January Market Commentary

A view of the markets in January 2025. Commentary provided by Upper Park, a Thornbridge Appointed Representative.

Overview of the global situation:

January 2026 has been an eventful month. The year started with the US abducting the Venezuelan president, legal action against Fed Chairman Powell, President Trump threatening to acquire Greenland by force, a mild protest from a few European countries who were then threatened with retaliatory tariffs, and a reported Canada–China trade deal, which also met with threats of retaliatory tariffs from President Trump. Meanwhile, the US were building a military presence around Iran in response to an uprising in that country, and Sanae Takaichi announced an early general election in Japan, seeking a mandate for more defence spending, a suspension of food taxes, and all-round faster growth.

Effect of uncertainty on markets:

Geopolitical uncertainty and therefore economic and monetary uncertainty are elevated. These events have been supportive of precious metals, although towards the end of the month, liquidity was very scarce, and sharp unexplained movements became more frequent. Oil and copper also rose strongly during the month, encouraging a strengthening of the commodity-related currencies. Interest rates remained in quite narrow ranges, largely overshadowed, while several non-US equity markets, particularly those of commodity-producing and emerging markets, saw very strong performances.

Where we stand ahead of the next month:

On the last day of the month, President Trump announced his Fed Chair designate choice of Kevin Warsh, who is well regarded. He has served at the Fed before between 2006 and 2011, and has critiqued the Fed’s performance in recent years. An ex-colleague of Treasury Secretary Bessent, he is widely expected to enact significant reforms within the Fed, addressing many of the current Administration’s concerns. It remains to be seen just how radical the changes will be, but change should offer a fertile environment for trading.

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