Market Review February

UK

The FTSE All-Share Index lost 8.9% in sterling terms during February as stocks sold off sharply on the back of coronavirus worries. While the UK itself reported relatively few cases of the virus, the government was preparing emergency legislation to deal with a possible pandemic. There were rising expectations of an imminent UK interest rate cut after Bank of England governor Mark Carney warned the coronavirus outbreak was likely to weigh on domestic growth this year. Meanwhile, official data showed the UK economy registered zero growth over the final quarter of 2019. Composite PMI data suggested the UK economy expanded at a modest pace in February, broadly in line with January. In terms of sectors, oil & gas producers (14.2%) and food producers (12.0%) lagged, while electricity (1.0%) and forestry & paper (1.0%) outperformed.

FTSE All-Share Total Return (TR) GBP (%)*

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Past performance is not a guide to future performance. The value of all stock market investments can go down as well as up and you may not get back the full amount originally invested. 

Europe

The FTSE World Europe ex-UK Index returned -5.4% in sterling terms. In common with global equities in general, European stocks suffered from fears over coronavirus. While various European countries reported coronavirus cases during the month, there was particular concern centred on Italy, where a cluster of towns in the country’s north were quarantined. Official data showed the eurozone economy grew by just 0.1% over the final quarter of 2019, the slowest pace since 2013. Eurostat also reported a 2.1% decline in eurozone industrial production in December, with weakness in Germany, Italy and France. PMI survey data for February pointed to
some monthly improvement in eurozone economic activity, though manufacturing continued to contract. The Zew survey suggested investor sentiment on Germany’s economic outlook deteriorated sharply in February.

FTSE World Europe ex UK TR GBP (%)*

US

The FTSE All-World North America Index fell 5.2% in sterling terms over February. Along with global equities in general, US stocks came under pressure from the coronavirus crisis and worries over the potential for a global pandemic. Though relatively few, there were a rising numbers of US cases, with health officials warning the disease was likely to spread through US populations. Comments from Federal Reserve (Fed) chair Jay Powell alluding to economic risks posed by the spread of coronavirus raised expectations that the Fed would cut interest rates in March. Survey data released early in the month showed US manufacturing activity had swung into expansion in January from contraction in December. The US economy also added more jobs than expected over January. The US and China repealed certain trade tariffs that they had imposed on one another in September.

FTSE All-World North America TR GBP (%)*

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*Source: Lipper to 31 January 2020, total return. Indices rebased to zero at 31 December 2019.

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