January 2025 Market Update

Overview

Stock markets had a strong start to 2025, with UK investors seeing a 4.6% total return in January.

Markets appeared to be encouraged by softer inflation data from the US and UK, which in turn allowed for optimism on the direction for Central Bank rates, with the UK cutting rates shortly after month-end. Although interest rates are now expected to remain higher than pre-Covid levels, this appears to have been absorbed by markets with attention switching to the pace of growth in the coming quarters.

A key theme over the month was the impact of President Trump’s economic agenda, with tariffs announced on Canadian, Mexican and Chinese goods – and subsequently partly retracted. The impact of this and other policies on growth and inflation is likely to become increasingly apparent in the coming months, with markets watching Trump’s actions closely.

Gold was the top asset class over the month, with traders moving physical gold to vaults in the US in a bid to avoid potential future tariffs. Meanwhile, Central Banks continued to add to holdings, with the metal rising

Full update below…