- Insights
- Articles
- Global Market Overview | January 2026
Global Market Overview | January 2026
02 February 2026
Ashburton Investments
Share via:
Written by the FNB Wealth and Investments Research team
The first month of the new year was dominated by headlines surrounding geopolitical tension between the United States (US) and several nations as well as a fresh round of new tariff threats. This continued to fuel the “sell America” rhetoric, pushing the US dollar deeper into bearish territory towards levels last seen in 2022. Sentiment remained broadly “risk on” however and emerging markets rallied strongly with the MSCI Emerging Markets index getting ahead by ~10.8% - a strong outperformance compared to developed markets (MSCI World index: +2.7%). The risk-on shift also extended to the US with the Russell 2000 index (+7%) outperforming the tech sector (FANG+ Index: -2.2%), intensified by doubts resurfacing over whether spending on artificial-intelligence (AI) infrastructure will translate into earnings over time. Precious metals remained in the spotlight as well with safe-haven champion, gold, extending its record-breaking rally above $5 500 an ounce amid escalating geopolitical risks, the possibility of another US government shutdown, dollar debasement and growing expectations of further monetary easing.
Fortunately, there was some easing in geopolitical tensions after U.S. President Donald Trump ruled out the use of military force regarding the U.S. plan to acquire Greenland as a strategic asset for national security purposes. Trump also withdrew the additional import tariffs previously threatened against eight European economies during the height of tensions over Greenland, which had been due to take effect on 1 February. This provided some breathing room for investors and helped the S&P 500 Index gain approximately 1.9% for the month.
The Federal Open Market Committee (FOMC) held its first meeting of the year and kept the benchmark federal funds rate unchanged, in line with market expectations. Post-meeting commentary from Federal Reserve Chair Jerome Powell pointed to a clear improvement in the U.S. economic outlook, including a more favourable assessment of the labour market, which has shown signs of stabilisation. Following three rate cuts last year, the Fed continues to maintain a data-driven approach. Recent economic indicators, including accelerating GDP growth, stable inflation and improving employment data, have provided little evidence that additional intervention is required to support the economy.
In Europe, the Euro Stoxx 600 Index gained 2.6% as equity markets rebounded toward month-end following an easing of geopolitical tensions between the U.S. and Europe relating to Greenland. However, geopolitical developments may continue to influence market sentiment, particularly as trade tensions between the U.S. and Canada re-emerged.
Across the Asia-Pacific region, China delivered a strong performance, with the MSCI China Index rising 7.5%. Strength in the global semiconductor sector provided additional momentum, while investors responded positively to several key economic releases, including robust GDP growth figures. The Chinese economy expanded by 5% last year, meeting Beijing’s official growth target as a record trade surplus supported economic activity.
Chinese property shares also benefited from reports that borrowing restrictions on property developers, known as the “three red lines” policy, will no longer be required. This move is being interpreted as a step away from measures that contributed to the debt crisis that continues to weigh on the world’s second-largest economy.
Locally, the JSE was among the best-performing emerging market exchanges, with the All Share Index gaining 8.2% and 13.5% in USD terms. A continued surge in commodity prices drove a 26% gain in the resources sector. Together with a weaker U.S. dollar, which fell to its lowest level in four years, this contributed to significant strength in the rand, which strengthened beyond the R16/USD level for the first time in four years.
The South African Reserve Bank (SARB) also held its first meeting of the year, keeping the repo rate unchanged at 6.75%, as widely expected following a 25 basis point cut in November last year. The decision was not unanimous and, while the inflation outlook continues to improve, policymakers are likely to seek further evidence that inflation expectations are firmly anchored before implementing additional rate cuts.
Outlook
Local
Global growth remained resilient in 2025 despite ongoing geopolitical tensions and changes in global trade policy. Supportive financial conditions and the adaptability of businesses, including strategies such as import front-loading and reshoring, helped sustain economic momentum. However, higher U.S. import tariffs are expected to place increasing pressure on countries that rely heavily on a narrow export base or are slow to diversify export markets. In the near term, favourable financial conditions and potential fiscal stimulus are expected to continue supporting global activity. Over the medium term, the risks of higher inflation and asset repricing could place pressure on financial conditions, growth prospects and currency valuations.
South Africa’s reform momentum continues to strengthen the country’s growth outlook. Key developments include the successful removal from the Financial Action Task Force (FATF) grey list and a recent sovereign credit rating upgrade from S&P. These developments are improving investor confidence and should support stronger economic growth. Investment spending is expected to complement household consumption, helping growth trend toward 2% over the forecast horizon.
South Africa’s inflation outlook has improved further, supported by softer goods inflation while services inflation continues to normalise. Inflation is expected to average 3.1% this year, compared to 3.2% last year and 4.4% in 2024, and is projected to remain around the 3% level over the medium term.
Despite this improvement, the SARB is expected to maintain a relatively restrictive monetary policy stance while inflation expectations become firmly anchored around its 3% target. Nevertheless, we continue to expect a 25 basis point rate cut during each half of the year, with monetary policy gradually moving toward a neutral setting. Lower real and nominal interest rates should provide greater support for credit demand and investment activity.
Overall, South Africa’s macroeconomic outlook is expected to continue improving, supported by structural reforms, fiscal consolidation, lower inflation, a gradual recovery in fixed investment and resilient household spending. Lower-income households are using recent gains in disposable income to stabilise their financial positions and are likely to return to credit markets from a stronger base. Higher-income households, supported by positive wealth effects from equity and property markets and reduced policy uncertainty, are showing a greater willingness to invest locally. Together, these trends reinforce the view that the economy remains in an upward phase of the cycle.
Global
Global policy uncertainty increased again in January as the Trump administration intensified geopolitical tensions through actions involving Venezuela, Greenland and renewed tariff threats against selected countries.
Economic data from the United States has generally exceeded expectations and growth forecasts have improved. Bloomberg consensus expectations for U.S. growth in 2026 have increased to 2.4%, compared to 1.8% just two months earlier.
Growth expectations for Japan, Europe and China have also improved for 2026, largely reflecting the anticipated impact of fiscal stimulus measures.
U.S. Consumer Price Index (CPI) inflation for December came in as expected at 2.7%, while core inflation measured 2.6%. Although inflation continues to move in the right direction, it remains above the Federal Reserve’s 2% target. Shelter inflation and core services inflation are expected to continue moderating, helping overall inflation trend lower. However, there remains a risk that inflation could prove more persistent than expected, particularly depending on the eventual level of tariffs implemented.
The Federal Reserve kept interest rates unchanged at its January meeting, as expected. Ten members voted in favour of maintaining rates, while two members preferred a 25 basis point cut. Following the meeting, Chair Jerome Powell noted that the outlook for the economy had improved substantially since the previous meeting, which should support labour demand and employment over time. Market expectations now suggest that further rate cuts may only materialise once a new Federal Reserve Chair takes office after May 2026.
Gold rallied strongly during January, reaching approximately $5,550 per fine ounce. The move was supported by central bank buying, geopolitical tensions, policy uncertainty, lower interest rates and increased investor demand. Platinum group metals (PGMs) and silver also delivered strong gains during the month.
Oil prices rose more than 17% during the month as tensions between the United States and Iran intensified. Brent crude traded above $71 per barrel amid concerns that military conflict could disrupt global supply.
Given the wide range of geopolitical and macroeconomic uncertainties currently facing markets, we remain closely aligned to our strategic asset allocation benchmarks.
Additional Insights
Contact Us
Our team of investment specialists is ready to discuss how we can help you achieve your financial objectives.
Call us on011 685 5050
Email us onclientservice@ashburton.co.za
Johannesburg Head Office2 Merchant Place, 1 Fredman Drive, Sandton, Johannesburg, 2196
Request a callback
Contact Us
Our team of investment specialists is ready to discuss how we can help you achieve your financial objectives.
Call us on+27(0) 860 000 339
Email us onquery@ashburton.co.za
Johannesburg Head Office2 Merchant Place, 1 Fredman Drive, Sandton, Johannesburg, 2196
