Monthly Highlights:
- Global markets advanced through February despite ongoing macroeconomic and geopolitical headlines. Cooling inflation data, resilient economic growth and continued earnings strength supported risk assets. The US Supreme Court ruled that existing trade tariffs were illegal, though uncertainty remains as the US Administration considers its next steps. Geopolitical tensions also escalated late in the month after the US and Israel launched strikes on Iranian targets, raising the risk of broader regional conflict.
- Australian shares moved higher, led by financials and materials, as the reporting season highlighted resilient bank earnings and improving conditions across the mining sector. Consumer staples and utilities also performed well given their defensive earnings profiles, while healthcare and IT lagged following weaker reporting-season reactions and pressure on growth valuations. Consumer discretionary also declined as cost-of-living pressures weighed on household spending.
- International shares were mixed in February. The US market declined as technology shares fell amid ongoing concerns about AI-related disruption. European markets rose as investors favoured relatively cheaper markets outside the US, while Japan gained after the incumbent government secured a landslide election victory. Chinese markets fell amid ongoing concerns about the property sector. Global listed property and infrastructure also performed well as bond yields declined.
- Global fixed interest markets edged higher as government bond yields drifted lower. Softer US inflation data and more measured central bank commentary supported government bond prices, while returns from corporate bonds were modest as credit spreads widened modestly, indicating investors demanded more compensation relative to government bonds to hold credit risk.
