February Commentary

Returns in the UK equity market were dominated by large-cap companies, with the FTSE 100 gaining 1.1%. This was more than offset, however, by falls of 6.6% and 4.1% in the mid and small-cap indices respectively. Fears for inflation and rising rates were balanced by steady estimates for earnings growth, and upside earnings surprises from some large retail companies. Down -0.4% (UK All Share)

European markets recorded their worst month since October 2020. Investors were concerned about inflation, supply-side bottlenecks and possible rate rises. EU stocks saw a sharp contrast between value and growth, with the EU Value Index actually recording a small rise. Down -3.9% (Euro 600 Index)

Fuelled by fears of expected higher US interest rates, US Equities tumbled, with technology stocks leading the way. The Fed Chairman, Jerome Powell, said that they would begin to reduce the government balance sheet once rates had begun to rise, and this would primarily take place in the form of adjustments to reinvestment, as opposed to outright bond sales. Down -5.3% (US 500)

Asia was led lower by falling Chinese equities, which lost more than 7%. India also returned a small loss. There were, however, gains in some markets. Hong Kong, which was the worst performing major market in 2021, rose by more than 1.7%. Japan, whilst not experiencing the inflation seen in other markets, was affected by falls around the world and comments from the Fed. Down 2.7% (Asia Index)