Global equity market performance was positive in February, supported by resilient economic data and relatively robust earnings reports in the US, with emerging markets performing strongly as Chinese shares rebounded, while UK equities lagged. Japan continued to outperform other developed markets, with the Japanese stock market reaching a record high. Fixed income markets came under pressure as investors adjusted their expectations around the timing of interest rate cuts this year. Commodities lost ground as gas and agricultural prices continued to drop, along with listed property stocks.

The US equity market recorded gains in February with good earnings results from some of the “Magnificent Seven” companies. Among the best performing US equity sectors were consumer discretionary and industrials, while defensive sectors underperformed. US interest rates were kept on hold at 5.25% – 5.5% and a cut in March is unlikely as data continues to indicate ongoing economic resilience. As January’s inflation numbers were stronger than anticipated in the US, investors further reduced their expectations for interest rate cuts over 2024. US bond yields rose meaning bond prices fell, and US Treasuries recorded a negative return during the month.

In the eurozone, stocks moved higher but lagged the US equity market and government bonds lost ground during February. The top performing equity sectors were consumer discretionary (luxury goods and automotive companies), industrials, and information technology, the latter was supported by some strong earnings from both domestic and global technology companies and ongoing enthusiasm around the potential of artificial intelligence (AI). Eurozone inflation eased in January and there have been some signs of green shoots for the eurozone economy including an improvement in business activity. The European Central Bank does not want to run the risk of cutting interests too soon and interest rates were kept on hold at the latest meeting as a result.

UK equities were broadly flat in February and did not partake in the rally seen in global equity markets. The UK economy entered a technical recession in the second half of 2023 as higher inflation and interest rates weighed on activity. Macroeconomic headlines have improved with wages rising faster than inflation for six months and unemployment remains at a record low. Further easing in inflation and the falling energy price cap should further reduce cost of living pressures and boost real incomes. Despite the improving inflation data, the Bank of England (BoE) have also taken a cautious approach to interest rate cuts with the concern that inflation will pick up again later in 2024 after briefly dipping below the 2% target. As stronger wage pressures suggest inflation might prove stickier than anticipated in the UK, investors pushed out their interest rate cut forecasts for the BoE, and UK government bonds (gilts) suffered as a result.

In Japan, data on Q4 2023 GDP growth, consumption, and economic sentiment was subdued. The Japanese equity market rallied during February as earnings strength led the market higher, specifically large cap stocks including car manufacturers, financials and trading companies, however small cap stocks continued to underperform. Modest inflation and corporate governance reforms in Japan have increased global investor appetite toward Japan. The anticipation of AI demand growth drove the stock prices of semiconductor related stocks higher. Yen currency weakness provided further support given the export-oriented nature of the Japanese equity market.

In emerging markets, China, South Korea, and Taiwan were the strongest performing equity markets in February. Chinese equity markets rebounded in February after falling to five year lows, underpinned by better-than-expected activity data as Lunar New Year holiday period provided some relief along with government support measures including a cut to one of its key mortgage policy rates to boost weak consumer demand, falling factory output and a property crisis. South Korea achieved strong growth in February as a result of a rise in exports driven by strong demand for semiconductors. Taiwan also achieved a robust performance in February, driven by ongoing investor enthusiasm for AI-related stocks and technology companies.

Ongoing economic resilience, alongside signs that inflationary pressures have not yet entirely dissipated, suggests that central banks will likely be on hold for a little while longer. Bond markets have suffered recently given the decreased likelihood of imminent rate cuts however the asset class offers an attractive income yield and diversification against an economic slowdown. Within equities, high quality companies with strong balance sheets are forecast to outperform as earnings expectations remain elevated.


Market Performance 2024 Year to Date
FTSE All-Share -1.13%
FTSE World ex-UK +6.20%
FTSE Actuaries UK Conventional Gilts All Stocks -3.29%
FTSE Actuaries UK Index-Linked All Stocks -4.14%


Total returns in GBP to 29/02/2024


Key Rates  
Bank of England Base Rate 5.25%
Inflation (Retail Price Index/Consumer Price Index)* 4.90%/4.00%


    *January 2024

Source of data: FE Analytics,,

The content contained in this article represents the opinions of MacIntosh & James Partners Ltd. The commentary in no way constitutes a solicitation of investment advice and should not be relied upon in making investment decisions. Past performance is not a reliable indicator of future results. The value of your investments can fall as well as rise and are not guaranteed.