Market Analysis


As temperatures dipped at the end of the month, so too did the markets. In the UK, the FTSE100 lost over 50 points on the last day of trading to end February down 4.0% on 7,231.91 – a recovery from its mid-month low of 7,092.43 on 9 February. On the last day of the month, the index fell in early trade following comments from the new chair of the US Federal Reserve, Jerome Powell, outlining his expectation for further gradual interest rate hikes over the coming year. The wider FTSE250 also closed the month in negative territory at 19,687.27, a monthly decrease of 2.75%. The Junior AIM followed suit with a 2.87% fall to finish the month at 1,038.32.


In the US, the release of US gross domestic product data showed fourth quarter growth was not as strong as originally anticipated. US GDP grew by an estimated 2.5% in the last quarter of 2017, one tenth of a percentage point lower than the previous estimate. Worries over interest rate rises dragged at month end, the Dow and S&P 500 capped their worst months since January 2016. The Dow Jones closed at 25,029.20, down 4.28% over the month, whilst the technology weighted NASDAQ index also slid (1.87%) to end the month on 7,273.01.


In Asia, equities were knocked by poorer-than-expected economic data, including weak Japanese factory output, retail sales and manufacturing data in China. The Japanese market, as covered by the Nikkei225 index, closed February on 22,068.24, a loss of 4.46%. Despite improving data from the Eurozone and Germany, European stock markets are under pressure as investors face the prospect of QE ending. The Eurostoxx50 in mainland Europe fell 4.64% to 3,438.96.


On the foreign exchanges, sterling closed the month at $1.37 against the US dollar. The euro closed at €1.12 against sterling and at $1.22 against the US dollar.


Gold fell 1.99% over the month to close February on $1,317.99 a Troy Ounce. The gold price fell at the end of the month following Jerome Powell’s first speech to lawmakers, as the dollar rallied. Oil slipped (2.65%) in February, to close out at $66.23 a barrel, as measured by the Brent Crude benchmark.



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