January market performance: The waiting game is on

At the regional level it becomes there’s a divide in performance. The US and Europe post returns of 1.6 and 1.5% respectively for the month. The Asian region and emerging markets (EM) were both down. Asia with –1.7%, whereas the EM index fell by 4.7%. While there’s a big difference between those numbers, one of the reasons behind the falls are the same, as China are pulling down both. The reason for the difference is that a large proponent of the Asian index is Japanese stocks, which had a good month, but Japan isn’t part of the EM index, of which China makes up a relatively larger part.

The Chinese economy is faced with a wide variety of challenges, which have sent the Chinese stock market down.

Communication services was the best performing sector during an earnings-heavy January. Within this sector it may be worth highlighting a company like Netflix, which presented positive earnings late in the month. Also, the second-best performing sector, information technology, seemed to be positively affected by earnings, as companies like Microsoft posted good results.

Materials and utilities are at the bottom of the chart falling 4.7 and 3.4% respectively. While there would be several reasons for this, two could be an expression of some worry about the stability of the economy despite the positive results in other sectors, as well as bond rates remaining somewhat attractive relative to especially utilities, which by some may invested in for dividends.

Global bonds had a relatively quiet month ending up in a small minus. The asset class may come into focus later, as the big central banks incrementally move closer towards pushing the rate-cut button.