Monthly report for January

The YTD return in P+ Balance was 1.9 percent at 31 January.

The month's portfolio returns accounted for 3.1 percent for equities, 2.3 percent for special investments, 1.3 percent for credit bonds, 0.8 real assets and -0.2 percent for bonds. 

After a weak end to 2024, which was a good investment year overall, 2025 started out with handsome returns across assets classes. The markets got off to a somewhat weak start due to ongoing fear of rising inflation and consequently higher interest rates. This fear was boosted by a handful of strong key indicators pointing to a continued solid US economy, while the market increasingly tried to provide for potential impacts of Donald Trump's statements about tariffs. The market sentiment did, however, turn around mid-month when US inflation for December came in lower than expected, while a number of members from the Fed made more lenient announcements than expected. After Donald Trump's inauguration on 20 January, the market also pointed focus towards the fact that some of the worst case scenarios that had been outlined did not materialise from day one, resulting in a certain relief in the markets. 

The US economic indicators remain solid, while the preliminary Eurozone PMI indicator was higher than expected in January. Combined with slightly lower inflation rates than expected, the market responded overall positively to the key indicators. In the coming period, there will, however, be continued focus on development of the key indicators, and possible announcements from the new US administration will be closely monitored to deduce the impacts on growth and inflation. 

Although the markets delivered strong returns in January, the fluctuations throughout the month still proved that we most likely are looking at a period with more volatile markets where the sentiment can quickly shift.