February 2023

• Global markets delivered mixed performance in February as stronger economic data and persistent inflation concerns increased expectations for further central bank tightening.
• Bond yields rose sharply as investors reassessed expectations that interest rate increases could end quickly.
• Technology and growth stocks experienced renewed volatility following strong gains in January.
• China’s economic reopening continued supporting Asian markets and commodity demand expectations.
• Energy prices remained relatively stable despite ongoing geopolitical uncertainty.
• Emerging markets delivered mixed results amid stronger dollar conditions and rising global yields.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed performance during February as investors balanced optimism surrounding China’s reopening against rising U.S. interest rate expectations and stronger dollar conditions.

Chinese economic data showed improving consumer and business activity following reopening measures, while technology exporters such as Taiwan and South Korea faced volatility linked to changing global demand expectations.

Europe

European equities remained relatively resilient during February as easing energy concerns and stronger-than-expected economic data supported investor confidence.

However, inflation remained elevated across the region, increasing expectations that the European Central Bank would continue tightening monetary policy more aggressively than previously anticipated.

United States

U.S. equities experienced increased volatility during February as stronger employment and inflation data reinforced expectations for additional Federal Reserve interest rate increases.

Treasury yields rose significantly during the month, pressuring technology and growth-oriented sectors after their strong January rally. Investors increasingly focused on the possibility that interest rates would remain elevated for longer.

United Kingdom

UK equities delivered mixed performance during February as persistent inflation and rising interest rate expectations offset improving global risk sentiment.

Economic conditions remained fragile, though lower energy prices compared with late 2022 helped reduce some recession concerns.

Japan

Japanese equities advanced modestly during February as exporters benefited from improving Chinese demand and resilient global manufacturing activity.

Investors also monitored the leadership transition at the Bank of Japan and speculated regarding potential future adjustments to ultra-loose monetary policies.

Emerging Markets

Emerging markets delivered mixed results during February as stronger U.S. dollar conditions and rising Treasury yields created headwinds for capital flows.

However, Chinese reopening optimism continued supporting Asian markets and commodity demand expectations across several developing economies.

Commodities

Commodity prices remained relatively stable during February as investors balanced improving Chinese demand against concerns regarding tighter monetary policy and slower global growth.

Industrial metals remained supported by reopening expectations in China, while oil prices fluctuated within a relatively narrow range amid mixed demand signals and ongoing geopolitical risks.