Further gains despite uncertainty

For the month as a whole, the U.S. S&P 500 rose by 1.4 percent measured in USD, the European Stoxx 600 ended up 3.2 percent measured in EUR, and the Nordic VINX rose by 1.9 percent measured in NOK. Domestically, the Oslo Stock Exchange rose by 4.3 percent (OSEBX).

Geopolitics, tariffs, and the market’s “circuit breaker”

January began with geopolitical unrest that quickly had market-related consequences. The situation around Greenland escalated, and rhetoric surrounding tariffs and retaliation contributed to increased uncertainty for a period. At the same time, developments showed that the market still functions as an effective circuit breaker when measures threaten economic stability and confidence. The tone was softened toward the end of the month, and reactions were less dramatic than feared. Nevertheless, uncertainty remains in the background, as such episodes can flare up again at short notice. This creates a market that at times can become more news-driven, with rapid shifts between risk aversion and risk appetite.

From “Sell America” to “Hedge America”

Clear signs emerged that several countries wish to reduce vulnerability in a more unpredictable world order. Canada has felt pressure over time and signaled in January a stronger focus on how “middle powers” must navigate as the rules of the game change. Several state visits and closer dialogue with alternative partners point toward a broader pattern of political and economic diversification. At the same time, new trade agreements were highlighted as an important tool to ensure stability in trade and investment. This does not mean that old alliances are disappearing, but rather that more countries are building additional “safety nets.” Over time, this may affect capital flows, currencies, and which regions attract the greatest interest.

Rapid movements

The dollar continued to decline, in line with political risk and increased diversification shaping capital flows. At the same time, questions around institutional predictability have contributed to markets reacting more quickly to new signals. Changes in central bank narratives can also trigger rapid counter-reactions, resulting in a more sensitive market than we have been accustomed to. Movements in the dollar also had spillover effects on other assets, with gold falling sharply during the period. On the interest rate side, rate cuts in the U.S. are still being priced in, but stronger growth signals may require expectations to be adjusted. The result is a market where currencies, interest rates, and expectations are more closely interconnected – and where surprises can lead to large short-term moves.

The road ahead

Looking ahead, geopolitics and trade policy may continue to create short-term shifts in sentiment, particularly when rhetoric intensifies. Nevertheless, the overall picture is more constructive: growth signals have improved, and the earnings season is likely to confirm that profitability remains robust. The AI theme continues to broaden, with rising energy demand and investment appetite providing support to more sectors than before. At the same time, the credit market points in a clear direction, with continued high risk appetite and tight credit spreads that often accompany stable market conditions. Uncertainty remains, but the market has increasingly demonstrated an ability to distinguish noise from lasting drivers. In other words, when taking a longer-term perspective, equities still appear to be an attractive choice for long-term savings.