March 2026 - Market Review

FTSE hits a fresh record: the FTSE 100 Index ended February at a record high, closing over 10,900 points for the first time ever. Performance was driven by stocks in the defence and mining sectors, which were boosted by escalating tensions in the Middle East, and by the UK’s relatively low exposure to companies in the technology sector. Meanwhile, an agreed bid for asset manager and FTSE 100 constituent Schroders from US investment group Nuveen propelled Schroders’ share price up by 30% over the month. Over February, the FTSE 100 Index rose by 6.7%, while the FTSE 250 Index climbed by 2.2%.

Tariff trouble: the thorny issue of trade tariffs resurfaced during the month following the US Supreme Court’s decision to strike down President Donald Trump’s Liberation Day tariffs. President Trump subsequently announced a 10% worldwide tariff, with plans to increase it to 15%. In response, the British Chambers of Commerce warned: “This will be bad for trade, bad for US consumers and businesses and weaken global growth.”

Rate cuts ahead? The Bank of England (BoE) maintained its key interest rate at 3.75% during February, although the decision was closely run with policymakers voting by five to four in favour of no change. The BoE expects UK inflation to ease to 2.1% in the first half of 2026, and BoE Governor Andrew Bailey commented: “There should be scope for some further easing in monetary policy in the period ahead.” The annualised rate of inflation dropped from 3.4% in December to 3% in January, reaching its lowest level since March 2025. 

A mixed economic picture: the UK economy expanded by 0.1% over the final three months of 2025. Although activity in the manufacturing sector rose slightly, the services sector stagnated over the quarter. Over 2025 as a whole, the economy grew by 1.3%, compared with 1.1% in 2024. However, the rate of unemployment reached 5.2% over the three months to December, hitting its highest level since 2020, and unemployment amongst young people aged from 16 to 24 rose to 16.1%. Elsewhere, the Office for National Statistics reported stronger-than-expected UK retail spending in January, boosted by “unprecedented” sales volumes from online jewellers that were underpinned by surging prices for gold and silver. 

Global

Escalating tensions: US equity markets were on edge during February amid mounting concerns over inflation, escalating geopolitical tensions, and questions over the impact of AI on the wider economy. The US Supreme Court struck down the tariffs imposed by President Donald Trump on Liberation Day, after which President Trump announced blanket worldwide tariffs of 10%, with plans for an increase to 15%. While the Dow Jones Industrial Average Index edged up 0.2% over February, the tech-heavy Nasdaq Index fell by 3.4%. The price of gold proved volatile during the month and, as February ended, the US and Israel initiated air strikes on Iran. 

Power politics: at the annual Munich Security Conference, German Chancellor Friedrich Merz warned that the rules-based world order “no longer exists”, arguing that “the international order based on rights and rules” had given way to one “openly defined by power and great power politics.”

“Doing dumb things”: questions were raised over the outlook for the financial sector amid the wider impact of the collapse of UK mortgage lender Market Financial Solutions. Jamie Dimon, CEO of JPMorgan Chase, drew comparisons to the years leading up to the Global Financial Crisis, warning that companies are “doing dumb things” by chasing risky loans. 

Inflationary pressures: according to minutes from the Federal Open Market Committee’s January meeting, policymakers believe that progress towards the Federal Reserve’s 2% inflation target “might be slower and more uneven than generally expected.” Stronger-than-expected US producer price inflation dampened sentiment towards the end of February. 

Japanese share prices surge: Japanese equity markets soared to fresh highs in February amid expectations of looser fiscal policy following a resounding victory for Prime Minister Sanae Takaichi’s Liberal Democratic Party (LDP). Prime Minister Takaichi said she intended to pursue a “responsible and proactive” approach to public finances. The Nikkei 225 Index climbed by 10.4% during the month.

Green shoots in Germany? Germany’s Dax Index rose by 3% during February, boosted in part by signs of an improving economic backdrop. In particular, activity in in the eurozone’s manufacturing sector hit a 44-month high, according to S&P Global’s Manufacturing PMI report; the acceleration was led by Germany, which posted its strongest performance since May 2023.  Elsewhere, ifo’s German Business Climate survey rose to its highest level for six months.

As ever, if you have any questions regarding your investments, please do not hesitate to contact us by calling +44 (0) 7917 390 344  or emailing me at richardbrazier@culverfinancial.co.uk and we will be happy to talk to you.