February '24 Market Report

The notable performance of several leading US tech giants propelled global stock indices upward in January, with the MSCI All Country World Index closing the month with a 1% gain, measured in sterling terms. The initial monetary policy decisions of 2024 by the Bank of England (BoE), Federal Reserve (Fed), and European Central Bank (ECB) left base rates unchanged, counteracting market anticipations of imminent interest rate cuts.

In the UK, bond yields increased in January as inflation rates climbed and economic indicators exceeded forecasts. Meanwhile, the US showcased robust employment and GDP figures, reinforcing its role as a critical driver of global growth. January's non-farm payroll numbers reached 353,000, nearly doubling predictions and marking the highest level in a year. While the UK and Eurozone's GDP growth appeared modest in comparison, their labor markets remained resilient, with strong wage growth potentially keeping inflation higher than central banks' targets.

In the upcoming weeks, investors are likely to focus on economic data releases and developments in the Middle East. The collective stance of the BoE, Fed, and ECB hinted at a need for more concrete signs of inflation slowing or economic deceleration before considering any easing of monetary policies.

Tensions in the Middle East have escalated since the beginning of the conflict between Israel and Hamas, with the US responding to the death of three American soldiers by stating it will continue to target militants in the area. Oil prices, highly responsive to these tensions, saw Brent crude, a global benchmark, finish January more than 6% higher, despite a retreat from its peak earlier in the month.