February 2026 Market update

Overview

While markets performed well during February – with most asset classes rising and UK investors seeing a 2.6% return from global equities during the month – the US-Israeli strikes on Iran at month-end dramatically shifted the mood in markets.

Risk assets, led by travel-related names, have sold off, while bond yields have also risen as energy prices surged, reflecting concerns about renewed inflationary pressures.

Middle East conflict...

The key concern is the potential for disruption to global oil and gas supplies, with the Strait of Hormuz now closed and refineries and ports also being targeted in retaliatory strikes. Natural gas prices have doubled in Europe to date, while oil prices have risen by more than $10 per barrel amid fears of supply disruption.

Approximately 20% of global oil supply passes through the Strait of Hormuz, making it one of the most important energy transit routes in the world.

Central Bank outlook...

Central banks remained a key focus during the month. The ECB, Bank of England and Federal Reserve all held policy rates unchanged, reflecting the delicate balance between easing inflation and still-resilient economic activity.

Complicating the outlook are signs that economic momentum may be strengthening again, while the Middle East conflict risks pushing inflation higher through rising energy costs.

Full update below…