January was heavily influenced by geopolitical events: The arrest of Venezuelan President Nicolas Maduro by US forces made headlines, as did the growing tensions between the US and Iran. And US President Trump's declared intention to buy Greenland for the US set the EU's crisis diplomacy in motion. Despite the geopolitical tensions, the stock markets performed largely positively in January.
The arrest of Venezuelan President Nicolás Maduro by US forces made headlines around the world on January 3. As Venezuela has the largest proven oil reserves in the world according to the US EIA, market participants discussed possible short-term supply shortfalls and long-term production prospects. However, apart from Venezuelan assets and some US oil companies, the market reaction remained limited.
The effects of developments in Iran were much more noticeable. Concerns about an escalation drove the Brent price back above USD 70 per barrel. This was triggered by speculation about possible US military action, exacerbated by reports of a partial withdrawal of personnel from the US base at Al Udeid in Qatar. Although US President Donald Trump later put the tensions into perspective, his statement on January 28 that a "massive armada" was on its way to Iran caused oil prices to rise further. At the end of the month, Brent stood at USD 70.69 - an increase of 16.2% and the sharpest rise since January 2022.
At the same time, another conflict over Greenland came to a head. On January 14, Trump declared that the US needed Greenland for reasons of national security. Three days later, he threatened European countries with tariffs if they did not agree to a complete sale of Greenland. The markets reacted with a significant risk-off move, with the S&P 500 falling by 2.1 %. It was not until January 21 that Trump provided reassurance by announcing a "framework for a future agreement". The planned punitive tariffs were halted and the stock markets recovered.
The US Federal Reserve also came into focus after the Department of Justice launched a criminal investigation that raised questions about the Fed's independence. This drove up precious metals, especially gold. The price of gold rose from USD 4,397 to USD 4,888 per troy ounce in January, but reached a record high of USD 5,595 on January 29 before falling sharply again. At the same time, the US dollar weakened until the Treasury Department reiterated its support for a "strong dollar policy". On January 30, Trump also nominated Kevin Warsh as the new Fed Chairman.
Yields on the bond markets for government bonds in the US and the eurozone were mixed month-on-month. Yields on 10-year US government bonds rose by 7 basis points at the end of the month, closing at 4.23%. Yields on 10-year German government bonds fell by 1 basis point from 2.85% to 2.84%. In contrast, the yield on 10-year Italian government bonds fell by 9 basis points. Italy reported better economic data for Q4 than economists had expected.
Despite geopolitical tensions, the stock markets performed largely positively in January. Global economic data remained robust: in the USA, the ISM index for services reached a 14-month high of 52.6 points (previous month: 47.9) and the unemployment rate fell to 4.4%. In Europe, inflation was weaker than expected at 1.7% in January compared to the same month last year, triggering new speculation about an ECB interest rate cut. At +0.3%, growth in the eurozone in the fourth quarter exceeded expectations and most major share indices rose accordingly in January.
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