Developed markets faced a downturn in February amid tariff concerns, persistent inflation, and soft economic data. The MSCI World Index declined 0.81% in dollar terms, largely driven by US loss of 1.69% as policy uncertainty and weak economic data weighed on sentiment. In contrast, European equities outperformed, with the MSCI Europe ex-UK rising 3.66%, supported by strong earnings, attractive valuations, and the ECB’s dovish stance. The MSCI UK gained 3.08%, bolstered by solid corporate earnings and improved market confidence.
Global bonds had a positive month, with the Bloomberg Global Aggregate Bond Index rising 1.43% as yields softened on inflation and economic concerns. The Fed’s cautious approach to rate cuts and speculation about the Bank of Japan’s policy shift contributed to bond market strength, while trade uncertainty and equity volatility prompted a rotation into fixed income.
The MSCI Emerging Markets Index ended 0.35% underpinned by diverging performances. Chinese equities rallied 11.76% on renewed investor optimism following the launch of DeepSeek and a high-profile meeting between Xi Jinping and business leaders, signalling greater private sector support. Strong Chinese tech earnings helped offset the impact of new 10% U.S. tariffs, keeping sentiment positive. However, other major emerging markets struggled. The emerging markets index ex-China slipped 3.98%, with MSCI Taiwan down 4.38% after Nvidia’s earnings disappointed. Latin America shed 2.28%, while India fell 8.10%, pressured by global uncertainty, U.S. trade tensions, and weak corporate earnings. Foreign investors were net sellers, reportedly shifting allocations toward China.
The heightened volatility from rising tensions with the U.S. also impacted the local bourse and South Africa’s financial markets ended the month flat. The All-Share Index (-0.01%) was slightly down, as losses in resource stocks (-6.17%) overshadowed gains in industrials (3.4%) and financials (0.82%).