket gains, supported by a softer US dollar, artificial intelligence (AI)-related growth in North Asia, and commodity-driven strength in Latin America. Japan also performed strongly, lifted by yen weakness and optimism around the snap election called by Prime Minister Takaichi, which investors interpreted as supportive for pro-growth fiscal policy (government spending designed to boost the economy).
European equities also gained, despite US tariff threats (which were ultimately withdrawn), linked to Greenland. US stockmarkets ended the month on a positive note in US dollars, but lagged other regions, although the S&P 500 Index (which tracks the 500 largest US stocks) briefly popped above 7,000 at one point.
European sovereign bonds were buoyed by weaker-than-expected inflation, which led to hopes the European Central Bank may cut rates in 2026. In the US, the Federal Reserve held rates at 3.5–3.75%, although two Federal Open Market Committee (FOMC) members voted for a cut. The total return on US Treasuries was flat in the month. Japanese sovereign bonds underwent a sharp sell-off following the announcement of snap elections, with long-end yields (yields on bonds with maturities of ten years or more) reaching multi-decade highs. Corporate bonds recorded gains and emerging market bonds benefited from the weaker US dollar and broad risk-on appetite.
Despite a sharp pull-back towards the end of the month, gold and silver recorded double-digit returns (at one point the gold price reached over US$ 5,500 per ounce). Concerns over central bank independence and escalating tension in the Middle East drove gains. The oil price registered its biggest monthly gain in four years as President Trump warned that “a massive Armada” was heading to Iran. Copper prices continued to climb, supported by structural demand from the global AI and electrification build-out.
Investments involve risks and may not be suitable for all investors. Past performance is not indicative of future results. The value of investments may go up or down and is not guaranteed. You may not recover the full amount you invested. The views expressed in this document should not be taken as a recommendation, advice or forecast. If you are in any doubt about the contents of this document, you should seek independent professional advice.