January 2025 Market Recap: Navigating the Complexities of a Shifting Global Landscape
- Thomas Sleep
- Feb 3
- 5 min read
As we head into February 2025, markets are reminding us that even a strong start to the year is rarely straightforward. Equities rallied in January, but cracks began to show almost immediately in tech, rates, and underlying economic data across regions.
For expat investors, especially those who are navigating multiple currencies, jurisdictions, and financial systems, these subtleties matter. It’s not just about whether the market is up or down. It’s about whether your strategy is still aligned with the world you actually live in.
Here’s what really happened in January and what it means for you if you’re building and protecting wealth across borders.
Equity Markets Recap: Strength with a Warning Label
The MSCI All Country World Index rose 3.9% in January (in sterling terms), suggesting strong global equity performance. But the reality under the surface was more nuanced:
European equities led the way. The MSCI Europe ex-UK returned 8.3% in January, as optimism around interest rate cuts and low valuations drew capital back to a typically overlooked region.
UK equities were also strong, with the MSCI UK index rising 6.1%, buoyed by falling inflation and hopes of a soft landing.
North America lagged, with the MSCI North America index returning just 3.6%, and with tech doing most of the heavy lifting, but not without turbulence.
Why this matters to expats: Too many expat portfolios are overly concentrated in one market (often the US) or one sector (often tech), for example, an overreliance on an S&P500 index fund. That’s fine when those areas outperform, but dangerous when leadership shifts.
Regional diversification isn’t a tick-box exercise. It’s an essential layer of defence for investors whose lives and liabilities are spread across different countries and currencies. A professional allocation strategy that considers where you earn, spend, and plan to retire is no longer optional. It’s the core of a globally relevant portfolio.
AI Shake-Up: DeepSeek and the Limits of Big Tech Dominance
One of January’s biggest market stories wasn’t about macro at all; it was about tech disruption. DeepSeek, a Chinese AI startup, launched its R1 chatbot model, which is already being touted as faster, smarter, and significantly cheaper to operate than ChatGPT.
The fallout was immediate:
Nvidia, one of the most loved AI-related stocks, fell 17% in a single day, wiping more than $600 billion off its valuation, the most significant single-day drop in market cap ever recorded.
Other AI and chip-related names also dropped as the market tried to reprice the risks of a rapidly changing competitive landscape.
Why this matters to expats: Innovation is exciting, but disruption often hits the winners first. If you’re holding concentrated exposure to the AI trade through big US names, your portfolio is not only unbalanced, but it’s also vulnerable. Now’s the time to review:
How much of your portfolio is dependent on a single sector narrative.
Whether you’re diversified across global tech, including Asia and Europe.
If your growth exposure is balanced with quality dividend stocks or defensive income generators.
Remember: as an expat, you need your portfolio to deliver growth and stability because your income and retirement needs may not be tied to one country or tax system. Resilience isn’t a luxury; it’s a necessity.
Interest Rates: The Divergence Has Begun
Global monetary policy is no longer moving in lockstep.
United Kingdom
The Bank of England cut rates to 4.5% in January, the third cut since August 2024.
Inflation dropped to 3.7%, but economic growth remained soft.
Markets expect further cuts, especially if UK consumer demand remains muted.
United States
The Federal Reserve held rates steady at 4.25–4.50%, resisting pressure to act early.
Inflation remains above target, and officials are signalling patience.
US GDP for Q4 came in at 2.3%, solid but slowing.
Eurozone
The European Central Bank cut its deposit rate to 2.5%, and more easing is expected.
Weak business activity and persistent stagnation in Germany and France remain headwinds.
Why this matters to expats: Central bank policy has real-world consequences. If you:
Earn in one currency but spend or invest in another
Hold fixed-income assets across geographies
Plan to repatriate funds or draw down retirement income in a different country than where you save
…then you need to track rate divergence closely. These moves impact FX, bond returns, and future cash flow planning. Align your investment strategy with interest rate cycles, not just your risk profile. A globally balanced bond allocation, currency-hedged income planning, and the use of multi-jurisdictional structures can help you benefit rather than suffer from diverging policies.
Bonds: Quietly Back in Play
UK gilts posted their strongest performance in six months.
US Treasuries are attracting interest, especially in the 5- to 10-year range.
European bonds are pricing in more cuts and showing signs of stabilising after a rocky 2024.
Why this matters to expats: Bonds haven’t been this interesting in years. And if you’re an expat planning big expenses, kids’ education, repatriation, second homes, they could be your best friend in 2025. Here’s how to think about them:
Use short-duration bonds in higher-rate countries to lock in returns without duration risk.
Blend with long-duration bonds in regions where rate cuts are priced in.
Don’t underestimate fixed income in multi-currency planning, it’s one of the few tools to deliver consistent returns in volatile FX environments.
And remember, there are much better ways to structure your wealth than you previously had available to you prior to becoming an expat that allows you to build and hold a globally diverse portfolio with better tax control. This can make a real difference if you prepare for retirement or pass assets on to the next generation.
FX & Commodities: Reading Between the Lines
Gold climbed 6.6%, driven by geopolitical tension and as a hedge against rate volatility.
Oil gained 1.9% as the Middle East and Ukraine conflicts persisted but was capped by US supply increases.
Sterling dropped 1% against the US dollar, ending the month near $1.24, 10 cents lower than its peak in September.
Why this matters to expats: FX fluctuations are not background noise; they directly impact your real-world wealth. If you:
Need to send money home
Plan to buy property in another currency
Are receiving income or pensions from multiple sources
…then you should be managing currency exposure intentionally. This could include FX-hedged funds, structured transfers, or holding assets in a currency-aligned international portfolio bond.
And don’t ignore commodities. Gold isn’t just a hedge, it can be a stabilising anchor in volatile markets. Especially if you’re holding growth assets that are sensitive to risk sentiment.
Final Thoughts for Globally Minded Investors
This isn’t the time for set-and-forget investing. The playbook is changing faster than many realise. Whether it’s AI reshaping markets, central banks moving in different directions, or currencies swinging quietly in the background, the world is not what it was even 12 months ago.
As an expat or international professional, your strategy needs to reflect that:
Your retirement isn’t tied to a single tax system
Your investment income needs to match your future lifestyle costs
Your liabilities (school fees, housing, healthcare) are likely spread across borders
A globally structured, tax-aware, risk-adjusted strategy is the bare minimum for someone in your position.
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