February 2026 | Market update

Markets rebound after Trump’s Greenland U-turn

Despite geopolitical turbulence, it was a positive month for markets

A positive start to the year

Global markets rebounded after President Donald Trump said a framework on a future deal for Greenland had been reached. He said he would no longer impose tariffs on some European countries and ruled out taking Greenland by force, helping to calm investor nerves after renewed trade-war risks had caused European stocks to slip

and US Treasury yields to spike.

Equity markets were largely unperturbed by the capture of Venezuelan President Nicolás Maduro and rising tensions in Iran. Ten-year UK government bond yields fell to their lowest level since December 2024, meaning prices rose.

Trump nominated Kevin Warsh as the US Federal Reserve’s (Fed) next chair, with Jerome Powell’s term ending in May. The announcement reduced policy uncertainty and triggered a sharp pullback in gold, silver and other precious metals, which had previously benefited from safe-haven demand. The Fed held interest rates steady at 3.5% to 3.75% following three straight quarter-point reductions. Powell said the central bank was in no rush to cut rates further, despite growing pressure from Trump. Federal prosecutors also opened a criminal investigation into Powell over testimony on

renovation costs at the Fed’s Washington DC headquarters.

US inflation remained at 2.7% in December as Trump faced mounting pressure over the cost-of-living crisis. Analysts believe inflation will continue to decline towards the Fed’s 2% target throughout 2026. US job creation slowed to its weakest pace since the Covid pandemic, with just 50,000 jobs added in December.

FTSE hits new record

The FTSE 100 climbed above 10,000 points for the first time, buoyed by upbeat economic data and strong company earnings. The pound also rose to a four-year high against the dollar. Meanwhile, the UK economy grew by 0.3% in November, its fastest pace since June, supported by a rebound in manufacturing and services. Inflation rose for the first time in five months, climbing to 3.4% in December. Analysts have largely ruled out an interest rate cut by the Bank of England in February.

There were signs of weakness in the labour market, with unemployment near a five-year high at 5.1% in the three months to November, while wage growth continued to ease. Payrolls fell by 43,000 in December.

Japan bond yields rise

Japanese bond yields rose after Prime Minister Sanae Takaichi called a snap election and pledged food tax cuts. The yen rebounded from an 18-month low against the dollar

after authorities signalled readiness to support the currency.

China reported a record $1 trillion trade surplus for 2025 despite tariff pressures. While trade with the US weakened, this was offset by stronger exports elsewhere. Fourth-quarter growth slowed to its weakest pace in nearly three years as domestic demand softened, even though GDP met its 5% annual target.

Inflation accelerated in December after spending picked up ahead of the New Year holiday. Industrial output rose 5.2% in December, while domestic consumption weakened.

The eurozone enters 2026 with cautious optimism. Inflation fell to 1.9% in December, below the European Central Bank’s (ECB) target, while private-sector activity continued to expand and business confidence rose to a 20-month high. Germany returned to modest growth in 2025 as stronger domestic demand offset the impact of US tariffs.

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Issued by Omnis Investments Limited. This update reflects Omnis and our investment management firms’ views at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.

The Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC are authorised Investment Companies with Variable Capital. The authorised corporate director of the Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC is Omnis Investments Limited (Registered Address: Auckland House, Lydiard Fields, Swindon SN5 8UB) which is authorised and regulated by the Financial Conduct Authority.

Approved by Omnis Investments on 1st February 2026

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