The Battle of Coronel on 1 November 1914 marked the end of the period of misfortunes and blunders by the British navy in the opening weeks of World War 1. With most of the British navy stationed in home waters, protection of British interests in Africa, Asia and the Pacific had mainly fallen to a handful of elderly ships, many of which could neither match the speed nor the firepower of their German counterparts. The Battle of Coronel, in which the British armoured cruisers Good Hope and Monmouth had been sunk without inflicting any significant damage on the German ships, was the latest in a series of encounters around the world where British ships had come off worse in an engagement with German warships.
These early misfortunes had prompted a change at the British Admiralty in London, and Lord Fisher, whom many regard as the architect of the modernised British navy, was brought out of retirement. On taking up command as First Sea Lord on 30 October 1914, Fisher had ordered the modern armoured cruiser Defence be sent to reinforce Craddock's ships in the south Pacific. By the time the message was relayed to South America however, Craddock was dead and the two surviving warships of his command, the pre-dreadnought battleship Canopus and light cruiser Glasgow, were steaming southwards to escape into the south Atlantic. The news of the defeat at Coronel prompted further British ships to be sent south on 11 November, including three battle cruisers, Princess Royal being sent to the Caribbean in case the German squadron attempted to reach the Atlantic via the Panama Canal, and Invincible and Inflexible to the Falkland Islands where they arrived with several cruisers on 7 December.
Immediately after the Battle of Coronel, von Spee had ordered his ships northwards to Valparaiso. While he was aware Monmouth had been sunk, he thought Good Hope had only been badly damaged and would head for Valparaiso for repairs. She had in fact sank in the dark with all hands, unobserved by either British or German ships. It was not until 3 November that von Spee learnt Good Hope had been sunk. Damage to the German warships had been light, however both Scharnhorst and Gneisenau had between them used 42% of the shells for their main guns, with no resupply possible outside Germany.
While in Valparaiso, von Spee heard of the fall of Tsingtau in China on 9 November to the Japanese forces that had besieged the city since 30 August. Tsingtau was Germany's last remaining uncaptured colony in the Pacific region, and had been the East Asiatic Squadron's home port. News also reached von Spee of the sinking of the light cruiser Emden in the Indian Ocean. Emden had been detached from von Spee's squadron in the early days of the war, heading westwards to raid British shipping in the Indian Ocean. Emden had succeeded in avoiding searching ships and reached the Indian Ocean via the Banda Sea and south of Java. On the 10 September she began a series of attacks against merchant shipping and over the following weeks also raided Madras (where oil storage tanks were destroyed) and Penang where she sank the Russian cruiser Zhemtchug and French destroyer Mousquet. Unfortunately for the German ship, her raid on the Cocos Islands in the central Indian Ocean on 9 November had occurred when the heavily protected convoy carrying Australian and New Zealand troops to Europe was only 50 miles away. The Australian light cruiser Sydney was detached from the convoy and was able to answer the distress call sent by the radio station on South Keeling Island in time to surprise Emden with her landing party still ashore. Armed with 6 inch guns compared to Emden's 4.1 inch guns, Sydney quickly crippled Emden, which was beached at North Keeling Island and her captain and surviving crew taken prisoner. In 2 months of operation in the Indian Ocean, Emden had sunk 2 warships and 16 merchant ships, plus captured another merchant ship which was converted to the auxiliary cruiser Cormoran. Emden's landing party on South Keeling Island successfully avoided capture and eventually reached Turkey in May 1915.
Von Spee's squadron spent several days resting before heading south, passing Cape Horn on 2 December. While his captains recommended bypassing the Falkland Islands on their journey northwards towards Germany, von Spee decided to raid Port Stanley harbour in the hope he might capture the islands and hold them with a militia raised from German citizens living in Argentina. In the early hours of 8 December, von Spee's squadron approached Port Stanley in the Falkland Islands, unaware of the presence of a large British squadron that had arrived the previous day. The scene was set for the Battle of the Falkland Islands.