1) 📊 Last Week in Review (Week ending 20 February 2026)
Performance snapshot (levels + weekly % + YTD):
- FTSE 100: 10,686.89 | +0.56% (YTD +23.41%)
- S&P 500: 6,909.51 | +0.69% (YTD +0.94%)
- MSCI World: 4,555.11 | +0.59% (YTD +21.09%)
- UK 10y gilt yield: 4.37% (-3 bp) | US 10y: 4.07% (-2 bp)
- GBP/USD: 1.3480 (+0.14%) | Brent: $71.86 (+0.14%)
What moved markets :
What moved markets :
- US equities rose as large-cap tech and growth outperformed on solid earnings and AI optimism, beating cautious expectations.
- Yields edged higher as markets pushed back the timing and number of Fed and BoE rate cuts after firm US data and sticky services inflation.
- European and UK indices lagged the US but remained supported by better earnings revisions and a softer dollar backdrop.
Sector & style:
- Best sector: Technology outperformed on AI and cloud spending themes; weakest: Defensives such as utilities and staples.
- Growth beat value by about 1–2% as lower-duration sectors benefited despite slightly higher yields.
- Large caps outperformed small caps by around 1%, reflecting investor preference for quality balance sheets and earnings visibility.
So what?:
- The combination of higher equities and slightly higher yields leaves less margin for error heading into this week’s inflation and activity data.
- UK investors start the week with global risk assets priced for a soft landing, so surprises on inflation or growth may produce outsized moves.
2) 🌟 The Defining Narrative
Can the “Tariff Relief” rally withstand the escalating US-Iran geopolitical friction?
Why it matters:
- The Supreme Court’s rejection of sweeping US tariffs has removed a massive overhang on global trade, supporting multinational equities and easing fears of imported inflation. However, President Trump’s immediate pivot to a temporary 15% global tariff and escalating US-Iran tensions (pushing Brent above $71) threaten to reignite inflation concerns, which could stall the current momentum in both bonds and stocks.
What confirms it / what breaks it:
- Confirms: Sustained elevation of Brent crude above $72/bbl and hawkish rhetoric from Fed officials regarding energy-driven inflation.
- Breaks: De-escalation signals from the US-Iran Geneva meetings, or weak US durable goods/factory orders data pointing to a sharper economic slowdown.
UK investor angle:
- A higher oil price benefits the heavy weighting of energy stocks (BP, Shell) in the FTSE 100, but sustained inflation could delay the Bank of England’s highly anticipated rate cuts, impacting domestic-focused mid-caps and the broader UK growth outlook.
3) 🏦 Central Bank Watch
No major scheduled central bank catalysts this week.
UK Market pricing: First cut still priced for later in 2026, with only a modest cumulative easing path expected.
4) 🌍 Macro Calendar
| Day (UK) | Region | Event | Consensus vs Prior | Why it matters | Most sensitive asset |
| Mon | US | Durable Goods Orders | – | Gauges business investment and manufacturing health | US Equities, USD |
| Mon | US | Factory Orders | – | Signals future production and economic momentum | US Equities, USD |
| Thu | US | Advance Q4 GDP (rescheduled) | 1.4% (Forecast) | Confirms the extent of the economic drag from recent government shutdowns | S&P 500, USD |
| Thu | US | Core PCE Price Index (rescheduled) | 3.0% (Forecast) | The Fed’s preferred inflation gauge; sticky inflation supports “higher for longer” | US 10y Yield, USD |
5) 📊 Earnings Watch
US
- Home Depot (HD) — Tue 24:
- What matters: demand tone for big-ticket/home improvement + pro vs DIY mix
- The “tell” headline: margin guidance holds despite promotions → stock/sector relief
- Read-across: consumer resilience + housing activity sensitivity
- Lowe’s (LOW) — Wed 25:
- What matters: same-store sales trajectory and contractor (“pro”) demand
- The “tell” headline: improving traffic + stable guidance → supports US consumer cyclicals
- Read-across: home improvement demand vs macro uncertainty
- NVIDIA (NVDA) — Wed 25:
- What matters: data-centre growth and forward commentary on AI spend
- The “tell” headline: upbeat guide → supports the AI complex; cautious guide → de-risks multiples
- Read-across: broader tech capex and “AI premium” risk appetite
- Salesforce (CRM) — Wed 25:
- What matters: bookings/remaining performance obligations and margin discipline
- The “tell” headline: strong forward demand signal → helps software sentiment
- Read-across: enterprise spend appetite (and sensitivity to cost-cut cycles)
- Dell (DELL) — Thu 26:
- What matters: servers/storage mix (AI infrastructure) and PC cycle guidance
- The “tell” headline: AI-driven server strength offsets PCs → read-through for hardware
- Read-across: capex cycle breadth beyond semis
UK
- HSBC (HSBA) — Wed 25:
- What matters: NIM outlook, credit quality, and capital return signal
- The “tell” headline: stronger buyback/dividend stance → supports UK financials
- Read-across: health of global trade/EM exposure via a UK mega-cap lens
- National Grid (NG) — Wed 25:
- What matters: regulated returns, capex plan, financing costs
- The “tell” headline: capex steady + funding confidence → supports UK defensives
- Read-across: cost of capital pressures across utilities
6) 💷 Fixed Income & Currency Outlook
A) UK Gilts / Rates
- Facts: The 10y gilt yield fell to 4.37%, a one-month low, following benign UK inflation (3.0%) and weak employment data.
- Portfolio angle: While domestic data supports a dovish BoE, the geopolitical inflation risks from energy suggest holding a balanced duration exposure rather than aggressively lengthening it.
B) FX (GBP focus)
- Facts: GBP/USD closed the week near 1.3480, recovering slightly despite a broadly stronger Dollar.
- Portfolio angle: Unhedged US equity holdings may experience volatility if the Dollar strengthens further on inflation fears or safe-haven demand.
7) 🧠 Sentiment Check
VIX: high‑teens/around 19–20, consistent with moderate volatility and no acute stress.
MOVE / rates volatility: still elevated vs pre‑2022 norms, reflecting uncertainty over the exact policy path.
Credit spreads: Investment-grade and high-yield spreads remain relatively tight, signalling no immediate credit stress.
CNN FEAR & GREED INDEX: around 43 (Fear), suggesting investors are cautious despite rising equity indices
8) 🗳️ Geopolitics & Wildcards
Event: US-Iran Nuclear Negotiations (Geneva).
- Impact channel: Oil prices, safe-haven flows, and shipping routes (Strait of Hormuz).
- What to watch: Any breakdown in talks or signs of preemptive US military action against Iranian sites.
- Most sensitive assets: Brent Crude, Gold, USD, and Defence stocks (BAE Systems).
Event: US Global Tariff Implementation.
- Impact channel: Global trade, imported inflation, and retaliatory measures.
- What to watch: The timeline and scope of President Trump’s proposed 15% temporary global tariff following the Supreme Court defeat.
- Most sensitive assets: Multinational consumer staples (Unilever, Diageo) and export-heavy European equities.
9) ⚡ The Bottom Line
- If the US Core PCE index prints significantly above the 3.0% forecast → then expect a sharp repricing of Fed rate cut expectations and a stronger Dollar → watch the US 10-year yield break above 4.15% and GBP/USD test support at 1.3400.
- If US-Iran negotiations in Geneva show signs of a diplomatic breakthrough → then the geopolitical risk premium will rapidly drain from energy markets → watch Brent crude drop back below $70/bbl and a rotation away from energy stocks.
- If the proposed 15% US global tariff is implemented quickly without exemptions for UK/EU allies → then global equities will likely surrender their recent relief rally gains → watch for a spike in the VIX and weakness in the FTSE 100’s multinational components.
© Clearly Investments Ltd. Educational information only. This is not investment advice.
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