February was a remarkable month, with strong economic data and positive earnings reports leading to the Standard and Poor’s 500 (a stock market index that tracks the performance of 500 large-cap U.S. companies) reaching a new all-time high.

At a regional level emerging market shares performed better than developed markets. This was due to supportive measures taken by the Chinese government, such as reducing the 5-year prime loan rate. However, developed markets such as the UK and Eurozone didn’t perform as well. On the other hand, Japan’s Nikkei 225 index reached a new all-time high for the first time in over 30 years. In fixed income markets, bond prices generally fell as yields rose during the month.

In terms of specific market indices, the MSCI World (a measure for developed market equities) returned 4.6% in local currency, while the Bloomberg Global Aggregate Bond Index (NZD hedged) returned -0.7%. US and Japanese equities continued to show strength, with the MSCI US and Japan up 5.3% and 5.5% respectively in local currency. In currency markets, the USD gained value against most major currencies as market participants adjusted their expectations for interest rate cuts.

Significant developments for February:

• Bitcoin surpassed $60,000 (USD) for the first time since November 2021 and has increased by more than 40% this year, following the successful launch of US bitcoin exchange-traded funds (ETFs).
• Corporate earnings in the developed world during the fourth quarter of 2023 were strong, with the US and Japan leading the way. Of the 90% that have reported, nearly three-quarters of the S&P 500 companies that reported their earnings exceeded analysts’ expectations.
• The Reserve Bank of New Zealand (RBNZ) maintained the Official Cash Rate (OCR) at 5.5% in February and expressed limited tolerance for inflation exceeding their target range of 1 to 3%. The RBNZ expects the OCR to remain at 5.5% until at least the second quarter of 2025.