Written by Millan Chauhan
Over the weekend, reports emerged that President Trump is prepared to introduce a new tariff regime, starting at 10% and rising to 25% in June on eight European nations (includes France, Germany, the UK, the Netherlands, Denmark, Norway, Sweden and Finland) that oppose his efforts to acquire Greenland. In response, European leaders have since announced plans for potential retaliatory measures, including restricting access for US companies to European markets and considering up to €93bn in tariffs.
President Trump has sought Denmark’s consent to assume control of Greenland, citing its strategic importance to US national security. In addition to substantial natural resources (such as iron and uranium), Greenland’s location and airspace are viewed as critical in the context of US–Russia geopolitical dynamics.
This escalation in tensions has supported the performance of global defence companies, particularly in Europe, with the Stoxx Europe Aerospace & Defence Index rising +14% year-to-date in local currency terms. Notable performers year-to-date include Sweden’s Saab (+26%), Germany’s Rheinmetall (+19%), and the UK’s BAE Systems (+18%).
Global equities, as measured by the MSCI All Country World Index, rose +0.6% last week and remain up +2.9% year-to-date. Interestingly, the MSCI All Country World Index ex-US outperformed global equities last week, rising +1.9%, and has returned +4.6% this year as US equities have lagged their global counterparts. Japanese and Emerging Markets equities (as measured by MSCI Japan and MSCI Emerging Markets) have been standout performers, up +7.2% and +6.3% respectively.
Japanese equities gained +4.5% last week (as measured by the MSCI Japan index), supported by growing optimism around potential additional fiscal stimulus under Prime Minister Sanae Takaichi. Prime Minister Takaichi has called a snap general election in early February, aiming to secure a stronger mandate for the ruling Liberal Democratic Party. Such an outcome could pave the way for more decisive policy action, benefiting sectors including artificial intelligence, nuclear energy, and defence while providing support for consumers too.
The Japanese yen has remained under pressure in recent years due to more accommodative monetary policy relative to other developed markets. Last month’s decision by the Bank of Japan to raise rates from 0.50% to 0.75% was widely anticipated, reflecting concerns that a weaker currency was pushing up import costs and could jeopardise the Bank’s longer-term 2.0% inflation target. We continue to hold an overweight tactical position in Japanese equities, more based upon the ongoing corporate governance reforms in Japan which continue to enhance the focus on shareholder returns.
In the US, inflation held steady at 2.7% in December, in line with expectations. US equities were broadly unchanged last week, with the S&P 500 down -0.1%. Notably, the Russell 1000 Growth index fell -0.9%, while the Russell 1000 Value index rose +0.9%, extending value’s outperformance for a third consecutive week and by nearly 5% year-to-date. Small-cap equities also performed strongly, with the Russell 2000 climbing +2.3% to reach all-time highs, outperforming the S&P 500 by 6.6% so far this year.
Recent market performance underscores the importance of diversification, a theme we have highlighted frequently in previous editions of World in the Week. Investors with diversified portfolios across regions, investment styles, and market capitalisations have been rewarded in 2025 and this trend has continued into 2026. We continue to see compelling opportunities across asset classes and remain confident in the benefits of a well-diversified multi‑asset approach.
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.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 19th January 2026.
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