February 2025 Market Update

Overview

The strong start to 2025 lost momentum in February as global stocks retreated, with UK investors seeing a -3.6% total return amid profit-taking and a stronger Sterling.

Concerns around elevated valuations weighed on sentiment, while fears of a potential trade war resurfaced. The Trump administration fuelled volatility, as early optimism over tax cuts gave way to concerns around tariffs and the passing of new legislation.

Japan was the weakest performer – cooling after years of strong gains – while US equities also struggled. Europe led global markets, as investors rotated into less expensive regions, with the UK also faring well.

Meanwhile, gold extended its rally, closing in on a 40% annual gain, as emerging market central banks continued reducing their reliance on international cash reserves. Bond yields declined, with the US 10-year Treasury yield falling 0.34% and the UK equivalent dropping 0.05%.

Full update below…