Investment markets started the year on a positive footing with most stock markets recording gains; however, sharp falls in Sterling, Yen and the US Dollar against the Euro offset underlying investment gains for Euro based investors. Bonds were weaker in January as a combination of currency movements and shifting investor sentiment towards higher return assets saw a selling of both Government and Corporate paper.
Overall, international equities started the year positively as a last minute deal in the US Congress on averting the so-called “fiscal cliff” provided a good start to 2013. A continuation of the recent positive economic data from the US and China also supported share prices and industrial commodities. Currency markets saw significant volatility in the month as the Japanese Yen fell over 8% as the new government in Tokyo committed to significant monetary easing and a weaker Yen. The US Dollar and Sterling also fell against the Euro as the Federal Reserve and Bank of England also committed to further inflationary measures to support economic growth.