Growing tension on Ukraine’s border, has been prominent in the headlines over the last few weeks. 

Russian President Vladimir Putin, massed his tanks on the border, with the Chair of the Commons Defence Committee, commenting that an invasion was imminent and inevitable, and a top Polish official, said that Europe was at its “highest risk of war for thirty years.” With so much of Europe reliant on Russian gas to keep warm and to power industry, there are real worries that Russia could weaponise the supply of gas, as the crisis in Ukraine continues. 

Meanwhile, World Bank President David Malpass, foresaw a grim outlook this year for the global economy, as the Bank predicted that global growth would slow to 4.1 per cent this year, from 5.5 per cent in 2021. It attributed the slowdown to continued threats from Covid, government aid and stimulus packages being wound down, and to the post-pandemic rebound in demand fading. 

Oil prices hit a seven year high, following an attack on a storage facility in the Middle East, and many commentators wondered about rising energy prices pushing the world into recession. In addition, North Korea, conducted another missile test in January which was, apparently, its biggest launch since 2017. 

As always, let us take a look at all the details, and see how January’s news affected the major stock markets around the world. 


January ended with Prime Minister Boris Johnson, and Chancellor of the Exchequer Rishi Sunak, confirming that the rise in National Insurance planned for April, which applies to both employers and employees, will go ahead. The move was criticised by the Confederation of British Industry, which said the increase would squeeze budgets and risk stunting economic growth. 

With an article in City AM suggesting that the average UK household energy bill could rise by fifty per cent in April, when the price cap is set to increase, personal spending will come under real pressure. With the personal tax allowance and higher rate threshold frozen until 2026, it could be a triple whammy, as many people will find themselves pushed into a higher tax bracket. 

January was the month when Covid restrictions ended in the UK. While many people will continue to work from home, at least part of the time, the ending of restrictions will be a welcome boost to town centres and the commuter economy. Google certainly placed a hefty bet on the office, announcing a £730 million investment, to reinvigorate the UK work environment, and increase its headcount from 6,400 to ten thousand. 

Meanwhile, sales of electric cars soared in 2021, despite the chip shortage, with more new vehicles registered than in the previous five years combined. Overall, though, 2021 was a disappointing year for the industry, with production down to its lowest level since 1956. While the Society of Motor Manufacturers and Traders, says it is optimistic about the future, with new investment worth £5 billion in the pipeline, hopes that production would recover last year were dashed. Just under 860,000 new cars left UK factories in 2021, a stark contrast to the numbers quoted below for Toyota. 

In the wider economy, the Omicron variant took its inevitable toll, with the service sector in particular, badly hit. The Purchasing Managers’ Index for the sector, showed that activity for December fell to 53.6, sharply down on the 58.5 recorded in November. Omicron hit the high street, with retail sales down four per cent in December, although the supermarkets enjoyed a good festive period, with all those reporting saying they had beaten their Christmas forecasts. 

However, the retail sector faces worries about rising energy prices too, as higher bills will reduce consumers’ spending power and push up industry costs. Figures from the Official for National Statistics for November, showed that the UK economy grew by 0.9 per cent between October and November, helping it to surpass pre-Covid levels for the first time, with the economy 0.7 per cent larger than in February 2020. 

Increases in base rates appear certain over the coming year, as the Bank of England seeks to keep a lid on inflation. Sir Charlie Bean, an ex-deputy governor, has warned of a series of rate rises in the coming months. Rising food prices pushed inflation to 5.4 per cent in December, the highest it has been for thirty years. 

House prices rose sharply in December. The Halifax said prices rose by 9.8 per cent in 2021, the fastest rate of increase since the 12.5 per cent seen in 2004. The Nationwide House Price Index was even more bullish, suggesting a rise of 11.2 per cent last year, with the average price of a house standing at £255,556. 

The FTSE 100 index of leading shares, was not quite as bullish as Nationwide’s index, but it was one of the few world stock markets to gain ground in January. It closed the month up one per cent at 7,464. The pound fell one per cent against the dollar to end at $1.3451. 


Perhaps Europe’s biggest story of last year, was the election of Olaf Scholz, as the new German Chancellor, following Angela Merkel’s decision to step down after sixteen years. 

This year will bring us the French Presidential Election. Emmanuel Macron, will stand for re-election and, at the time of writing, is the overwhelming favourite to win a second term. Who will be Macron’s challenger? Marine Le Pen, is always a candidate, but may lose out to right-wing journalist and pundit Éric Zemmour. Quite possibly though, they will both be beaten by Valérie Pécresse, presidential candidate from the Les Républicains and current leader of the greater Paris region. 

Soaring gas prices, is not just a problem being experienced in the UK. Germany is perhaps more vulnerable than most countries, being heavily reliant on gas from Russia. Despite this, the government is moving ahead, to close three of its six remaining nuclear plants, a commitment in the aftermath of the Fukushima meltdown, and a move championed by the Greens, who are now a part of the ruling coalition. 

The German government remains committed to its economic stimulus package, and there are suggestions, that it will transfer €60 billion of Covid funds to an energy and climate fund. Whether this will boost the economy is the subject of much debate. 

A boost may be needed, as figures released in January, showed the Eurozone Purchasing Managers’ Index falling to 53.3 in December, from the 55.4 recorded in November, the lowest figure for nine months. 

This was a consequence of the tough measures introduced in all European countries, as the Omicron variant swept across the continent. In Italy, Prime Minister Mario Draghi, is pressing ahead with plans to make vaccines compulsory for all those over fifty. 

It was a poor start to the year for Europe’s major stock markets. Germany’s DAX index fell three per cent to 15,471, while the French stock market ended the month down two per cent at 6,999. 


There was plenty of positive news to start the year in the US. The first day of trading after the New Year holiday, saw both the S&P 500 index and the Dow Jones hit record highs. Tesla shares jumped thirteen per cent after strong sales figures, and despite the supply chain problems, the company beat its own record, delivering 308,600 vehicles in the fourth quarter of the year. Sales for 2021 as a whole, were up eighty-seven per cent on the previous year. 

In the same trading session, Apple briefly became the first company to hit a valuation of $3 trillion, before the shares slipped back slightly, although they are up 5,800 per cent since Steve Jobs unveiled the first iPhone in 2007. Meanwhile, Tesla was widely criticised for opening a showroom in China’s controversial Xinjiang region. 

Last year was a year of record jobs growth in the US, as the economy recovered from the pandemic, but the employment figures for December were disappointing. Although the jobless rate dropped to just 3.9 per cent, US employers hired just 199,000 people in December, well down on previous months. 

Early in December, the White House was said to be bracing itself for a brutal inflation report, as the President’s disapproval ratings hit an all-time high. The figures were as expected, with US inflation up to seven per cent year-on-year in December, the highest figure for more than forty years. 

Like all central banks around the world, the Federal Reserve is likely to push up interest rates to try to contain inflation. However, it will be a delicate balancing act, with some commentators worrying that raising rates too much, might push the economy into recession. 

The month ended with more positive news from both Tesla and Apple. Tesla boss Elon Musk, said sales would grow by fifty per cent in 2022, as the company reported a $5.5 billion profit for last year. Apple also defied the chip shortage as sales rose eleven per cent, to a record $124 billion in the last three months of the year. 

Despite the good start to the month, the Dow Jones index fell three per cent in the month to 35,132, while the more broadly based S&P 500 index fell five per cent to 4,516. 

Far East 

Speaking at the World Economic Forum’s annual meeting, China’s President Xi Jinping, defended his common prosperity programme and the crackdowns on technology, education and entertainment firms, which now seem an integral part of it. The implementation of the policy, has seen billions of dollars wiped off the value of some of China’s biggest companies, as international investors start to worry. 

Shareholders in property giant Evergrande, have been concerned for some time. The month started with the shares suspended in Hong Kong, as the company sought to raise cash. The shares rose as trading resumed. The company left its head office building to save cash. 

This, was reflective of wider problems in the Chinese property sector. At the time of writing, the government appears torn between boosting liquidity in the sector, letting the property companies borrow yet more money, or yet another crackdown. Early in the month, Evergrande was ordered to demolish thirty-nine buildings in ten days. 

The property sector, was far from the only potential problem in the Chinese economy. Several ports were locked down over Covid fears, with inevitable knock-on supply chain problems, and there were real worries that the economy as a whole was slowing down, with the Purchasing Managers’ Index for January falling to 50.1. Any figure below fifty indicates that an economy is contracting. 

With the economy growing by four per cent in the final quarter of the year, above expectations but well below the previous quarter, and inflationary pressures apparently easing, the People’s Bank of China cut interest rates for the first time since April 2020. 

By contrast, the Bank of Korea raised South Korean rates for the third time in six months, lifting the rate to the pre-pandemic level of 1.25 per cent, as it looks to contain inflation and soaring household debt. 

January, was an excellent month for Japanese carmaker Toyota. It ended General Motors’ ninety-year reign, as the top car seller in the US. Toyota’s sales rose ten per cent to 2.3 million vehicles, as GM, hurt by the shortage of semiconductor chips, saw its sales fall thirteen per cent. Worldwide, the company is aiming to make a record eleven million vehicles in its fiscal year 2022/23, which would beat its 2016 record. 

Whatever the success of Toyota, it did little to cheer the Japanese stock market, which fell six per cent in January to end the month at 27,002. China’s Shanghai Composite Index fared even worse, dropping back eight per cent to end the month at 3,361. Hong Kong’s Hang Seng Index, in contrast, rose two per cent to 23,802. 

The biggest fall of all the markets we cover came in South Korea, where the index was hit by a wave of selling, triggered by fears of further interest rate rises. This led to an eleven per cent fall in January, and it closed at 2,663. 

Emerging Markets 

In Turkey, inflation reached thirty-six per cent in December, the highest figure for nineteen years. Transport and food price rises hit household budgets hard, as the central bank raised interest rates to try to cool the inflationary pressure. 

Figures for December, showed that car production in Mexico, had slumped to its lowest level for eleven years. Production dropped 16.5 per cent compared to the previous year, to just over 212,000 vehicles in the month. 

Meanwhile, cybercrime has become a growing problem in North Korea. According to one analysis company, hackers targeting investment firms and centralised exchanges, apparently stole $400 million of crypto currencies in 2021, forty per cent up on the previous year. 

There were wildly different fortunes, for two of the major emerging markets we report on in the Bulletin. The Russian stock market had a poor start to the year, falling seven per cent to 3,530. Brazil’s market went in exactly the opposite direction, gaining seven per cent to close at 112,144. The Indian market was unchanged in percentage terms at 58,014.