Market Update - Month Overview (February 2026)

Summarised by Shara Cox (Report via Zenith)

International Markets Summary

Global markets experienced a notable rotation in February, with investors shifting away from large US technology stocks due to concerns around returns on heavy AI-related spending. This led to weaker performance in growth sectors, while value, defensive, and income-focused investments outperformed.

Developed market shares were mixed, with hedged returns positive but unhedged returns slightly negative. Japan and Europe led regional gains. Emerging markets performed strongly overall, particularly in South Korea, Taiwan, and Latin America, although China lagged due to ongoing growth concerns.

Global bonds delivered positive returns as yields declined, supporting asset classes such as infrastructure and listed property, which saw strong gains. However, credit markets weakened as spreads widened. Commodities were volatile—gold rose strongly, while oil surged late in the period due to escalating Middle East tensions, increasing global inflation concerns.

Australian Markets Summary

Australian markets outperformed global peers, with shares rising strongly over the month. This was largely driven by gains in the banking and resources sectors, supported by higher commodity prices and their lower exposure to AI-related disruption.

The domestic economy remained resilient, with solid GDP growth and persistent inflation leading to expectations of further interest rate increases by the Reserve Bank. This weighed more heavily on mid- and small-cap stocks.

Australian bonds posted modest gains as yields eased slightly, though they remained higher than US equivalents due to stronger inflation and tighter policy expectations. Meanwhile, listed property declined despite global strength in the sector.

The Australian dollar strengthened further, supported by higher interest rate differentials and firm commodity prices.