Market Outlook
Last Updated: 20 Feb 26 5 min read
Entering the Year of the Fire Horse, markets took a steady and broad based path rather than a bold one. Europe led global stock markets this week, supported by stronger commodity prices. The FTSE 100 performed well, rising 2.3%, while Germany’s DAX, which is Germany’s main stock market index tracking its 40 largest companies, gained 1.5%. In the United States, the S&P 500 added 0.4% as investors continued shifting away from the small group of large technology companies that have dominated recent returns.
The US dollar strengthened by 1.1% as investors looked for safety, although it remains around 8% lower than a year ago. US government bond yields moved slightly lower, reflecting uncertainty around future interest rate decisions and ongoing geopolitical tensions. Oil prices also climbed sharply to their highest levels since August. Rising tensions in the Middle East pushed West Texas Intermediate (WTI) above 66 dollars, while Brent Crude moved close to 72 dollars. Both WTI and Brent Crude are widely used global oil price benchmarks that help set and compare crude oil prices around the world.
The latest Federal Reserve meeting minutes showed a cautious approach. Policymakers kept interest rates unchanged but were increasingly divided about the outlook. Strong employment data sat alongside signs that demand for workers is softening. Inflation continues to ease overall, supported by slower housing related price increases and improving productivity, although progress remains uneven.
In the UK, economic data weakened further, increasing expectations that the Bank of England may cut rates soon. Employment fell again, unemployment rose to 5.2% and inflation continued to ease to 3.01%. With wage growth slowing and energy related costs expected to fall, the Bank is becoming more confident that inflation is on a clearer downward path.
Markets are reacting to shifting economic data and rising geopolitical tensions. With inflation and growth diverging across regions, central banks are taking different approaches, creating a backdrop for wider differences in asset performance.
Equities |
1 Week |
YTD |
1 Year |
S&P 500 |
0.41% |
0.40% |
13.59% |
FTSE 100 |
2.33% |
7.68% |
27.35% |
Euro Stoxx 50 |
1.54% |
5.09% |
13.96% |
MSCI Asia Pacific ex Japan |
0.96% |
11.04% |
37.74% |
MSCI China |
0.37% |
0.78% |
17.03% |
Source: Bloomberg as at 9:56am on 20.02.26
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