| GLOBAL MACROECONOMIC OVERVIEW |
Financial markets were broadly positive in February, supported by strong commodity prices and broader market breadth as investors rotated away from large U.S. tech companies. The outlook for economic growth remained constructive and inflation continued to moderate. Towards the end of the month, geopolitical tensions escalated in the Middle East, with the U.S. and Israel launching strikes on Iran on the final day of the month. Market volatility is expected to increase in the near term.
United States
The U.S. economy remains resilient; however, recent data points to a cooling but still expanding economy, with Q4 2025 GDP growth slowing to 1.4% annualised from 4.4% in Q3. Consumer spending slowed, while government spending and investment also contracted during the quarter. Inflation eased to 2.4% YoY in January from 2.7% in the prior month.
One of the defining features of the current market cycle continues to be the extraordinary capital expenditure (capex) being deployed by U.S. technology companies to build AI infrastructure. The four largest tech companies — Alphabet, Amazon, Meta and Microsoft — have announced combined capex of approximately $650 billion to scale up AI-related infrastructure this year, up significantly from $410 billion in 2025.
The Supreme Court struck down the tariffs imposed by Trump in April 2025, ruling they exceeded his presidential authority. This ruling creates further uncertainty over approximately $170 billion collected from these import duties.
China
China’s economic recovery remains uneven, although policymakers have continued to introduce targeted measures aimed at stabilising the property sector and strengthening social safety nets. Chinese exports remain robust despite the tariffs imposed by Trump, with goods increasingly redirected to alternative markets such as the EU, ASEAN and Latin America. Inflation slowed to 0.2% in January from 0.8% in the prior month, raising concerns about a prolonged deflationary cycle.
Looking ahead to the 15th Five-Year Plan, due to be announced in March 2026, the Chinese government is prioritising domestic consumption as a primary driver of economic growth.
Japan
Japan continues to stand out as one of the more compelling developed markets. Manufacturing activity is supported by solid domestic demand and resilient exports, particularly from AI-related semiconductor demand. Japan’s annual inflation eased to 1.5% in January from 2.1% in the prior month — its lowest level since March 2022.
| GLOBAL MARKET PERFORMANCE |
Global equity markets delivered mixed but generally positive returns in February. The MSCI World Index gained 0.73% in US dollars, while the S&P 500 declined 0.74%. European equities outperformed U.S. peers, with the Euro STOXX 50 up 3.7% and the FTSE 100 rising 7.0%. Japan delivered another strong month, with the Nikkei 225 advancing 10.4%.
Looking at broader emerging markets, the MSCI Emerging Markets Index gained 5.5% in US dollars, supported by an easing dollar, AI supply chain tailwinds and elevated commodity prices.
| Asset Class / Index | Return (m/m) | Currency |
| MSCI World Index | +0.73% | USD |
| MSCI Emerging Markets | +5.50% | USD |
| S&P 500 | -0.74% | USD |
| Euro STOXX 50 | +3.70% | EUR |
| FTSE 100 (UK) | +7.00% | GBP |
| Nikkei 225 (Japan) | +10.40% | JPY |
| FTSE/JSE All Share Index | +7.00% | ZAR |
| JSE Resources Sector | +13.30% | ZAR |
| FTSE/JSE All Bond Index | +1.74% | ZAR |
| SOUTH AFRICA |
South Africa’s macroeconomic environment continues to show signs of gradual improvement. January inflation eased slightly to 3.5% YoY from 3.6% in the prior month. Employment data was encouraging, with the unemployment rate improving to 31.4% in Q4 2025 from 31.9% previously.
Finance Minister Enoch Godongwana delivered the 2026 National Budget, reinforcing government’s commitment to fiscal consolidation while supporting economic growth. South Africa’s debt-to-GDP ratio is expected to stabilise for the first time in nearly two decades, with gross debt projected to peak at approximately 78.9% of GDP in FY26.
The budget was supported by stronger-than-expected tax revenue collections — projected to be R28.8 billion higher than the 2025 Budget estimate — avoiding major tax hikes while providing modest household relief through adjustments to personal income tax brackets. The primary budget surplus is projected at 0.9% of GDP this year.
South African equities delivered another strong month. The FTSE/JSE All Share Index rose 7%, supported by resources (+13.3%) — benefiting from a rally in gold and platinum group metals — and financials (+7.3%). The FTSE/JSE All Bond Index gained 1.74% for the month.
| FINAL THOUGHTS |
The ongoing artificial intelligence investment cycle, shifting global supply chains and evolving geopolitical risks are likely to remain key drivers of market performance in the months ahead.
The escalation of tensions in the Middle East at month-end introduces near-term uncertainty. We continue to monitor developments closely and remain focused on delivering consistent, risk-adjusted returns for our clients.
Disclaimer
This document is prepared by Citrine Fund Managers (Pty) Ltd (FSP 53295) for informational purposes only and does not constitute financial advice. The information contained herein is sourced from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Past performance is not indicative of future results. Citrine Fund Managers is an authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act, 37 of 2002. All Citrine BCI funds are collective investment schemes managed by Boutique Collective Investments (RF) (Pty) Ltd. Please consult your financial advisor before making any investment decisions.