January’s investment market commentary

After a very challenging 2022, January proved to be an excellent month for markets with global equity and bond markets rallying strongly. Market sentiment was upbeat on expectations of cooling inflation and lower interest rates, but will this optimism be undermined by slower economic growth and stickier inflation ahead?
Published 7 February
2½ mins

January proved to be an excellent month for markets. After a very challenging 2022, global equity and bond markets rallied strongly during the period. Investor sentiment was supported by several factors, the main being: declining inflation, relatively mild weather in Europe (helping to push down energy prices) and China’s reopening after the government abandoned its zero-Covid policy late last year.  This resulted in markets rapidly discounting the best possible scenario of sharply falling inflation (back to central bank targets), falling interest rates, and a ‘soft-landing’ for economic growth. While it is undoubtedly nice to see some ‘green on the boards’ (positive returns), we believe that markets may have got ahead of themselves given the likelihood of slowing economic activity, due to the accumulation of monetary policy tightening and ‘stickier’ inflation ahead, which will limit the ability of central banks to cut interest rates.

Global equity markets (+6.5%) were up sharply on the month. The improved energy situation benefited Europe ex UK (+7.0%), the loosening of COVID restrictions in China boosted Asia ex-Japan (+6.9%), while UK (+4.1%) equites lagged. In terms of style, the interest rate sensitive growth stocks (+9.6%) outperformed the more value / cyclically oriented equities (+5.0%). This was to some extent also reflected in sector performance, with consumer discretionary (+14.1%), communication services (+13.2%), and information technology (+10.5%) the best performing areas. At the other end of the spectrum, healthcare (-0.4%), utilities (-0.1%) and consumer staples (+1.4%) sectors trailed the most.

Within fixed income markets, declining inflation and increased risk appetite meant all areas generated positive returns. Looking at the detail, global government bond prices rose (+1.8%), on reduced interest rate expectations. Global investment grade credit (+3.5%) generated a positive return over the month as spreads tightened, and at the risker end of the credit spectrum the same was true with global emerging market debt (+3.1%) and global high yield (+3.9%) also rallying strongly during January.

In terms of real assets, the more economically sensitive property markets outperformed equities over the month, with the global REITs index up +9.0% over the period while global listed infrastructure (+1.4%) lagged. Commodities (-0.5%) were broadly flat on the month, however, there was significant divergence across the different markets.  Industrial metals (+8.1%) was the strongest area, supported by China’s reopening, closely followed by gold (+6.0%) which itself was helped by a weaker US dollar. In a reversal of some of the gains seen last year, it was energy (-9.7%) that was the weakest area with natural gas (-34.3%) falling sharply on lower demand due to warmer weather in Europe.

FTSE 1007451.747771.7
DJ Ind. Average33147.2534086.04
S&P Composite3839.54076.6
Nasdaq 10010939.7612101.93
£ Base Rate3.53.5
Brent Crude85.9185.46

This month’s values quoted as at 31/1/2023. 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

Simon Watts

Simon Watts

Based in the London office, Simon was appointed to the role of senior investment analyst in 2012, focusing primarily on fund research and portfolio management for Nedgroup Investments, a sister company of Nedbank Private Wealth. Simon has 20 years of industry experience in asset management and is a Chartered Financial Analyst.


Prior to joining the firm, Simon worked as a senior investment analyst at XL Group, a global insurance and reinsurance company, within its investment management division. Further experience includes working at UBS Investment Bank within their economic research department as an economist and strategist, focusing on emerging European markets.

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