February 2017

• Global markets extended gains in February 2017 as economic data improved across major economies and investor confidence strengthened.
• Equities rallied globally, supported by strong corporate earnings and continued accommodative monetary policy.
• U.S. markets reached new record highs as optimism surrounding fiscal stimulus and deregulation remained strong.
• European and Japanese equities benefited from improving manufacturing activity and export demand.
• Emerging markets outperformed developed markets amid stable commodity prices and renewed capital inflows.
• Bond markets remained relatively calm despite expectations for gradual Federal Reserve tightening.

Asia (ex. Japan)

Asian equities outside Japan delivered strong gains in February as export demand and technology sector strength supported markets across the region. China maintained stable growth momentum through continued policy management and liquidity support.

India remained resilient due to improving business confidence and expectations of continued reform progress. South Korea and Taiwan benefited significantly from rising semiconductor and electronics demand, helping regional markets outperform.

Europe

European equities advanced as economic indicators improved and investor concerns surrounding political risks eased modestly. Manufacturing surveys reached multi-year highs, reflecting strengthening domestic and external demand.

The European Central Bank maintained its accommodative policy stance, helping support financial conditions and credit growth. Banking stocks recovered modestly as bond yields stabilised and economic sentiment improved.

United States

U.S. equities continued to rally in February as investors remained optimistic about the economic outlook and potential policy reforms. Consumer confidence reached elevated levels, while employment and manufacturing data remained strong.

The Federal Reserve signalled increasing confidence in economic conditions, preparing markets for likely interest rate increases later in the year. Treasury yields rose modestly, though equity markets remained well supported by earnings growth.

United Kingdom

UK equities posted gains in February as global risk appetite strengthened and sterling remained relatively weak. Export-oriented sectors benefited from currency conditions, while domestic demand remained stable.

Inflation continued to rise gradually due to sterling depreciation, though the Bank of England maintained an accommodative stance. Gilt yields remained relatively stable despite improving global growth conditions.

Japan

Japanese equities gained in February as improving global trade conditions and a weaker yen supported exporters. Corporate earnings expectations strengthened alongside better manufacturing data.

The Bank of Japan maintained its yield curve control policy, helping sustain supportive financial conditions. Investor sentiment improved as global growth optimism continued to build.

Emerging Markets

Emerging markets outperformed in February as stable commodity prices, improving global trade and softer concerns about U.S. protectionism supported investor sentiment. Capital inflows strengthened across several regions.

Latin America benefited from firmer commodity prices, while Asian economies continued to gain from stronger export demand and technology sector momentum.

Commodities

Commodity prices remained stable to higher in February as improving global demand expectations supported industrial and energy markets. Oil prices were supported by ongoing OPEC production discipline.

Industrial metals strengthened due to rising manufacturing activity globally, while gold prices were relatively stable as risk appetite improved and the U.S. dollar consolidated.