With so much interest focused on inflation coming down and the timing of interest rate cuts, the health of the European and UK economies was largely forgotten.
A reminder of the fragility of global economies was laid bare in February as the European Commission downgraded forecasts for eurozone growth, and the UK slipped into a technical recession, with the Office for National Statistics showing successive drops in GDP in the past two quarters.
Despite a slight dip in economic growth to 3.2% in the fourth quarter, the US economy has, however, shown remarkable resilience, especially in the labour market. This strength, coupled with consumer spending that exceeded expectations, underscores the robustness of the US economy.
While purportedly growing at 5.2% in 2023, China's economy remains shrouded in uncertainty, particularly in property markets and broader sectors. To counter this, the government has injected significant liquidity into the economy. As things stand, the effectiveness of these short-term measures in revitalizing the economy remains uncertain.
Global inflation is no longer a material concern, although it continues to exceed central bank targets. Again, the worries remain more in Europe, but it is coming down, and timings for interest rate cuts appear set for mid-year. The UK figure is more confused at 4% for January, with most economists expecting an uptick to 4.1%. However, UK food inflation figures were back at two-year lows, so there may be room for an earlier-than-anticipated rate cut. Traders are monitoring this closely to get any sense of direction.
Equity markets were generally up for the month. The US had another strong month, with many tech stocks reporting bumper results. Amazon was up 12% and Nvidia 25% in February, respectively. By the end of the month, the S&P 500 was up 5.2% and the Nasdaq 6.1%. The Dax was up a similar amount, 4.6%, while the FTSE was flat. In Asia, the Nikkei 225 was up 7.9%, and the Shanghai Composite Index 8.1%.
In commodities, the Bloomberg Commodity Index was down -1.5%. With little change in the Red Sea, as the Houthis continued to cause havoc, oil prices rose, with Brent +3.7% and WTI +3.1%. Gold was down 0.2%, and silver was down 0.8%.
Crypto had a bolter in February as investors piled in. Bitcoin surged past the $60,000 mark, where it was in November 2021 and is now up a staggering 40% since the start of the year.