The bullish mood across equity markets was maintained in February despite some shaky data, with the majority of the key indices globally continuing to climb to ever higher levels.
Starting with the UK, the FTSE 100 gained 2% in February to close at 7,263 points, while in the US the S&P 500 rose 4% to finish at 2,363 points.
The gains came in the face of weak figures from the US which saw a downward revision to GDP for the final quarter of last year. There has also been a lack of clarity about President Trump’s plans to boost the economy, but neither was enough to derail a bull market which is already the second longest running in history.
Europe followed suit, despite the uncertainty caused by a series of upcoming elections, with the German DAX gaining 3%, while further afield in Japan, the Nikkei 225 rose marginally.
Peter Lowman, Chief Investment Officer at Investment Quorum, said while there may be a reckoning for valuations at some point, investors who are sticking it out across developed markets are being well rewarded for now.
“Clearly, at some stage in the proceedings valuations, corporate profitability, central bank policy and inflationary pressures will need to become more attached to market movements, and this may mean a period of higher volatility,” he said.
“However, February was another rewarding month for investors, and of course, UK clients with an overweight position towards international markets continued to benefit from some of those big share price movements as well.”
Despite expectations of protectionism and a stronger dollar, emerging markets also enjoyed solid gains in February, with the MSCI EM index up 3% as it continues to recover from the events of 2015 and 2016.
Lowman added: “There are now some interesting challenges ahead with a decoupling of investment opportunities given that the US looks rather expensive compared to the likes of Europe, Japan and the emerging markets which are more attractive.
“However, these areas will also be driven by events in the US and by domestic issues such as politics and internal economic policies.”
Away from equities, UK government debt has seen yields retreat once more, ending the month at 1.15%, down sharply from starting levels above 1.4%. Meanwhile US yields have been more range-bound, continuing to trade between 2.3% and 2.5%.
Alternative assets are starting to gain momentum, according to Adrian Lowcock, investment director at Architas, in particular gold. The precious metal gained another 3% in February and Lowcock said it could continue to perform if equity valuations keep creeping higher.
“In terms of alternative assets, gold has been performing despite the rally in markets, which is unusual for it, but that shows people are cautious,” he said. “Therefore, if valuations in markets get much higher, gold will be increasingly popular.”