February Market Commentary

A view of the markets in February 2025. Commentary provided by Luna Investment Management, a Thornbridge Appointed Representative.

February was another strong month for stock markets. During the month the US Supreme Court ruled against the use of the International Economic Emergency Powers Act to justify the April 2025 reciprocal tariffs. President Trump responded by immediate new 10% tariff on imports from all countries, on top of any existing tariffs, and then issued a proclamation putting them into effect. Tensions between the US and Iran escalated into armed conflict, though hostilities started after markets had closed for the month.

Global stock markets were mostly in positive territory during the month (to a sterling investor). The Japanese Nikkei 225 sprung over 11%* during the month. Markets reacted positively to the snap election victory of Japanese prime minister Sanae Takaichi, which delivered the first two-thirds supermajority since the Second World War. Investors factored in the increased likelihood of further fiscal stimulus. Closer to home the FTSE All Share returned 6.5% during the month with the FTSE 100 well and truly above the 10,000 figure set in early January. On the flip side, it was a slightly weaker month for US Technology, with the Nasdaq 100 delivering a slightly negative number during February.

It was a stronger month for bond markets with inflation falling more than expected in the UK, announcement of a fall in energy prices in April and therefore the possibility of more interest rate cuts in 2026. UK Government Bonds delivered a 2.5%* return during the month.

This commentary was written for February, but it would be amiss of us not to touch on the tensions in the Middle East. Firstly, and most importantly we must consider the human impact here and hope a swift conclusion follows. Like any major global event, these developments have caused short term uncertainty and volatility in markets. Equity markets are weaker, safe havens like the US dollar and Gold are benefitting. Due to the location and the uncertainty of cargo passing through the Strait of Hormuz both Oil and Natural Gas prices are spiking; the longer this continues, then the bigger the impact on inflation.

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