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January market performance: There’s just no way out of the financial rollercoaster

Market Rewind
Soren Otto 400x400
Søren Otto Simonsen

Senior Investment Editor

Summary:  After a tough end to 2022 for global financial markets, January will be remembered for three things: 1) positive returns are great, 2) it’s been a rollercoaster ride up and down for the past three months, and 3) central bank meetings and earnings season will be important in February.


Global equities increased with seven percent over January. A month ago, when we looked at December, they fell more than four percent. Back then, we argued that the financial markets are on a rollercoaster ride and January only strengthened that analogy.

Check out these numbers: in November, global equities performance was +6.8%, in December-4.3% and now January posted +7%. Since October, these market rewinds have shown monthly global equity performance with changing falls and increases of more than four percent every single month. Up and down, and up…

While this relatively simple depiction of how markets are performing isn’t an absolute truth, it does point to financial markets having a hard time figuring out what to believe in. To some extent a fair issue, as there’s enough to worry about like conflicting macroeconomic figures, geopolitical conflicts, inflation and interest rate increases and a reopening of the Chinese economy. Whether or not recession is coming, whether central banks are making financial conditions too harsh and whether the tightening regime is soon gone are just a few of the topics that occupy market participants and add to the seemingly directionless performance experienced over the past three months.

Towards the end of January, earnings season, which runs into February, as well as some important central bank meetings as early as 1 February were in focus.

Web 1200x500 Global equity performance 20230201

US 6.2%.
The American market – as the lowest performing region – climbed six percent in January despite discussions of recession picking up. Still, the market was positive because of a variety of factors, such as easing inflation numbers, strong job market reports and whispers of easing financial conditions based on the potential for less aggressive central bank policy.

Europe 6.7%.
European stocks increased a bit more than seven percent in January. A key driver of this performance is the expectation – or hope rather – that leading central banks will slow their interest rate increases, either in terms of actual tightening or a slower pace of tightening, which will create a more attractive business environment than currently.

Asia 7.8%, Emerging Markets 7.9%.
Both the Asian and Emerging Market regions were supported by a strong performance in China after ending it’s lockdown-heavy zero COVID policy, despite more muted performance in the days after being closed for Chinese New Year.

Web 1200x500 Regional performance 20230201

The equity sectors haven’t been able to get off the rollercoaster either. Back in November, every sector posted positive returns, in December negative returns and in January, we’re back to a thrill ride with only Healthcare in minus and Utilities at status quo.

Interestingly, it was Consumer Discretionary that fell the most in December (-8.6%), but in January, it stood on top of the world, returning almost 15% for the month. To a large extent, you can almost flip last month’s performance.

Take an area like Information Technology, which is always in focus it seems. In December, it fell by eight percent, while it more than made that back in January, increasing with 10.

Web 1200x1200 Sector performance 20230201

Global bond performance – and specifically corporate bonds – posted strong returns of more than two and three percent respectively relative to what can be expected by the asset class. The positive numbers come on the back of central bank policy and a potential belief that especially corporate investment grade bonds may fare better than equities in the uncertain environment we are experiencing currently.

Web 1200x500 Global bond performance 20230201
Check out the rest of this month’s performance figures here:
A4 Monthly market performance 202302012x

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