Global Markets​

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In January 2026, global markets experienced a volatile but ultimately positive start to the year, characterised by improving growth data and heightened geopolitical tension. Equities advanced across most regions. Commodities delivered strong gains, while bond markets performance was mixed and made limited progress globally. 

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Global equities rose 3.0% on the month, as measured by the MSCI AC World Index, supported by resilient economic data around the world, including a decline in the US unemployment rate to 4.4% and better-than-expected Q4 GDP growth of 0.3% in the Eurozone. Emerging markets equities led the way, with the MSCI EM Index surging 8.9%, outperforming developed markets, with South Korean and China Taiwan markets particularly strong. Japanese stock market also delivered strong returns. Value stocks and smaller companies delivered stronger returns than growth and large caps. While the “Magnificent Seven” tech giants saw modest 1.0% gains, smaller companies experienced a strong start with the MSCI Small Cap Index climbing 5.7%. In Europe, mid-caps also outperformed, with the FTSE 250 and MDAX rising 3.0% and 2.0% respectively. Sector performance was led by financials and industrials, while the technology sector faced slight declines toward month-end due to elevated valuations and concerns over the impact of new tariff threats from the Trump Administration. 

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Commodities were the standout asset class during the month, with the Bloomberg Commodity Index up 10.4%. Energy prices rose sharply on colder-than-expected winter weather. Escalating geopolitical tensions in Venezuela and Greenland contributed to a 13% rise in gold prices because of an increased demand for safe-haven assets.

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Bond markets produced mixed returns. Improved economic activity and the nomination of Kevin Warsh as the next Fed Chair pushed rate-cut expectations further out, which placed upward pressure on US Treasury yields. Japanese Government Bonds suffered, with 1.3% fall in returns following the announcement of snap elections. Conversely, French and Italian bonds outperformed as domestic political risks moderated. 

As of 30 January 2026:

UK 10 Year Gilt Yield 4.53%
US 10 Year Treasury Yield 4.24%
Germany 10 Year Bund Yield 2.85%

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UK Market

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​UK equities performed well in January, led by the basic materials, utilities and telecommunications sectors. Gilts yields fell at the short end of the curve while rose at the long end, supported by expectations of further policy easing.

The Bank of England maintained the base rate at 3.75% following the early February meeting, with a narrow 5:4 majority vote. It followed the mixed UK economic data. While inflation remained above target, with headline inflation rising to 3.4% in December, forecasters continue to expect inflation to fall back towards the target 2% in 2026, supported by easing energy prices and weaker demand conditions. While the labour market showed some signs of weakness, with the unemployment rate trending higher accompanied by job declines in hospitality and retail sectors, PMI indices were stronger than expected across both services and manufacturing. Underlying GDP growth remained subdued, estimated at 0.1% for Q4 2025. 

On the fiscal front, the UK’s position appeared more resilient than before, rising tax revenues resulted in government borrowing of £11.6 billion in December, which was lower than consensus expectations.

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Ark Insights

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At the start of2026, global markets were defined by a broadening rally amidst significant geopolitical tension. While global equities rose 3.0% in January, the divergence between sectors and regions was stark, with commodities and emerging market stocks significantly outperforming broader indices. With a weaker US dollar and the nomination of Kevin Warsh to lead the Federal Reserve, the global rate-cutting cycle by central banks, including the Bank of England and the US Federal Reserve remains a focal point.

This period of volatility has underscored the value of our active and diversified approach, as demonstrated by our internal rate of return of 94.97% from the beginning of 2025 to January 2026, exceeding the returns of the FTSE 100 (21%) and the S&P 500 (18%) over the same period. 
 

Ark’s current strategy continues to focus on high-conviction themes, such as the 18% jump in European defence stocks and the 13% rise in gold seen this month. We remain overweight in precious metals as an inflation hedge and continue to identify UK-listed companies with highly attractive dividend yields to support long-term growth. By focusing on sectors that offer both resilience and long-term growth potential as well as diversifying across regions and sectors, we believe the portfolio is well-positioned for the potential turbulence of the coming quarters.

As always, your advisors would be more than happy to help you with any queries.

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The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

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