Month in Review | January 2026

Market Snapshot: Strong Year-End, Softer Dollar, SA Leads Again

December capped a strong year for investors, with risk appetite holding into year-end and a softer U.S. dollar providing an additional tailwind for emerging-market assets. While U.S. equity indices were mixed on the month, Europe finished 2025 on a firmer note and South African assets once again stood out, supported by resources, financials and a meaningful decline in local bond yields.

In South Africa, the FTSE/JSE All-Share rose 4.39% in December and ended 2025 up 37.74%. Resources continued to dominate (Resource 10 +5.56% in December; +138.22% in 2025), while financials delivered a strong year-end rally (Financial 15 +7.23% MoM; +20.69% YTD). Listed property was flat in December (-0.16%) but still closed the year strongly higher (+30.48%). The rand strengthened meaningfully into year-end (USD/ZAR -3.10% MoM to 16.57), and the South African 10-year yield declined further to 8.21%, reinforcing supportive financial conditions for domestic assets.

Globally, equity performance was more mixed in December. The Dow Jones gained 0.73%, while the S&P 500 was flat (-0.05%) and the Nasdaq slipped (-0.53%), consistent with ongoing rotation beneath headline index moves. Europe was firmer, with both the Euro Stoxx 50 and FTSE 100 up 2.17%, while Asia was uneven (Shanghai +2.06%, Hang Seng -0.88%, Nikkei +0.17%).

Key Trends in December:

• SA equities outperformed again, led by resources and financials, closing 2025 with standout returns.
• Global equities were mixed, with Europe stronger, U.S. indices broadly flat, and Asia uneven across markets.
• Bond markets diverged: developed-market yields rose modestly, while SA yields fell meaningfully.
• The dollar eased further, and the rand strengthened across major crosses.
• Gold ended the year strong, while oil softened further, reinforcing a mixed but broadly supportive commodity backdrop for South Africa.

 

United States: Mixed Month-End, Rotation Continues

Equity Performance:

• Dow Jones: +0.73% | +12.97%
• S&P 500: −0.05% | +16.39%
• Nasdaq: −0.53% | +20.36%

U.S. equities ended December with a split outcome. The Dow advanced modestly while the S&P 500 was essentially flat and the Nasdaq edged lower, consistent with late-year rotation and more selective risk-taking. Despite the softer finish, U.S. equities still delivered solid full-year returns, with the Nasdaq outperforming the broader market on a 2025 basis.

Outlook:

U.S. markets remain supported by earnings resilience, but the year-end pattern reinforces the case for selectivity and diversification, particularly where valuations are stretched and market leadership is narrow.

 

Europe: Strong Finish, Solid Full-Year Outcome

Equity Performance:

• Euro Stoxx 50: +2.17% | +18.29%
• FTSE 100: +2.17% | +21.51%

European equities ended the year on a firmer footing, with both the Euro Stoxx 50 and FTSE 100 rising 2.17% in December. Europe’s stronger finish reflected relatively better breadth and a more supportive year-end risk backdrop, alongside the tailwind from a softer U.S. dollar.

Outlook:

Europe continues to benefit from better sector diversification and more balanced market leadership, supporting the case for maintaining regional diversification into 2026.

 

Japan: Modest Gains, Strong Year

Equity Performance:

• Nikkei 225: +0.17% | +26.18%

Japanese equities were broadly flat in December, but the market still closed 2025 with a strong gain. The muted month-end move is consistent with a period of consolidation after a robust year.

Outlook:

Japan remains an attractive structural market, but after strong performance, returns may be more two-way and sensitive to shifts in yields and currency dynamics.

 

China: Uneven Across Markets, Mainland Firmer

Equity Performance:

• Hang Seng: −0.88% | +27.77%
• Shanghai Composite: +2.06% | +18.41%

Chinese markets ended December mixed, with mainland shares firmer while Hong Kong lagged on the month. Despite the uneven finish, both indices delivered strong full-year returns, highlighting that performance in 2025 extended beyond the U.S. and into select Asian markets.

Outlook:

China remains a market where policy direction and sector composition drive dispersion; opportunities are most attractive where reforms and domestic priorities support earnings visibility.

 

South Africa: Year-End Surge in Financials, Resources Still Dominant

Equity Performance:

• JSE All-Share: +4.39% | +37.74%
• Resource 10: +5.56% | +138.22%
• Industrial 25: +1.50% | +16.73%
• Financial 15: +7.23% | +20.69%
• SA Listed Property TR: −0.16% | +30.48%

South African assets ended 2025 with another strong month. The All-Share rose 4.39% in December, with resources extending extraordinary full-year gains and financials delivering a strong year-end rally. Industrials added modestly, while listed property was slightly weaker on the month but still closed the year sharply higher, supported by the broader decline in yields through 2025.

The macro/financial backdrop remained supportive into year-end: the rand strengthened meaningfully and SA long bond yields fell further, reinforcing improved local financial conditions.

Outlook:

After an exceptional year, South African assets remain supported by high real yields and commodity leverage, but positioning should remain disciplined given sensitivity to global risk sentiment and domestic growth constraints.

 

Currencies and Commodities:  Softer Dollar, Strong Gold, Weaker Oil

The dollar weakened further into year-end, supporting emerging-market currencies and reinforcing the rand’s strength. USD/ZAR fell 3.10% in December to 16.57 and finished the year 12.10% lower. The rand also strengthened against sterling (GBP/ZAR -1.46% MoM) and the euro (EUR/ZAR -1.95% MoM). Sterling strengthened versus the dollar (GBP/USD +1.30% MoM; +7.20% in 2025).

In commodities, gold rose 2.40% in December and ended 2025 up 64.98%, extending its role as one of the standout diversifiers of the year. By contrast, Brent crude fell 3.72% in December and ended 2025 down 18.48%, reflecting supply/demand concerns and contributing to a more benign inflation impulse into 2026.

 

Fixed Income: DM Yields Up, SA Yields Down

10-Year Benchmark Yields (End-Dec | MoM change | 2025 change):

• United States: 4.18% | +0.16% | −0.40%
• United Kingdom: 4.47% | +0.03% | −0.09%
• Germany: 2.86% | +0.17% | +0.50%
• Japan: 2.08% | +0.27% | +1.00%
• South Africa: 8.21% | −0.28% | −0.82%

December saw a clear divergence in bond markets. Developed-market yields moved higher on the month, while South African yields fell meaningfully, reinforcing the constructive local fixed income backdrop. The decline in SA yields remains supportive for domestic rate-sensitive assets such as property and financials, and strengthens the diversification profile of local bonds within multi-asset portfolios.

 

Final Thoughts:Strong Finish, Stay Disciplined

December rounded off a year where risk appetite ultimately proved resilient. While developed-market equities ended the month mixed, Europe finished strongly, South Africa extended its outperformance, the dollar softened further, and gold remained a standout diversifier. At the same time, the divergence in bond markets—DM yields rising while SA yields fell—highlights the importance of active positioning and balanced regional exposure as we enter 2026.

What this means for portfolios:

• Avoid concentration risk. Maintain exposure to global growth themes, but balance it with diversified regional and sector exposure.
• Stay regionally diversified. Europe and select Asian markets delivered strong outcomes alongside the U.S. in 2025.
• Retain quality bond exposure. Local SA bonds remain valuable for real yield and diversification, while DM curves remain more sensitive to term premia.
• Lean into SA selectively. A strong year supports staying invested, but with disciplined sizing and attention to global risk swings.
• Keep diversifiers in the mix. Gold and alternatives remain useful portfolio stabilisers as markets transition into a more mature phase of the cycle.