We share our latest observations on global asset markets regarding T8 Energy Vision

The rally in global equities continued in February (+4.1%) led by large cap technology stocks in the United States (US). The ‘Magnificent 7’ (+12.1% on an equal weighted basis), led by NVIDIA (+28.6%), was the major driver. NVIDIA alone accounted for approximately 20% of February’s gains in the S&P 500 (+5.2%).

Elsewhere, the regional standout was Asia with Japan’s momentum continuing (+7.9%), eclipsing highs set in its 1989 boom, and China rebounded (+8.1%), recovering its losses from January. European stocks were sluggish despite the German index (+4.6%) outperforming global indices.

Across style factors, growth stocks (+6.7%) unsurprisingly (given the strength of technology stocks) outperformed value stocks (+3.5%), while market cap was less of a factor as small caps (+5.5%) narrowly outperforming large cap stocks (+5.2%).

Within the US, the utilities sector (+0.5%) was the worst performing sector, largely as a result of the movement in bond yields (US 10-year Treasuries +34bps). Interest rate sensitive sectors (such as utilities and real estate) have been the worst performing major industry sectors throughout the rate hiking cycle (the first interest rate hike was announced by the US Federal Reserve on 17 March 2022) with utilities and real estate -13.0% and -16.5%, respectively during this period.

Bond prices declined across the board (global aggregate bond index -1.3%). Within US Treasuries, the most pressure was felt at the long end of the curve (US 20-year Treasuries +25bps to 4.5%). The US dollar strengthened (+0.9%).

The highly interest rate sensitive Clean Energy Index (flat) traded sideways and consolidated during the month, having been buffeted by the considerable speculation in relation to interest rates in recent months.