February 2026 Monthly Market Summary
Global Market Update
Global markets remained resilient despite heightened geopolitical uncertainty, with February marked by a widening performance gap between the U.S. and the rest of the world. Emerging Markets (EM) led global equity gained +5.5% versus +0.8% for Developed Markets (DM), marking the third consecutive month of EM outperformance. Over the past 12 months, EM has outperformed DM by 26.2% — the widest margin since 2009. More specifically, U.S. equities struggled over the month, as sticky inflation data and AI disruption fears put pressure on the market, while international markets — particularly Europe and Japan — continued to outperform. Within EM, strong gains in Korea (+21.8%) and Taiwan (+12.8%) were driven by ongoing investment in AI infrastructure and semiconductors. Global bonds also delivered strong returns, recording their best monthly return in 18 months. DM bonds outperformed EM bonds, as investors rotated back into traditional safe-haven assets. U.S. Treasuries benefited from a flight to safety, with 10- year yields falling below 4%, leading to outperformance in longer-duration bonds, as declining bond yields tend to push up bond prices. Meanwhile, Emerging Market Debt (EMD) continued to generate solid returns, supported by attractive yield levels.
Turning to economic growth, the U.S. economy expanded at an annualised 1.4% in Q4 2025, slowing meaningfully from 4.4% in Q3 2025 and undershooting expectations of 3%. The euro area grew by 0.3% over the q/q (quarter-over-quarter), matching the prior period and demonstrating resilience despite U.S. trade tariffs. Japan’s economy grew 0.1% q/q (quarter-over-quarter), rebounding from a 0.7% contraction but missing forecasts of a 0.4% increase. The latest reading suggests the drag from U.S. tariffs, with a baseline of 15%, is gradually easing, while diplomatic tensions with China persist. It also comes as Tokyo prepares to ramp up investment through targeted public spending following a sweeping election victory by Prime Minister Sanae Takaichi. On the inflation front, the annual inflation rate in the U.S. slowed to 2.4% in January 2026, its lowest level since May 2025, down from 2.7% in each of the previous two months and below forecasts of 2.5%. The deceleration largely reflects base effects, as higher readings from a year ago drop out of the annual calculation. Annual inflation in the Euro Area came in at 1.7% in January 2026, down from 2.0% in December and marking its lowest level since September 2024. Lastly, Japan’s annual inflation eased to 1.5% in January 2026 from 2.1% in the prior month, the lowest since March 2022.
In other economic news, the U.S. Supreme Court recently deemed Trump’s tariffs illegal. Within hours, however, President Trump invoked Section 122 of the Trade Act of 1974 to impose a 15% global import tariff. The tariff situation has evolved through several phases: the original “reciprocal” tariffs of 2025 that caused the Liberation Day sell-off; the legal challenges that reached the Supreme Court; and now the pivot to a universal 15% levy under a different statutory authority. This new measure is limited to a 150- day window, setting up a late-July deadline that is likely to become a key market focus.
South African Market Update
South African equities (+7.0%) delivered another strong month, once again led by the Resources sector (+13.3%), which is now up more than 165% over the past 12 months. Gains were driven by precious metal miners, with AngloGold Ashanti (+30.3%) and Valterra Platinum (+22.7%) contributing meaningfully to performance. Financials (+7.3%) also performed well, supported by solid gains from major banks including Capitec (+9.0%) and Standard Bank (+7.6%). In contrast, Industrials (+0.1%) were broadly flat, weighed down by heavyweights Prosus (-11.6%) and Naspers (-10.7%), with SA Inc names such as Spar (- 21.3%) and Clicks (-2.2%) further detracting from returns. The property sector posted strong returns over the month (+6.6%), supported by positive company updates and declining bond yields.
South African bonds (+1.7%) extended their gains as yields declined further, supported by a stable rand and a cautiously optimistic national budget. The yield curve flattened for a sixth consecutive month, with long-term yields falling faster than short-term yields (also known as a “bull flattening”), reflecting supportive global and domestic conditions.