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• Equities outside the US rose: UK +0.9%, emerging markets +1% and Asia ex-Japan +1.4% (in sterling terms)
• Brent crude oil rose +7.3% in dollar terms on geopolitical risk, this week centered on US-Iran

• Metals, including gold – see below
• US equities slid -0.5% on mixed tech earnings (more below) 

Gold, silver and copper investors stomached a rollercoaster ride last week after relentless rallies became increasingly speculative. At the start of a rare week, on 26 January silver was the most-traded type of ETF in the US, even outstripping equity investors’ interest in the S&P 500 or Russell 2000. Four days later, silver slid 26% – its biggest ever one-day fall. Gold and copper also faltered. Although there is no single reason, many investors have been buying more real-assets – which may hold their value and protect against inflation and political risk – as a hedge in uncertain times. But President Trump’s nomination last week of Kevin Warsh as the next chair of the US Federal Reserve (Fed) may have calmed nerves. Seen as a relatively safe and credible choice, Warsh is an experienced Fed governor and is not expected to undermine the central bank’s independence or take his eye off inflation. Despite the sell-off in gold, the structural reasons for owning it are likely still in place: geopolitical risks are high; many central banks seem keen to build their reserves; the yellow metal still only accounts for less than 3% of global assets under management; and international investors may be looking to diversify a little more from the US dollar. Interest from retail investors has likely amplified recent price swings.

The US dollar traded at lows not seen since early 2022 at the end of last week, capping a poor start to the year. The dollar index (DXY) – which measures the value of a dollar against a basket of other currencies – fell around -2% in January, the largest monthly decline since June. Several factors are at play, including an expectation that the Federal Reserve (Fed) will cut interest rates further, trade policy uncertainty, and a rising US fiscal deficit. And some of these factors have eroded investor confidence in US economic stability. Rumours that US and Japanese authorities might prop up a weak yen, and the prospect of another US government shutdown, also pressured the dollar – although politicians did reach a provisional deal which should avoid a shutdown. The DXY recovered some ground last Friday, after President Trump’s nomination of Warsh becalmed markets. 

While a weaker dollar might add to inflation as the cost of imports rise, it can benefit US exporters – as the dollar value of foreign revenues increases. Consequently, it may also help improve the US trade deficit – as the US imports more than it exports.

The EU and India signed a new free trade agreement last week. The deal eliminates most tariffs on imports of Indian textiles (hardest hit by the US’s new tariff regime), machinery and chemicals. Meanwhile, Indian levies on EU cars will be reduced from 110% to 10%, with a quota of 250,000 vehicles a year. Tariffs on European food products will also be either reduced or removed. Wine tariffs will be halved to 75% and eventually drop as low as 20%, and olive oil from 45% to zero over the next five years. Although undoubtedly symbolic for the EU and India, many experts doubt the deal’s real economic impact, even though the EU is India’s largest trading partner. For both, it’s no substitute for better trading terms with the US. Promises of greater co-operation over security, defence and skilled migration may yet prove problematic, given the EU and India’s differing relationships with third countries like Russia. The deal still needs to be ratified by the European parliament, EU member states and India’s cabinet. It comes hot on the heels of the EU’s trade deal with Mercosur – a bloc of Latin American countries including Brazil, Argentina, Uruguay and Paraguay.

• Mixed mega-cap tech earnings – US tech company results were mixed. Microsoft fell as slower Azure cloud growth disappointed, while Meta jumped +9.5% on strong revenue and guidance. Apple rose after profits beat forecasts driven by record iPhone sales and a rebound in China, but Tesla dipped on weaker revenues and higher AI spending plans
• ASML delivers record results – its record earnings were driven by strong demand for AI-related chip equipment and its upgraded outlook for 2026
• Amazon eyes major OpenAI investment – Amazon is reportedly in talks to invest up to $50bn in OpenAI, the owner of ChatGPT, signalling a significant AI commitment
• AstraZeneca expands in China – Britain’s biggest drugmaker AstraZeneca announced a $15bn investment in China during the UK prime minister’s visit, just months after pulling back from earlier UK expansion plans
• US weight in global index falls – The US share of the MSCI All Country World Index (ACWI) has dropped to 63% (down from 67%), its lowest level in two years, as global markets outperform and leadership broadens beyond US mega-cap stocks
• US consumer confidence slumps – US consumer sentiment fell to 84.5, its lowest level since 2014. The survey came in far below consensus 91.1 and highlights growing economic strain, with the rising cost of living weighing on poorer households
• US durable goods orders jump – New orders for manufactured durable goods rose +5.3% in November, beating forecasts of +3.1%. The increase was led by a surge in Boeing aircraft orders, while core orders also showed underlying strength
• US producer prices rise – Producer prices rose +0.5% in December, exceeding expectations of +0.2%, driven by a +0.7% increase in service prices. The data suggests businesses are passing higher import tariff costs through the supply chain, increasing the risk of higher inflation in the months ahead
• 2025 Eurozone growth beats forecasts – The eurozone economy grew +1.5% in 2025, up from +0.9% in 2024, exceeding the European Commission’s +1.3% forecast. GDP rose +0.3% in the fourth quarter, slightly above expectations, as stronger growth in Germany, Spain and Italy offset slower growth in France
• Renewables overtake fossil fuels in EU – Wind and solar generated more EU electricity than fossil fuels for the first time in 2025. Wind and solar now account for around 30% of electricity generation, marking a major milestone in the transition to cleaner power
• Bitcoin’s pullback continues – Bitcoin fell below $80,000 amid a broad crypto market pullback; it has fallen more than 10% year-to-date and ~38% from its October 2025 peak

Disclaimer

Past performance is not a reliable indicator of future returns. Nothing herein should be construed as a recommendation to hold, buy or sell any security or encourage any investment decision. The mention of any particular asset class, sub-asset class or company does not imply that it is held, or may ever be held, in any product or service.