January set a mixed tone across global markets, driven by key policy moves, investor behavior, and geopolitical tensions.
Money Market Inflows and Global Volatility
Investors sought safety amid uncertainty over the upcoming U.S. tariffs and a major U.S. jobs report, causing a surge of $158.7 billion into global money-market funds, marking the second-largest weekly inflow since 2020. Equity funds also saw inflows, especially in Europe and Asia.
Diverging Central Bank Actions
The Federal Reserve kept interest rates unchanged, weighing low growth concerns against inflation risks. Meanwhile, the European Central Bank hinted at potential rate cuts to protect the eurozone from U.S. tariff fallout. These differing approaches triggered shifts in bond and currency markets.
Equity Markets and Tech Trends
Global equities ended January with gains of around 3.3 percent. International stocks led the way, with the MSCI EAFE rising 5.3 percent. In the U.S., tech stocks faced some pressure, partly driven by developments in China’s AI sector. Value stocks outperformed growth, and emerging markets posted modest gains.
What It Means for You
Cash flow strategy remains essential. With interest rates steady and inflation risks still present, maintaining liquidity is important.
Global diversification proved valuable. The strength in non-U.S. equities highlights the importance of a geographically balanced portfolio.
Policy changes deserve close attention. U.S. trade actions and central bank policies may trigger further market volatility. Staying informed and adaptable is key.
Markets are adjusting to trade dynamics, monetary policy shifts and technological disruptions. This evolving landscape calls for a flexible approach and a long-term view. Let us know if you’d like help interpreting what these trends could mean for your strategy.
