Head of Asset Management James Timpson talks us through what’s been going on in markets over the last few weeks.

February was another positive month for most equity markets, with easing inflation and expectations of further rate cuts keeping investor sentiment buoyed amidst rising geopolitical uncertainties – at least until the Middle East conflict escalated at the start of March.

The FTSE 100 TR index, which tracks the largest companies in the UK, continued to reach new highs as it amassed over 7% during the month – its biggest gain since November 2022. Meanwhile Japanese equities measured by the Topix index grew by more than 10% as markets reacted positively to the emphatic victory of Prime Minister Sanae Takaichi.

A notable exception among equity markets was the US, with the S&P 500 index declining nearly 1% during the month as investors continued to rotate away from the tech giants. Emerging markets have continued to perform well, in particular the Korea which has benefitted from recent corporate governance reforms. The KOSPI index, which tracks the Korean stock market, returned a bumper 24% in February – its biggest monthly increase in nearly 30 years.

Full round-up of February market performance

In the UK, the FTSE 100 index gained 7.04% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, rose 2.14% and 1.60%. In the US, the S&P 500 USD index slipped -0.76% while in Europe the Eurostoxx 50 EUR index gathered 3.34%. Japanese stocks measured by the Topix JPY index surged 10.47%.

Emerging markets returns were mostly strong with the MSCI Emerging Markets index rising 4.97% in local currency terms. Latin American equities measured by the MSCI Latin America local currency index gained 2.65%. However China and India both posted negative returns for the month as the MSCI China CNY index and the Nifty 50 INR index fell -5.82% and -0.56% respectively.

In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, amassed 2.35% with long dated (over 15 years to maturity) gilts climbing 4.37%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, returned 1.16%. In the high yield market, the ICE Bank of America Sterling High Yield index increased 0.63%.

In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, gathered 2.38%. Brent crude oil futures rose 2.78% during the month. In the precious metals markets, the S&P GSCI Gold and Silver indices surged 10.91% and 18.22% in USD respectively, while in the agricultural markets corn and wheat futures returned 2.45% and 9.90% in USD respectively.

In currency markets, it was a weak month for the pound as it depreciated 1.49% versus the US dollar, 1.18% against the euro and 0.67% versus the Japanese yen.