Monthly Market News February 2024 – Market Trends

Alexandre Gauthy - Economist

Equity markets delivered solid returns in February. Long-term bond yields rose as the market repriced monetary policy expectations. Stock gains have broadened outside the technology sector.

Our expert, Alexandre Gauthy, analyses market trends in February 2024.

Equity markets: equities continue to rise in February

During the month of February, global equities rose by 4.6% in euro terms. Measured in common currency, US equities (+5.7%) and emerging market equities (+5.1%) outperformed other regions, including Japan (+3.3%) and Europe (+1.8%).

The major U.S. stock indexes ended February higher, with the Nasdaq and the Russell 2000 (small-cap companies) leading the way. The performance of the S&P 500 was also strong, with the index closing above the 5000 mark for the first time on February 9 and setting several new all-time highs during the month. The stock prices of big tech companies rose thanks in part to another big gain from Nvidia. The stock market rally is no longer just about technology: in February, the gains spread to other sectors. More specifically, consumer discretionary (+8.6%), industrials (+6.9%) and materials (+6.3%) outperformed technology companies (+6.2%) in February.

Market expectations for rate cuts have been pushed back. This did not hinder the rise in equity markets, as the latest data continues to support the thesis of disinflation and monetary policy easing later in the year. In addition, corporate earnings have held up well and consumer spending has remained robust. Artificial intelligence remains an important driver for stocks, despite a few missteps by Alphabet's Gemini. That said, high sentiment and positioning indicators continue to capture investors' attention.

Bond markets: bond yields rose in February

Some of the month's economic releases pushed up long-term bond yields. The highlight of February was the January inflation report, which showed an increase in core inflation over the month. January's jobs report was also stronger than expected, both in terms of job creation and wage growth. Against this backdrop of rising bond yields, bonds posted negative returns over the month. Eurozone government bonds ended the month down 1.2% while corporate bonds did slightly better (-0.88%).

Central banks: waiting for more indications of disinflation

In the weeks that followed the Fed's January meeting, several Fed members said they wanted to wait for additional data to bolster their confidence that inflation is moving sustainably closer to the 2% target. Market expectations have gradually shifted to three 25 basis point rate cuts this year, which is in line with the Fed's December forecast. Market expectations for the timing of a first ECB rate cut have also been pushed back.

Currencies: no big moves

The dollar remained broadly unchanged in February, both against the euro (which appreciated slightly at the end of the month) and against other major currencies. The Swiss franc depreciated by 2.5% against the euro in February. This negative month for the Swiss currency was mainly due to low inflation prints in Switzerland as well as risk-on sentiment among investors, which was a headwind for the safe-haven franc. The Japanese yen followed the same movement as the Swiss franc in February.

Commodities: significant rise in cocoa prices

In February, the price of European gas on the futures market fell by 12% over the month, thanks to warmer than average temperatures in Europe. As for the price of oil, it rose slightly last month. The highlight was the 27% increase in the price of cocoa in February. The price of cocoa has reached its highest level in 44 years due to a sharp decline in harvests in West Africa.

Share the article

More about: