Global equity markets, as measured by the MSCI ACWI Index, lost ground in February, though performance was mixed among regions. Despite a decline towards the end of the month in response to President Trump’s threat to impose tariffs on imported goods from the European Union (a political and economic union of 27 European countries), the European market generally benefited from investors’ optimism that the region would avoid a trade war with the U.S. Uncertainty regarding the proposed tariffs and a downturn in the technology sector hampered the U.S. equity market.

Emerging markets garnered modestly positive returns and outperformed their developed-market counterparts in February. The Nordic countries were the strongest performers within the developed markets for the month, bolstered mainly by strength in Sweden and Denmark. The rally in Europe was attributable primarily to upturns in Ireland and Spain. Conversely, North America was hampered by a decline in the U.S. market. Chinese stocks listed on the Hong Kong Stock Exchange led the emerging markets in February. Additionally, Eastern Europe benefited from strong performance in Poland. In contrast, the Association of Southeast Asian Nations (ASEAN) region recorded a negative return due to weakness in Thailand and Indonesia.¹

On February 3, a day before 25% across-the-board tariffs on Mexico and Canada (with an exception for Canadian energy, which faces a 10% duty) were scheduled to be implemented, the Trump administration reached agreements with Canada and Mexico to delay the levies for 30 days. This was only after Mexico agreed to send 10,000 troops to the border to combat the flow of fentanyl into the U.S., and Canada pledged to appoint a fentanyl czar, list cartels as terrorists, and launch a joint strike force with the U.S. to combat organised crime, fentanyl trafficking, and money laundering. At the end of February, Trump announced that he was considering 25% tariffs on imports from the European Union. He also commented that the levies against Mexico and Canada were still scheduled to take effect in early March. The ongoing tariff dispute remains highly volatile and in constant flux.

Global fixed-income assets, as measured by the Bloomberg Global Aggregate Bond Index (USD), gained 1.4% in February. Mortgage-backed securities (MBS) were the strongest performers within the U.S. fixed-income market, followed by U.S. Treasury securities, investment-grade corporate bonds, and high-yield bonds. Yields moved lower for all maturities greater than three months. Yields on 2-, 3, 5, and 10-year Treasury notes fell by corresponding margins of 0.23% and 0.28%, 0.33, and 0.24% to 3.99%, 3.99%, 4.03%, and 4.34%, respectively.² The decline in the yield on the 10-year Treasury resulted in an inverted yield curve (three-month yields exceeded 10-year yields), which historically has predicted economic recessions.

Global commodity prices, as represented by the Bloomberg Commodity Index, rose 0.8% in February. The West Texas Intermediate (WTI) and Brent crude oil prices posted fell by corresponding margins of 3.8% and 5.4% to $69.76 and $71.62, respectively, over the month due to concerns about geopolitical tensions between the U.S. and Ukraine, as well as a possible increase in oil production by the Organization of the Petroleum Exporting Countries (OPEC). (In early March, the oil cartel announced plans for a production increase in April.) The gold price rallied for most of the month as investors sought safehaven assets amid concerns about the Trump administration’s proposed tariffs. However, a sharp decline in the price in late February attributable to U.S. dollar strength—the gold price typically moves inversely to the greenback—trimmed the monthly gain to 0.5%. The New York Mercantile Exchange (NYMEX) natural gas price surged 26.0% during the month as cold winter weather in the U.S. spurred an increase in demand. Wheat prices dipped 0.7% in February, hampered by strong production from Australia and Argentina, as well as reduced imports from China. These offset the positive impact of a decrease in stockpiles in the U.S.

On the geopolitical front, the Trump administration sought to enter into negotiations to end the Russia-Ukraine conflict after the president spoke with Russian President Vladimir Putin. Trump subsequently extended an invitation to Ukrainian President Volodymyr Zelenskyy to participate in negotiations with Putin for a ceasefire in the war. Toward the end of February, Trump and Zelenskyy agreed to a deal that would give the U.S. access to deposits of Ukraine’s rare earth minerals. The agreement included the establishment of an “investment fund” for Ukraine’s reconstruction. However, the deal appeared to be in jeopardy after Trump cut short a meeting with Zelenskyy at the White House on February 28, following a heated discussion regarding a possible settlement of the Russia-Ukraine conflict.

¹   All equity market performance statements are based on the MSCI ACWI Index.

²  According to the U.S. Department of the Treasury. As of February 28, 2025.

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