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

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.

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.

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.