January’s investment market commentary

January was a negative month for risk assets, due to increasingly hawkish rhetoric from central banks and more persistent inflation than previously forecast.
Published 8 February
2 mins

January was a negative month for risk assets, due mainly to the increase in hawkish rhetoric by the central banks as a result of higher and more persistent (less transitory) inflation than previously forecast. This translated into the market pricing in a greater number of interest rate hikes this year. For example, the market went from expecting around three (25 basis point) increases by the US Federal Reserve at the start of the year to five hikes by the end of January. The expectation of tighter monetary policy caused risk assets, especially the more expensive parts of the market, to sell off and volatility to significantly increase during the month. The decline in risk appetite was exacerbated by geopolitical concerns, with the threat of Russia invading Ukraine and the related tensions/brinkmanship between Russia and the United States.

Global equity markets were down sharply on the month (-4.6%), with the more expensive and ‘tech’ heavy markets such as the US (-5.7%) falling the most. The cheaper and more cyclically exposed UK stock market (+1.9%) generated a positive return, while emerging market equities (-1.8%) outperformed developed markets on a relative basis, having significantly lagged developed markets in 2021. In terms of style, growth stocks (-8.6%) substantially underperformed the more value (-1.2%) cyclically-orientated equities. This was also reflected in sector performance with higher valued information technology stocks (-8.2%) falling considerably, while cheaper financials (+1.4%) and energy (+13.1%) sectors rose.

Within fixed income markets, the expectation of increasing rate hikes from central banks combined with the sell-off in risk assets meant there was no place “to hide”, especially within “safe haven” government bonds. Looking at the detail, UK government bonds (-3.8%) and global investment grade credit (-2.6%) generated a negative return over the month, while at the riskier end of the spectrum global high yield (-2.4%) and emerging market hard currency debt (-2.9%) also declined as spreads widened.

In terms of real assets, property markets generated an equity-like return over the month with the global REITs index down -5.0% over the period. Commodities (+8.8%) were up sharply, led mainly by crude oil (+17.7%) as a result of higher demand expectations (due to reduced concerns over the Omicron variant of COVID-19) and geopolitical tensions with Russia over Ukraine.

FTSE 1007384.547464.37
DJ Ind. Average36338.3035131.86
S&P Composite4766.184515.55
Nasdaq 10016320.0814930.05
£ Base Rate0.250.25
Brent Crude77.7889.26

This month’s values quoted as at 31/01/2022. The above values are sourced from Bloomberg and are quoted in the relevant currency.

Clients of Nedbank Private Wealth can get in touch with their private bankers directly to understand how their portfolios are responding to market events or call +44 (0)1624 645000 and speak to our client services team.


If you would like to find out more about how we help manage clients’ investments, please also contact us on the number above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

about the author

Tom Caddick

Tom Caddick

Tom joined Nedbank Private Wealth as its chief investment officer in March 2021. Prior to joining, Tom was at Santander Asset Management in London for nine years, where he was, most recently, chief investment officer for the UK business and previously global head of the multi asset division. He has over 20 years’ investment experience, including several years as head of multi manager and fund selection at LV Asset Management.


Tom’s responsibilities include heading the London-based investment team, and chairing both the International Strategy Committee and the International Investment Committee. Tom is also part of the international investment team for Nedgroup Investments, a sister company of Nedbank Private Wealth.

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