Equity markets got off to a strong start in 2025, with the MSCI World index increasing nearly 3.5% in local currency terms.
The UK market was among the strongest performers, bolstered by a lower-than-expected inflation figure and the weakness of sterling; the FTSE 100 derives a significant chunk of its earnings from overseas and can therefore benefit from foreign currencies appreciating against the pound. The index reached a new all-time high during the month
Meanwhile US chip giant Nvidia was once again in the headlines, but this time for the wrong reasons as its share price suffered a 17% drop on 27th January. This was due to the emergence of a considerably cheaper-to-produce AI model from small Chinese company DeepSeek. The US tech sector was spooked, with the NASDAQ index dropping nearly 3% on the day. Meanwhile Nvidia’s significant drop equated to nearly $600 billion, making it the biggest one-day wipeout for a single stock in US stock market history.
Full round-up of January market performance
In the UK, the FTSE 100 index gained 6.20% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, returned 1.78% and 1.24%. In the US, the S&P 500 USD index rose 2.78% while in Europe the Eurostoxx 50 EUR index surged 8.14%. Japanese stocks measured by the Topix JPY index crept up 0.14%.
Emerging markets returns were mostly positive, with the MSCI Emerging Markets index amassing 1.62% in local currency terms. Latin American equities, measured by the MSCI Latin America local currency index, climbed 5.91% while Indian stocks measured by the Nifty 50 INR index slipped 0.58%. Chinese stocks measured by the MSCI China CNY index picked up 1.06%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, gained 0.80% with long dated (over 15 years to maturity) gilts rising 0.93%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, returned 1.18%. In the high yield market, the ICE Bank of America Sterling High Yield index gathered 1.21%.
In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, appreciated 3.32%. Brent crude oil futures climbed 1.13% during the month. In the precious metals markets, the S&P GSCI Gold and Silver indices surged 6.67% and 10.74% in USD respectively, while in the agricultural markets corn and wheat futures grew 5.13% and 1.45% in USD respectively.
In currency markets, it was a weak month for the pound as it depreciated 0.97% versus the US dollar, 1.03% against the euro and 2.23% versus the Japanese yen.
