Global equity markets rose by 3.2% (in local currency terms) in January, while Eurozone markets rose by 7.4% over the month.
Equities in the Eurozone relatively outperformed global markets in January, demonstrating strength despite concerns over economic growth and lingering trade policy issues with the US and China. The Purchasing Managers’ Index (PMI) rose over the month, driven by a rebound in German business activity, while France experienced a contraction due to weak demand and political uncertainty.
US Equities have remained resilient, supported by strong corporate earnings and an optimistic outlook on the labour market, despite the FED’s decision to keep rates steady amid uncertainty surrounding potential US government policies on tariffs, immigration, and taxes, which have fuelled expectations for higher inflation.
Eurozone annual inflation rate rose to 2.5% in January, contrary to expectation. Despite the uptick in inflation, the ECB lowered official interest rates by a further 0.25%, citing weakened economic momentum, ongoing political uncertainty across major economies, and growing concerns over US trade policy.
Annuity prices experienced a fall in January as bond yields rose. All annuity rates are 5-year guarantee and single life.
The funding level of our sample DB scheme rose to 109%, with assets rising and its liabilities falling slightly (calculated using a Funding Standard proxy) over January.
Our High Risk, Medium Risk DC strategies posted positive returns over the month, however, our Pension Purchase DC strategy experienced a decline as bond prices fell.
