Investor update: February 2026

At a glance:

• Our view on equities is increasingly positive due to what we believe is an improving economic picture.
• Global equities continued last year’s strong performance, up more than 2% in January, with emerging markets a standout performer, up over 8%.
• President Trump announced Kevin Warsh as his intended nominee to be the next Chair of the Federal Reserve (Fed), a hot topic for market participants.

Key portfolio changes

Our view on equities is increasingly positive due to what we believe is an improving economic picture. While geopolitical shifts have grabbed the headlines, the global economic engine has continued to hum along in the background, largely uninterrupted.

Given our positive outlook, we have added to portfolios’ equity holdings. To fund this, we have slightly trimmed fixed income exposure. In our 2026 outlook published backed in December, we delved into our assessment for the fixed income space. While there are opportunities in some areas of the market, we feel the investment case for asset classes such as longer-dated government bonds is slightly challenged. This comes down to some concerns on the level of fiscal discipline by governments around the world. 

How financial markets have fared and why

The headline is that global equities have continued the strong run they had last year, up more than 2% over the course of January.

Major indices across the US, UK and Europe posted positive returns between 1-3%. The US’s flagship index – the S&P 500 – which reflects the performance of the US’s 500 largest listed companies – broke the 7,000 level for the first time. This reflects investors’ continued optimism in the US economy overall and positivity for artificial intelligence and other emerging technologies being developed by US companies.

We have also seen a particularly positive start to the year for emerging markets, up around 8% over the month. Emerging markets cover a broad range of countries. This includes those with more developed, tech-centred economies such as South Korea and those with commodity-focused, mining-heavy economies like Brazil. Emerging markets endured many years of lacklustre returns, hampered by a stronger US dollar and persistent household debt impediments in China leading to a clamour to invest in the US. However, 2025 saw a sea change. The dollar weakened significantly last year as global growth became more sure-footed. This proved positive for emerging market equities, and these themes continued into January.

Also among the biggest gainers have been indices that track the performance of ‘small cap’ companies – those with more modest market capitalisations. They have benefitted from better-than-expected economic growth news and expectations of lower interest rates in the future, something we’ll touch on in a moment.

On the commodities front, gold continues to grab the headlines. It reached a record high in the last week of the month, almost touching $5,600 per troy ounce: up by over $1000 since the start of the new year. It did, however, see some sharp price swings near month-end. We keep a positive long-term view of the asset class.

Economic developments we’re watching

This month, the US central bank – the Federal Reserve, more commonly known as the Fed – has been in focus. At its meeting towards the end of the month, the Fed held interest rates steady after three consecutive rate cuts at the end of last year. The Fed is responsible for keeping prices and employment stable in the US, using a variety of methods in pursuit of careful economic balance.

The current Fed Chair, Jerome Powell, has been in place since 2018, and his second term is due to come to an end in May. The Chair is a position with significant influence over the direction of monetary policy, of which interest rates are a central element. Who will be picked to replace Chair Powell has been a much-discussed topic in recent months. Well, on the 30th of January, President Trump announced Kevin Warsh as his intended nominee.

The Fed has broad global influence. Any potential change to monetary policy direction, which is possible with a new leader at the helm, could have wide-ranging effects. This is something we’ll be watching closely in the months to come.

About this update: All figures, unless otherwise stated, relate to the month of January 2026.

Sources: MacroBond, J.P. Morgan Personal Investing and Bloomberg.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in this update. Always do your own research.