March monthly investment update - Reflections on February 2026

February started off fairly quietly in investment markets terms. No one, at that time, could have predicted just how the month would end, or what effect it would have on global markets as the US and Israel began military operations in Iran on 28 February.

During the month itself, global equities delivered broadly positive returns. This followed on from their steady ascent seen in 2025, and in previous years, too. In the main, the winners were emerging markets (which outperformed), with Japan and Asia reflecting even stronger regional returns. By contrast, the US (having been a strong market in recent years) produced a more modest, overall return.

The relative calm before the storm

If we dig a little deeper into the detail, US investors, it seems, were growing increasingly concerned about the sheer amount of investment needed by US tech companies in 2026, to support the artificial intelligence boom in the race for AI dominance.

February was also the month that saw the US Supreme Court strike down President Trump’s sweeping trade tariffs. The court ruled 6-3 against Mr Trump, saying the President exceeded his authority by using a law to implement tariffs that should only be used in national emergencies. Clearly irritated, but undeterred by this news, the President is now pursuing "other alternatives" to continue his global trade tariff crusade.

Another headache the President may face, on home soil, is the possible reluctance by the Federal Reserve (the Fed) to cut interest rates further in 2026, if inflation remains higher than the central bank would like. Some stronger than anticipated job market figures and PCE (Personal Consumption Expenditures) data – the bank’s closely-watched measure of inflation – that looked stubbornly higher than they may have hoped, could deter the Fed from further lowering rates for fear of pushing inflation higher.

Back across the pond, UK indices did much better than their US equivalents, posting further solid gains in February, resulting in a year-to-date return of nearly 10%. In Europe, equities were also having a positive month (with some major indices reaching record highs) bringing the overall gain to 7%, so far this year. UK fixed income assets also saw improved performance with gilts delivering positive returns as yields declined. Corporate bonds delivered a smaller, but still positive, return for both the month and the year to date.

Military operations in Iran cause tensions to rise

This positive start for global investment markets was thrown into chaos somewhat, on 28 February, when mounting tensions between the US and Iran escalated into military operations. America, supported by its close ally, Israel, carried out a targeted air attack on the Iranian state, killing its Supreme Leader, Ali Khamenei, and other senior officials.

President Trump has, for some time, made it clear that he is unhappy with Iran’s nuclear programme, fearing Iranian weapons capability could threaten US security. And this is nothing new. For decades, the US and Israel have long been accusing Iran of developing nuclear weapons. Previous US administrations (including former Democrat President Obama) have attempted diplomatic negotiations with Iran before on this very subject, including with Mr Trump himself, in his first term.

It's also not the first time that the President has launched an attack on Iranian soil. Back in June 2025, US military strikes on Iran’s nuclear facilities, appeared to 'damage' rather than 'wipe out' its nuclear programme as President Trump had hoped. But, as reported at the time, it probably only set them back a few months. Termed as 'the 12-day war' – a ceasefire was quickly put in place. The impact on investment markets, at that time, was relatively subdued.

Now in 2026, it appears diplomatic efforts with Iran by the US and Israel are no longer viable. It was reported that when US and Iranian officials met in Geneva on 26 February, they appeared to be making "significant progress". So, the events of 28 February, took the world, and investors, somewhat by surprise. The immediate impact disrupted flows in and around the world’s most important oil producing regions (accounting for 20% of global oil supplies) - sending the price of crude oil, and associated energy markets, like gas, soaring and global investment markets reeling.

Staying focused with an eye on the future

It’s natural for customers to be concerned about market volatility caused by the latest military operation in the Middle East. But it’s also important to keep a perspective.

Investment markets have always had to ride out turbulence in order to take advantage of better times ahead, and history has taught us this. We only have to look back over time: In 2000, for example, we had the peak of the .com bubble, and sometime later, the global financial crisis of 2007-2009 – both of which caused major market turbulence at the time, which was unprecedented.

More recently, investment markets have had to deal with a worldwide pandemic, a cost-of-living crisis, US trade tariff disruption and, of course, the Russia/Ukraine war, which is still ongoing, and caused some big moves in markets back in 2022, when it began.

During times of market turbulence, it’s important for investors to stay focused on their long-term investment goals. Money already invested in the market will benefit from any potential recovery when it happens.

One thing you can be assured of is that our Fund Managers and Investment Analysts continue to use their expertise by applying the same strategic approach they always have into looking after your money - with a firm focus on maximising financial returns in the long term.