Any hopes that global trade war fears, geopolitical crises and the unpicking of the international rules-based system would be confined to 2025 were dashed with the US capture of Venezuelan President Maduro in early January. And yet, global stock markets ended the first full week of the year in positive territory.
Then came Greenland, ‘a piece of ice’ long coveted by US President Trump. A weekend social media post from Trump threatening tariffs on eight European allies for taking part in a small exercise in Greenland sent global stock markets into risk-off mode. Just days later, markets had recovered after another TACO (Trump always chickens out) moment, this time at the World Economic Forum in Davos.
The US dollar lost further ground in January after depreciating 12% in 2025, as the pound hit its highest level against the US dollar since 2021. However, the increasing likelihood that any rate cuts will occur in the second half of the year, along with Kevin Warsh’s nomination as Fed chair, could support the US dollar in the coming months.
Private sector spending on artificial intelligence (AI) is driving growth in the US, with AI hyperscalers, such as Meta, Alphabet, Microsoft and Oracle, announcing ambitious plans to build the data centres needed to power the large language models being developed by the likes of OpenAI, Anthropic and Google.
Recent supportive economic data paints a positive picture for global markets. Risks remain, both those carried over from 2025 and new ones. However, with markets pricing in interest-rate cuts in both the UK and the US, this should provide support for gilts, infrastructure investments, and US equities. All areas where we hold significant exposure
