In February, the Bank of England kept interest rates unchanged at 0.5%, despite inflation remaining high at 3%. Under different circumstances, high inflation might be seen as enough to prompt a further interest rate increase, but many market professionals believe the Bank of England is reluctant to raise rates further until there is more clarity around Brexit.
As was widely reported in the media, February was a difficult month for most global stock markets. No one can be certain of the specific cause of the issues, but a popular theory is it was led by the announcement in the US that to combat inflation, interest rates might rise by more than expected. The potential negative effect of this on America’s economic growth could be what led to the rapid sell-off of shares we saw. Whether or not this was the case, the reality is that after a period of such strong market performance like we saw last year, a market ‘correction’, as it’s known, was almost inevitable at some point.
Looking at February’s performance by numbers, the UK’s leading market (FTSE 100) lost -3.39%, the US (S&P 500) -3.69%, the EU -3.76% (Euro Stoxx) and Japan (Nikkei) lost -4.41%.
In currency markets the Pound lost ground against most major currencies, including the US Dollar against which it was down -3.13%.
Investment type performance breakdown
Most investment types ended the month lower with only commodities bucking the trend. Commodities +2.12%, private equity -2.32%, bond investments -0.21%, property -4.67% and shares -1.73%.
Summary with Plan details
February was a tough month for most investors everywhere. However, thanks to some decisions made by our investment team at the start of February, we ended the month better than we would have, had we done nothing. These market dips are part and parcel of investing and a reminder that you should always think long-term and ignore the short-term noise.
*Figures shown are based on a medium-risk (Confident) investment Plan.
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