February 2019

• Global markets continued advancing in February as accommodative central bank policies and optimism surrounding U.S.-China trade negotiations supported investor sentiment.
• U.S. equities extended their recovery and approached record highs once again.
• European and Asian markets benefited from improving risk appetite and signs of stabilisation in Chinese economic activity.
• Emerging markets remained supported by weaker dollar conditions and improving capital inflows.
• Bond yields remained relatively subdued as central banks adopted increasingly cautious policy tones.
• Commodity prices strengthened further, particularly oil and industrial metals.

Asia (ex. Japan)

Asian markets outside Japan posted strong gains in February as investors responded positively to continued policy support from Chinese authorities and improving sentiment around trade negotiations with the United States. Chinese economic data remained mixed, though stimulus measures aimed at supporting lending and infrastructure investment helped stabilise growth expectations.

Technology-heavy markets such as Taiwan and South Korea continued recovering following late-2018 weakness, supported by improving semiconductor sentiment and stronger export expectations. India also advanced as lower inflation and stable domestic growth conditions supported investor confidence.

Europe

European equities advanced during February as global risk appetite improved and fears of aggressive monetary tightening continued to fade. The European Central Bank maintained a cautious stance amid signs of slowing eurozone growth, helping support financial conditions.

Economic indicators remained relatively soft, particularly within manufacturing sectors, though investors were encouraged by stabilising global trade conditions and improving sentiment toward cyclical sectors. Brexit uncertainty remained a significant source of volatility for UK-related assets.

United States

U.S. equities extended their rally in February as investors welcomed continued signs that the Federal Reserve would adopt a patient approach toward interest rates. Corporate earnings remained generally supportive despite some moderation in growth expectations.

Employment conditions remained strong, while consumer spending and business activity continued supporting economic expansion. Treasury yields remained contained as inflation pressures stayed relatively subdued.

United Kingdom

UK equities advanced modestly during February as improving global sentiment offset continued Brexit uncertainty. Sterling remained volatile due to ongoing negotiations and parliamentary developments surrounding the UK’s withdrawal process.

Domestic economic growth remained moderate, while business investment continued to be constrained by political uncertainty. The Bank of England maintained its cautious policy stance amid the uncertain outlook.

Japan

Japanese equities continued recovering during February as global trade optimism and improving market sentiment supported exporters and cyclical sectors. The stabilisation in global equity markets helped improve investor confidence after the sharp volatility of late 2018.

The Bank of Japan maintained its highly accommodative policy framework, while stable currency conditions supported corporate earnings expectations.

Emerging Markets

Emerging markets remained strong in February as supportive central bank policies, improved trade optimism and stabilising Chinese growth conditions encouraged investor inflows.

Asian emerging markets led gains due to technology sector recovery and stronger export expectations, while commodity exporters benefited from rising energy and metals prices.

Commodities

Commodity prices strengthened further during February as improving risk sentiment and hopes for stronger global demand supported markets. Oil prices continued recovering due to OPEC production discipline and expectations for reduced supply.

Industrial metals advanced on optimism surrounding Chinese stimulus measures and trade negotiations, while gold prices remained relatively stable as safe-haven demand eased modestly.