January’s market saw volatility due to Trump’s aggressive tariff policies on imports from Mexico, Canada, China, and potentially the EU. While US growth remained strong early in the month, the emergence of China’s DeepSeek AI led to a sharp sell-off in tech stocks, particularly semiconductors like Nvidia, which lost $500bn in market cap in a day.

Global equities rose 4.1%, with the US up 3.3%, while Europe (+8.3%) and the UK (+5.8%) outperformed due to lower tech exposure and rate cut expectations. The ECB cut rates by 25bps, while the Fed held steady. Bond markets gained 0.5%.

The US dollar strengthened on tariff news, while affected currencies weakened. Inflation concerns grew, with US 2-year inflation expectations hitting 3.0%. Despite uncertainties, the US economy remains resilient, though AI disruptions and tech volatility pose risks. Caution is advised, with diversification key amid ongoing monetary easing.