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Market Snapshot - February 2024

4 months ago

In brief

Hopes faded for interest rate cuts in March. While the US Federal Reserve and European Central Bank indicated that later rate reductions were possible, they stressed it was too early to consider such a move. The Bank of England, meanwhile, removed the warning that rates could rise again from its guidance.

Headline inflation rates slowed in January, but risks of a flare up remain. US average hourly earnings ticked up in January, and job growth was far stronger than expected. Additionally, employment data for November and December were revised upwards.

Chinese equities surged over the month, amid growing expectations that March’s National People’s Congress would see the announcement of further stimulus measures. Empirical evidence of strong spending during the Lunar New Year holidays also boosted sentiment.

The Markets


Global equities rallied, with the MSCI All Countries World Index rising 4.29%. Chinese stocks posted the strongest monthly gain since November 2022, with the MSCI China Index surging 8.59%. Japanese shares also soared, with the Nikkei 225 Index surpassing its 1989 high as it rose 7.98% over the month. February was also a strong month for US equities, with the S&P 500 Index and Nasdaq Composite Index rallying 5.34% and 6.22%, respectively. Both indices closed the month at record highs. European shares also moved up, reaching their highest levels since January 2022, but trailed the advance in other markets, with the STOXX Europe 600 Index gaining only 1.98%


Global bonds sold off somewhat, as central banks moved to dispel hopes that rate cuts may be imminent. The yield on the 10 year US Treasury closed the month up 29 basis points (bps) at 4.24%, while the yield on the 10 year German Bund rose 24 bps to 2.42%. In the credit markets, investment grade corporate bonds weakened along with government debt, while high yield bonds held up better as their larger coupons helped to cushion them from rising bond yields.


The US dollar appreciated over February, supported by data highlighting the resilience of the US economy and labour market. Overall, the dollar rose 0.38% against the euro and 2.39% against the Japanese yen. The Bank of Japan maintained its ultra accommodative stance, but faced growing pressure to raise rates and exit its yield curve control policy.


Oil prices, as measured by Brent crude, advanced 2.34% to close the month at $81.95 as investors weighed hopes of a ceasefire in the Israel/Hamas conflict against concerns that OPEC+ might extend production cuts. Gold prices slid slightly, briefly dipping below $2,000 a troy ounce before closing February back above that level.

Market Volatility

Market volatility

Volatility fell over the month, with the Vix Index closing down 6.6% at 13.4. The index remained below the 20 level which is usually viewed to be an indicator of market stability.

Responsible investing

JPMorgan Asset Management and State Street Global Advisors have confirmed they are to quit Climate Action 100+, an investor group set up to place pressure on polluting companies to decarbonise, while BlackRock is scaling back its involvement. The moves come as US asset managers face a rising backlash from Republican senators, who tend to be more in favour of the oil and gas industry.

On the radar

  • In early March, the National People’s Congress meets in China. As well as setting growth targets for 2024, it is hoped the meeting will outline fresh stimulus measures for the economy and bolster confidence in the property market.
  • March sees central bank meetings in the US, eurozone and the UK amongst others. Rates are widely expected to remain on hold, but investors will be analysing the accompanying statements carefully to glean information on when rate cuts might be expected.
  • In contrast, whereas central banks in other developed markets have raised rates, Japan remains the outlier. The Bank of Japan acknowledges that it needs to normalise policy at some point, but wants inflation to be at 2% sustainably before it does so. The forthcoming ‘shunto’ wage setting round may be the key to this.

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