February 2015

• Global equity markets advanced in February 2015 as accommodative monetary policy, stabilising oil prices and improving investor confidence supported risk assets.
• European stocks outperformed following the imminent launch of the European Central Bank's quantitative easing programme and a weaker euro.
• The United States delivered steady gains as labour market strength and robust corporate earnings offset concerns about slower growth in some sectors.
• Japan continued to benefit from aggressive monetary stimulus and improving corporate profitability.
• Emerging markets produced mixed but generally positive returns, with reform-oriented economies attracting renewed capital inflows.
• Commodity prices stabilised after earlier declines, helping reduce market anxiety surrounding energy and resource sectors.

Asia (ex. Japan)

Asian markets outside Japan delivered broadly positive returns in February as investors responded favourably to supportive monetary policies and lower energy costs. Chinese equities continued to advance on expectations of further stimulus, while official data suggested growth was slowing but remained within the government's target range.

India maintained strong momentum as inflation eased and the Reserve Bank of India cut interest rates for the second time in 2015. South Korea and Taiwan also benefited from improving technology demand and lower oil prices, which supported both consumer spending and corporate profitability across the region.

Europe

European equities were among the strongest performers globally during February. Investors welcomed the approaching start of the European Central Bank's asset purchase programme, which was expected to inject substantial liquidity into financial markets and help lift inflation expectations.

The euro weakened further against major currencies, boosting the competitiveness of exporters and enhancing earnings prospects. Negotiations between Greece and its creditors remained a source of uncertainty, but a temporary agreement to extend financial assistance helped calm market concerns and sustain positive momentum.

United States

U.S. equities posted modest gains in February as strong employment data and resilient consumer spending reinforced confidence in the economic expansion. Corporate earnings were generally solid, although the stronger dollar and weakness in the energy sector created headwinds for some multinational companies.

The Federal Reserve continued to signal that future interest rate increases would depend on incoming data. Inflation remained subdued, allowing policymakers to maintain a patient stance. Treasury yields rose slightly as investors reassessed the timing of the first rate increase.

United Kingdom

UK equities advanced during February, supported by strong consumer spending and lower inflation. Falling energy prices boosted household purchasing power, while employment remained robust and business confidence stayed relatively healthy.

The Bank of England maintained its accommodative policy stance, with inflation close to zero and wage growth only gradually improving. Sterling traded within a relatively narrow range, while gilt yields edged higher in line with global bond markets as risk appetite improved.

Japan

Japanese equities continued to perform well in February as the weaker yen and ongoing monetary stimulus supported exporters and domestic sentiment. Corporate earnings remained strong, and institutional investors continued to increase equity allocations as part of broader pension reforms.

Economic indicators suggested gradual improvement in activity and inflation, though progress toward the Bank of Japan's price target remained slow. Investor optimism was further strengthened by improving shareholder returns and corporate governance initiatives.

Emerging Markets

Emerging markets generated positive returns overall, supported by stabilising commodity prices and improving sentiment toward countries pursuing structural reforms. India and several Asian economies remained among the strongest performers, while Latin American and Eastern European markets were more mixed.

Russia experienced a modest rebound as oil prices stabilised, although economic challenges remained substantial. Countries with lower inflation and policy flexibility were generally better positioned to benefit from renewed investor interest and capital inflows.

Commodities

Commodity markets stabilised in February after significant weakness in previous months. Crude oil prices recovered modestly as drilling activity slowed in North America and investors anticipated some adjustment in supply dynamics.

Gold prices eased slightly as improving risk sentiment reduced safe-haven demand. Industrial metals were mixed, influenced by Chinese growth expectations and supply developments, while agricultural commodities remained subject to weather-related volatility and evolving global crop forecasts.