Written by Dominic Williams
Global equity markets finished the week on a mixed footing, with the MSCI All Country World Index falling by -0.5%, despite supportive central bank signals and resilient earnings. Sentiment was further supported by strength in commodity markets, even as political and policy uncertainty lingered in the background.
In the US, the Federal Reserve (Fed) concluded its two-day policy meeting by keeping interest rates on hold, as expected. The overall tone of the committee remained consistent, reinforcing the view that policymakers are in no rush to adjust policy. Chair Jerome Powell struck a notably firm tone when addressing political pressure, underlining the Fed’s independence despite ongoing scrutiny from the White House and reports of a Department of Justice subpoena relating to the Chair, adding to the political scrutiny surrounding the central bank.
Later in the week, attention turned to President Donald Trump’s nomination of Kevin Warsh as his preferred successor to Powell when the current Chair’s term ends in May, subject to Senate approval. Warsh, a former Fed governor, is regarded as more focussed on keeping inflation under control, which has eased some concerns that political pressure could lead to premature interest rate cuts. While his nomination was initially seen as a potential test of the Fed’s independence, market reaction suggested a degree of reassurance that monetary policy would remain focused on inflation control rather than aggressive easing.
The US dollar strengthened against a basket of currencies following the announcement, while gold prices fell sharply from recent highs, reflecting reduced demand for a commodity often used as a hedge against the dollar during periods of global uncertainty.
US equity markets were more volatile, with the S&P 500 briefly surpassing the 7,000 level for the first time before ending the week down -0.8%. The move was underpinned by earnings season, although results from large technology companies highlighted an increasingly nuanced picture.
In particular, earnings revealed a growing divide between firms already benefiting from AI investment and those still facing heavy upfront costs or slowing growth. Meta delivered strong results, with revenues rising sharply year-on-year and shares gaining around +7.5% over the week, as investors welcomed evidence that AI-driven improvements to advertising efficiency are feeding through into near-term profitability despite substantial capital expenditure plans.
In contrast, Microsoft reported strong headline profits but weaker-than-expected cloud growth, with shares falling sharply after the release. The sell-off wiped more than $350bn from the company’s market capitalisation, underlining growing investor concern around the near-term payback from heavy AI-related capital expenditure. Similar concerns were evident in Europe, where SAP shares fell sharply after the company warned that growth in its cloud backlog would slow, reinforcing investor sensitivity to signs that cloud and AI growth may be moderating.
Tesla also drew attention after signalling a strategic pivot away from a pure electric vehicle focus towards greater emphasis on artificial intelligence, robotics and automation. The announcement followed the company’s first annual decline in revenues, highlighting the pressure on the EV business amid slowing demand and intensifying competition from lower-cost Chinese manufacturers.
Outside equities, commodities remained positive, with the Bloomberg Commodity index rising by +1.0% over the week, in GBP hedged terms, supported by strength across energy and continued investor interest in real assets, despite some weakness in gold and silver into the end of the week. With gold and silver prices already elevated, some investors have looked further along the value chain, driving significant gains in mining equities. The surge in metals prices added hundreds of billions of dollars to the market capitalisation of global mining groups, reflecting renewed interest in real assets as both an inflation hedge and a source of diversification.
Emerging markets performed relatively well, with the MSCI Emerging Markets Index rising by +0.6% over the week, although performance masked significant regional divergence. Indonesia came under pressure after warnings from MSCI, a major index provider, raised the prospect of a potential reclassification within global equity benchmarks. Such a move could lead to forced selling by passive investors, highlighting how technical factors can have a meaningful impact on local markets.
Overall, the week underscored the resilience of global markets in the face of uncertainty, supported by steady monetary policy and selective earnings strength. At the same time, divergences across sectors and asset classes highlight the importance of maintaining a diversified and disciplined investment approach over economic cycles.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 2nd February 2026.
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