Global Markets​

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In February 2026, global markets delivered broadly positive returns, supported by resilient economic data and moderating inflation pressures across major economies. However, market volatility increased amid heightened geopolitical tensions in the Middle East at the end of the month, uncertainty surrounding global trade policy, and growing concerns about the disruptions and returns of artificial intelligence investment. 

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Global equities produced modest overall gains but with significant divergence across regions and sectors. Emerging markets outperformed developed markets, with the MSCI Emerging Markets Index rising around 5.5%, supported by strong gains in Korea and Taiwan amid continued demand for semiconductor and technology hardware exports. In contrast, developed market equities rose only slightly, with the US market even underperforming as the S&P 500 declined 0.8%. Investor sentiment towards large technology companies weakened as concerns emerged regarding the long-term return on substantial AI-related capital expenditure as well as potential disruption of AI tools on other sectors like software. As a result, a rotation within equity markets away from mega-cap US technology and towards the “value-over-growth” trend became more evident, with value stocks rising 2.9% while growth stocks declined 1.6%. Sector performance reflected this shift, with materials, utilities and energy among the strongest performers, while information technology and communication services lagged. Japanese equities were a standout performer, with the TOPIX rising more than 10% following the snap election victory of Prime Minister Sanae Takaichi, which increased expectations of political stability and further fiscal stimulus.

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Commodity markets posted modest gains of 1.1% during the month, following strong performance in January. Precious metals were the best-performing segment delivering a 12.4% return over the month, with gold rising around 5% in February and more than 20% year-to-date. The rally was supported by a weaker US dollar, softer US Treasury yields and continued strong investor demand, particularly from Asia. Geopolitical tensions also reinforced gold’s role as a safe-haven asset, with prices rising sharply following the escalation of conflict between the US and Iran. Energy markets were more subdued for much of the month due to rising US inventory levels, but oil prices spiked at the end of February after renewed Middle East tensions.

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Global fixed income markets delivered positive returns of 1.1% as government bond yields declined across major developed economies including the US, UK, the Eurozone and Japan. Investors sought high-quality assets amid growing geopolitical risks and concerns about AI disruption. US Treasury yields fell as markets increasingly priced in additional rate cuts later in the year. Credit markets weakened slightly during the month, however, as spreads widened modestly across both investment grade and high-yield bonds.
 

As of 27 February 2026:

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UK 10 Year Gilt Yield 4.234%
US 10 Year Treasury Yield 3.952%
Germany 10 Year Bund Yield 2.656%
 

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UK Market

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UK equities performed strongly in February, with the FTSE All-Share Index delivering solid gains supported by the market’s sector composition and the broader global rotation away from large technology stocks. Large-cap companies led the advance, with healthcare, basic materials, utilities and telecommunications among the strongest-performing sectors. Healthcare stocks benefited from robust corporate earnings and continued merger activity aimed at strengthening drug pipelines, while basic materials and utilities were supported by stronger commodity prices and defensive demand from investors.

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Monetary policy remained a key focus for markets during the month. The Bank of England maintained the Bank Rate at 3.75%, following a narrow 5–4 vote, with four policymakers supporting a 25 basis-point rate cut. The close vote and relatively dovish communication from the Bank and the reduction in inflation to 3% increased expectations that interest rates could be reduced in the coming months. As a result, gilt yields declined during February, making UK government bonds one of the stronger performing sovereign bond markets globally.

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On the fiscal front, the Spring Forecast 2026 showed that government borrowing fell by nearly £18 billion compared to the Autumn, with headroom against the stability rule increasing to almost £24 billion. Economic growth is expected to remain modest but stable, with GDP forecast to grow by around 1.1% in 2026.
 

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Ark Insights

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February highlighted the return of volatility in global markets as geopolitical tensions and a sharp rotation away from mega-cap technology raised concerns about potential disruptions to financial markets and global supply chains. While such developments can significantly influence short-term market sentiment, the course of geopolitical events and conflicts remains inherently difficult to predict.

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In this environment, we believe it is important to return to the fundamentals of investing. Rather than attempting to react to unpredictable events, maintaining a disciplined and long-term approach remains key. When markets are strong, discipline helps prevent excessive risk-taking; when uncertainty rises, it helps investors avoid unnecessary fear.

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At Ark, our strategy continues to focus on diversification, resilient businesses, precious metals and long-term opportunities. In other words, successful investing often means remaining balanced: not becoming overly greedy when markets are strong, and not becoming overly fearful during periods of uncertainty.

As always, your advisors would be happy to assist with any questions you may have.
 

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The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

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