Stocks rise in January; EURO STOXX 50 has strongest month in two years

Stocks jumped in January as investors’ optimism that earnings will continue to grow overshadowed concerns about global politics and trade issues. 

The STOXX® World AC rose 3.3% last month when measured in US dollars and including dividends, following a 17.9% gain in 2024. The global benchmark added 2.9% in euros over January as the greenback climbed 0.4% against the common currency. The STOXX^® Global 1800 index rose 3.5% last month and climbed 18.8% in 2024.

The Eurozone’s EURO STOXX 50^® rose 8.1% in euros in January on a total-return basis, its best monthly showing in two years.^[1] The benchmark posted its best two-month outperformance to the STOXX^® USA 500 since 2015.^[2]

The pan-European STOXX^® Europe 600 gained 6.4%. The STOXX^® North America 600 rose 3% in dollars, as did the STOXX USA 500. The STOXX^® Asia/Pacific 600 added 2.2% in dollars. The STOXX® Developed World gained 3.6% while the STOXX® Emerging Markets rose 1%.

Figure 1: STOXX Equity World indices’ January risk and return

Figure 2: STOXX Benchmark indices’ January risk and return

Germany’s DAX^® increased 9.2% in the month. MDAX^®, which gauges the performance of German mid-caps, gained 4.5%.

Figure 3: DAX indices’ January risk and return

Jobs, earnings

The U.S. economy added 256,000 job payrolls in December, the government said in January, largely exceeding the consensus forecast among economists for a gain of 165,000.^[3]  Netflix, Meta Platforms, General Electric, Goldman Sachs and JPMorgan were among companies that reported better-than-expected earnings in January, sending their shares higher. 

The month didn’t pass without market swings. Technology stocks tumbled on January 27 after Chinese startup DeepSeek unveiled an artificial intelligence model that competes efficiently and at a very low cost with established programs from US companies. Global indices fell again on the month’s last session after US President Donald Trump announced tariffs on Canada, Mexico and China.^[4]

Figure 4: Total annual % returns for STOXX World AC index

Figure 5: Select STOXX benchmarks’ returns since 2023

Volatility drops  

The VSTOXX® (EURO STOXX 50^® Volatility), which tracks the price of EURO STOXX 50 options traded on Eurex, fell to 15.4 in January from 17 in December. A higher VSTOXX reading suggests investors are paying up for puts that offer insurance against stock price drops. The VDAX®, which measures volatility in German equities, eased to 15.4 from 15.6 a month earlier.

Factor investing        

Among the STOXX Factor indices, the Momentum signal led gains last month (Figure 6). The strategy performed the best in the suite in 2024, returning 46.7%.

Figure 6: STOXX Factor (Global) indices’ January risk and return characteristics

Climate benchmarks

Within climate benchmarks, the ISS STOXX® Developed World Net Zero Transition rose 3.6%. The index is focused on net-zero targets and real-world transition-aligned metrics, and includes all industries featured in the parent universe.

The STOXX^® Global 1800 Paris-Aligned Benchmark and the STOXX^® Global 1800 Climate Transition Benchmark both climbed 4.2%. The PAB and CTB indices follow the requirements outlined by the European Commission’s climate benchmarks regulation.

Sustainability indices

The STOXX^® Global 1800 ESG-X index gained 3.5% in the month. The STOXX^® ESG-X indices are versions of traditional, market capitalization-weighted benchmarks that observe standard responsible exclusions. 

The DAX® ESG Screened rose 8.7% in the month. The index reflects the composition of the DAX benchmark minus companies that fail to pass norms-based and controversial weapons screenings, meet minimum ESG ratings or are involved in certain business activities considered undesirable from a responsible investing perspective.

Within indices that combine exclusions and best-in-class ESG integration, the EURO STOXX 50^® ESG index rose 8% over the month. Germany’s DAX^® 50 ESG index (+8.1%)^[5], which excludes companies involved in controversial activities and integrates ESG scoring into stock selection, lagged behind the benchmark DAX in the month.

The STOXX^® Global 1800 SRI rose 1.5%. The STOXX SRI indices apply a set of carbon emission intensity, compliance and involvement screens, and track the best ESG performers in each industry group within a selection of STOXX benchmarks. 

Thematics, digital assets

Twenty-three of 40 STOXX® Thematic indices outperformed the benchmark STOXX Global 1800 last month. The STOXX^® Europe Luxury 10 index (+15%) showed the biggest gain in the set for a second straight month, while the STOXX^® Global Lithium and Battery Producers index (+0.1%) showed the smallest gain in the month.

The STOXX^® Digital Asset Blue Chip index, which aims to track high-quality assets that represent the crypto universe today, rose 7.1% in the month. 

Dividend strategies

Dividend strategies also had strong returns in the month that ended. The STOXX^® Global Maximum Dividend 40 (+4.5% on a net basis) selects only the highest-yielding stocks. The STOXX^® Global Select Dividend 100 (+2.6%) tracks companies with sizeable dividends but also applies a quality filter such as a history of stable payments.

Minimum variance

Minimum variance strategies had weak relative returns in Europe last month but outperformed in the US. The STOXX^® Global 1800 Minimum Variance rose 4.2% and the STOXX^® Global 1800 Minimum Variance Unconstrained advanced 2.3%. 

The STOXX Minimum Variance Indices come in two versions. A constrained version has similar exposure to its market capitalization-weighted benchmark but with lower risk. The unconstrained version, on the other hand, has more freedom to fulfill its minimum variance mandate within the same universe of stocks.