Outlook
Market review – February 2026
3 min read 6 Mar 26
Financial markets generally recorded good gains in February and, because they were mostly closed on 28 February, were unable to respond to the news that the US and Israel had initiated a strike on Iran.
European stockmarkets rallied sharply in the month, driven by positive earnings news and the desire by some investors to diversify (spread investments to reduce risk) out of the US.
Meanwhile, the UK benefited from its heavy tilt toward sectors such as energy, mining and financials, which all performed well.
Japan was among the month’s strongest performers, as a landslide victory in a snap election called by Prime Minister Takaichi spurred expectations of fiscal stimulus (higher government spending or tax cuts to support the economy).
Elsewhere in Asia, Korea continued to stand out as one of the best performing global markets, buoyed by governance reforms and strong semiconductor (the materials used to make computer chips, which are essential components in almost all modern technology) demand.
US equities (company shares) underperformed, as software and IT services companies experienced sharp falls in value following concerns about the release of new artificial intelligence (AI) tools and poor performance among the so-called “Magnificent-7” (a small group of large, influential US technology companies) stocks.
The US Supreme Court’s rejection of earlier tariff measures and President Trump’s subsequent announcement of a new “global tariff”, with confusion over whether this would be 10% or 15%, created additional uncertainty for investors.
In fixed income (bonds), US Treasuries (US government bonds) responded positively to softer inflation data. January CPI (Consumer Price Index, a key inflation measure) printed at 2.4% year-on-year, compared to 2.7% in the previous month.
UK gilts (UK government bonds) performed well, supported by a cooling labour market, easing inflation (January CPI was 3.0% year-on-year, down from 3.4% in December), and rising expectations of a March interest rate cut. German bunds (German government bonds) also posted gains.
The US dollar strengthened in February, reversing some of its recent losses, while the UK pound weakened on expectations of a near-term Bank of England interest rate cut.
Oil prices rose as the US continued to build up military forces close to Iran, while precious metals and copper continued to record good gains.
Investments involve risks and may not be suitable for all investors. Past performance is not indicative of future results. The value of investments may go up or down and is not guaranteed. You may not recover the full amount you invested. The views expressed in this document should not be taken as a recommendation, advice or forecast. If you are in any doubt about the contents of this document, you should seek independent professional advice.