A year on from the onset of the Russian invasion of Ukraine and three years on from the outbreak of Covid-19, volatility continues to linger in global equity markets.

After a blistering start to the year, markets wobbled a little in February with the MSCI World index, which tracks global developed market equities, slipping 1.57% in local currency terms amidst continued uncertainty surrounding the Russia / Ukraine conflict and rising interest rates.

Meanwhile the FTSE 100 index, which tracks the largest companies in the UK, continued to outperform other markets and posted a positive return for the month while the US and emerging markets saw their stocks decline. This is partly due to the index’s high concentration in energy stocks, such as BP and Shell, which continue to perform strongly in an environment of high energy prices, and also its high weighting in financial firms, which can benefit from rising interest rates. The strength of the index last month resulted in it finally surpassing the 8,000 level for the first time.

Full round-up of February market performance

In the UK, the FTSE 100 index gained 1.76% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, gathered 0.96% and 0.62%. In the US, the S&P 500 USD index declined 2.44% while in Europe the Eurostoxx 50 EUR index rose 1.94%. Japanese stocks measured by the Topix JPY index were up 0.95%.

Emerging markets returns were mostly negative, with the MSCI Emerging Markets index dropping 4.65% in local currency terms. Latin American equities, measured by the MSCI Latin America local currency index, fell 5.19% and Chinese stocks measured by the MSCI China local index slumped 9.87%. Meanwhile Indian stocks measured by the Nifty 50 INR index slipped 2.03%.

In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, declined 3.26%, with long-dated (over 15 years to maturity) gilts losing 5.97%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, decreased 2.38%. In the high yield market, the Bank of America Merrill Lynch Sterling High Yield index picked up 1.03%.

There were negative returns in the commodities market. The S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, fell -3.83%. Crude oil futures relinquished 2.31% during the month. In the agricultural markets, corn and wheat futures conceded 7.39% and 9.16% in USD respectively. In the precious metals markets, the S&P GSCI Gold and Silver indices lost 5.24% and 12.06% in USD respectively.

In the currency markets, it was a mixed month for the pound as it depreciated 2.42% versus the US dollar but gained 0.22% against the euro and 2.14% versus the yen.