February was a notably strong month for global markets, with our recommended strategies producing solid gains across the range of portfolios.

In the UK, shares moved higher during the month, supported by strength in financial and commodity-related companies alongside encouraging inflation data.  European markets also made good progress, helped by improving investor confidence and a generally steadier economic backdrop.

In the US, markets made modest progress overall as investors focused on corporate earnings and the economic growth outlook.  Japan delivered particularly strong returns, building on renewed optimism following recent election results and continued interest from overseas investors.  Emerging markets also performed well, supported by improving sentiment and a more constructive global backdrop.

Bond markets were relatively stable, with yields moving within a narrow range as investors balanced inflation expectations against the prospect of interest rate adjustments later in the year.

Since the start of March, markets have been more unsettled, with geopolitical tensions in the Middle East leading to increased caution among investors and somewhat wider daily fluctuations.  Energy prices have risen sharply, reflecting the importance of the region to global oil supply and concerns about disruption to key shipping routes.

The markets are now weighing whether the situation develops into a prolonged disruption or moves towards a quicker de-escalation. Sustained increases in oil prices could place renewed pressure on inflation and economic growth.  At the same time, higher prices can increase the incentive for a diplomatic resolution, as both producing and consuming economies have a strong interest in stabilising supply.

So far, while volatility has increased, the broader reaction across global equity markets has remained relatively contained.  This indicates that investors are currently treating the situation as a developing geopolitical risk rather than immediately pricing in a significant change to the global economic outlook.

Our recommended strategies remain diversified across regions, sectors and asset classes.  They are designed with periods like this in mind to help manage risk while staying focused on long-term objectives.

We continue to monitor market developments closely and will provide you with any further updates should there be any material change in conditions.

As always, please let us know if you have any questions or would like to discuss your portfolio in more detail.