January was marked by heightened geopolitical tension and high-profile political commentary. Gold and silver rose strongly earlier in the month before falling sharply at month end, while the main UK stock market reached a new high. US technology stocks weakened late in the month amid concerns over AI investment and earnings momentum.
One sure way to chase away the January blues is to splurge on something extravagant. That approach was on full display early doors, with President Trump nabbing the president of Venezuela, as well as attempting to bring Greenland into the American fold. Both moves caused ructions across the world, prompting wary condemnations from some quarters and underlining that geopolitical risk remains a persistent feature of the investment landscape.
January also witnessed the annual pilgrimage of the elite and powerful to mountain-bound Davos (we’ve been assured we’ll be invited next year). Canapés were consumed, photo opportunities carefully choreographed, and the odd speech delivered. Not to make this all about Donald Trump, though he’d probably approve, his remarks drew plenty of attention. He talked up the strength of the US economy, took aim at Europe’s regulatory and energy priorities, and reinforced an America-first approach to trade and geopolitics. There was also a brief moment of confusion between Greenland and Iceland, easily done as they do sound pretty similar. Hopefully any invasion fleet is armed with a decent map, particularly if you happen to live in Iceland.
Gold and silver extended an already very strong run for much of January, as investors sought assets that tend to hold their value during periods of heightened uncertainty, before seeing a sharp pull-back at month end as some profits were taken – more on this below. In the UK, the main stock market passed the 10,000 mark, a genuinely eye-catching milestone, driven by strength in mining and energy stocks, and banks rather than technology. Oil prices moved higher earlier in the month as renewed tensions around Iran and its nuclear programme raised concerns over supply disruption linked to possible US intervention, before giving back those gains later in January. In US markets, the spotlight fell firmly on technology after Microsoft suffered one of the sharpest one-day falls in its history, dropping around 10% after earnings highlighted a sharp rise in artificial intelligence spending alongside slower growth in parts of the business. The sell-off briefly spilled over into peers such as Nvidia and Alphabet, reflecting growing investor concern over the sheer scale of AI investment across big tech, and how quickly it will translate into profits.
Bottom Line
It appears we are in the midst of shifting sands in market leadership - a strong reminder of the importance of diversification in portfolios. Not just across stocks, but importantly across investment style, sector and geography.
What’s on your mind?
How have escalating tensions involving Iran impacted oil prices?
Although the year has only just begun, it has already been marked by heightened geopolitical tensions. Relations between Iran and the US have escalated, with President Trump hardening his rhetoric toward Iran. Over the past month, his messaging has shifted from condemning Iran’s crackdown on protestors to threatening military action, including the deployment of what he described as a “big armada” to the Middle East, in an effort to force a new nuclear deal. Fears of renewed conflict initially pushed oil prices higher, putting them on track for their largest monthly rise since 2022. Market concerns centred on the potential impact of any escalation on global oil supplies, as Iran is one of the world’s largest crude oil producers, as well as the risk of disruption to shipping through the Strait of Hormuz, a vital passage handling around 20% of global oil shipments. Oil prices then pulled back towards month end as markets responded to signs of renewed diplomatic engagement between the US and Iran, easing fears of an immediate supply disruption. Talks between the two countries are now under way and expected to continue, though a meaningful resolution still appears some distance off.
Who is the new Fed chair Kevin Warsh, and what could we expect?
January ended with a sense of relief on Wall Street, following reports that former banker Kevin Warsh had been selected by President Trump to succeed Jerome Powell as Chair of the Federal Reserve when Powell’s term ends in May 2026. The decision followed months of speculation, with several candidates reportedly considered, amid broader debate about the future direction and independence of the US central bank. While the appointment carries political significance, Warsh has strong credentials and is widely viewed as a credible choice. After beginning his career in investment banking, he moved into a senior role at the National Economic Council, advising President George W. Bush, before joining the Federal Reserve Board, where he played a key role during the global financial crisis.
From a market perspective, Warsh is generally seen as more focused on keeping inflation under control. His appointment would likely lead investors to expect a more disciplined, data-driven approach to interest rates, with a greater emphasis on credibility and stability, and potentially fewer or more cautious rate cuts than previously anticipated.
What has been happening in gold & silver?
Gold and silver are certainly the investments du jour, dominating headlines after strong recent performance. Both metals reached all-time highs in late January before falling steeply towards month end. Gold has long been viewed as a “safe haven” asset and demand has risen alongside heightened geopolitical tensions.
Central banks, traditionally large holders of gold, have been at the forefront of recent buying, largely to diversify away from the US dollar. Broader investor demand has also increased, with substantial inflows into gold and silver investments through 2025 and into this year. Silver has benefited from many of the same forces and, as a close cousin of gold, also enjoys significant industrial demand, particularly in electronics and renewable technologies. Combined with constrained supply, this has provided a strong backdrop for rising prices. After such a strong run, inflows accelerated further in January. Prices then fell sharply at month end, marking one of the more pronounced short-term pullbacks in recent years, as investors took profits following the rally.
