Financial markets continued their upward trajectory during February with several equity bourses (S&P500 Index, Nikkei Index) reaching all time highs over the month. The upward move in the S&P 500 Index (+5.2%) over the month was on the back of a solid reporting season, but equally, the performance of Nvidia (+28.6%) after the company posted its quarterly earnings that was above market expectations. However, while February was another solid month for equity markets bond markets failed to fire as global bond yields continued to inch higher. The upward move in yields is finally seeing markets take note of central bank commentary around the future direction of cash rates. While inflationary pressures have slowed and in many jurisdictions are trading around the top end of central bank’s target levels, the overall strength in economic growth, particularly out of the US will curtail enthusiasm for the US Fed to cut rates any time soon. While such a move has the potential to take the gloss of equity markets in the near term given the upward move over the last 3 months, we continue to be fundamentally positive on the outlook for growth and other cyclical based assets over the medium term.
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