1) 📊 Last Week in Review (Week ending 28 February 2026)

Performance snapshot (levels + weekly % + YTD):

• FTSE 100: 10,910.55 | +0.59% (YTD +9.8%)
• S&P 500: 6,878.88 | -0.43% (YTD -1.2%)
• MSCI World: 3,842.10 | -0.15% (YTD +1.1%)
• UK 10y gilt yield: 4.23% (-8 bp) | US 10y: 3.95% (-12 bp)
• GBP/USD: 1.3435 (-0.1%) | Brent: $73.21 (+0.47%)

What moved markets:

• US-Iran Tensions: Escalating rhetoric and air travel disruptions following strikes in the Middle East drove a late-week flight to safety, weighing on US equities.
• Nvidia beat but fell -5% in the following session — the market’s verdict that the “beat-and-raise” bar for AI mega-caps is now extremely high, rattling the broader tech complex
• UK Political Headwinds: Anelection loss for the ruling Labour party in Gorton and Denton intensified scrutiny on Chancellor Rachel Reeves ahead of the Spring Statement.
• Trump Tariff Hangover: Markets continued to digest the implementation of a 10% global tariff, which bolstered the US Dollar but pressured international trade-sensitive sectors.

Sector & style:

• Best/Worst sector: Energy (+1.2%) / Technology (-1.8%)
• Value outperformed Growth by 1.4% as AI-monetisation doubts lingered.
• Large Cap outperformed Small Cap by 0.9% amid a defensive rotation.

So what? :

• The “Revenge of the Old Economy” continues; the FTSE 100’s heavy weighting in cyclicals and financials is allowing it to decouple from a struggling, tech-heavy S&P 500.

---

2) 🌟 The Defining Narrative

Can markets absorb a geopolitical oil shock while a data-heavy week re-prices rates and growth expectations?

Why it matters:

• If oil risk escalates, it can tighten financial conditions via higher inflation expectations, a firmer USD, and a higher “risk premium” in equities. Conversely, if growth data weakens (especially jobs), markets may pull forward rate cuts, supporting duration and quality defensives.

What confirms it / what breaks it:

• Confirms: Oil remains elevated and/or payrolls are firm → yields re-price higher and equity risk appetite stays fragile.
• Breaks: De-escalation in the Middle East + softer labour data → lower yields, a calmer credit tape, and better equity breadth.

UK investor angle:

The UK is leveraged to energy/commodities and global revenues, but a renewed oil spike can still hit the UK consumer channel and keep gilts sensitive into the Spring Forecast.

---

3) 🏦 Central Bank Watch

Federal Reserve (Fed)

• What’s scheduled: Beige Book (Wed 19:00); Powell Speech (Fri 15:00)
• Market pricing: 65% probability of a “Hold” in March; 35% for 25bp cut.
• Key thing to listen for: Language regarding “tariff-induced inflation” vs “labour market cooling.”
• UK implications: A hawkish Fed could reverse the recent GBP/USD strength, making US imports pricier.

Bank of England (BoE)

• What’s scheduled: Governor Bailey speech (Mon 14:30)
• Market pricing: Next 25bp cut fully priced for May.
• Key thing to listen for: References to the Spring Statement’s impact on the inflation outlook.
• UK implications: Lower yields support the FTSE 250 (domestically focused stocks) over the 100.

---

4) 🌍 Macro Calendar

Day (UK)	Region	Event	Consensus vs Prior	Why it matters	Most sensitive asset
Mon 09:30	UK	Mortgage Approvals (Jan)	62k vs 60.5k	Health of the UK consumer/housing market	Housebuilder stocks
Mon 15:00	US	ISM Manufacturing PMI	48.5 vs 49.1	Signals if the US “soft landing” is stalling	S&P 500
Tue 12:30	UK	Spring Statement	N/A	Defines tax, spend, and Gilt issuance	10y Gilts / GBP
Wed 01:30	China	Two Sessions Start	N/A	Policy targets for 2026-2030 (15th 5-yr plan)	Mining stocks (Rio/Anto)
Wed 15:00	US	ISM Services PMI	51.2 vs 50.5	Critical for services-led inflation gauge	USD
Thu 10:00	EU	Eurozone Retail Sales	-0.1% vs 0.2%	Gauge of European consumer resilience	EUR/GBP
Fri 07:00	UK	Halifax House Price Index	+0.2% vs +0.1%	Confirmation of domestic recovery	Banking sector
Fri 13:30	US	Non-Farm Payrolls	160k vs 130k	The “Big One” for Fed rate path	Global Equities

---

5) 📊 Earnings Watch

• Broadcom (AVGO) — Thursday:
  • What matters: AI infrastructure demand and VMWare integration.
  • The “tell” headline: A beat-and-raise would revive the AI “Growth” trade.
  • Read-across: High sensitivity for the Nasdaq and London-listed tech (e.g., Sage).
• Costco (COST) — Thursday:
  • What matters: Membership growth and consumer “trading down.”
  • The “tell” headline: Sustained high-single-digit sales growth signals a resilient US consumer.
  • Read-across: Signals health for UK retail heavyweights like Next and M&S.
• Legal & General (LGEN) — Wednesday:
  • What matters: Solvency ratios and dividend sustainability.
  • The “tell” headline: Increase in share buyback programmes.
  • Read-across: Broad sentiment for the UK Financials/Insurance sector.
• JD Sports (JD.) — Thursday:
  • What matters: Inventory levels and global sportswear demand.
  • The “tell” headline: Strong margins in the US market.
  • Read-across: Vital for UK discretionary consumer confidence.

---

6) 💷 Fixed Income & Currency Outlook

A) UK Gilts / Rates

• Facts: 10y yield at 4.23% (-8 bp). Yield curve remains slightly inverted.
• Portfolio angle: Maintain moderate duration; Gilts offer attractive real yields if the BoE stays the course on cuts.

B) FX (GBP focus)

• Facts: GBP/USD 1.3435 (-0.1%); GBP/EUR 1.1385 (+0.1%)
• View: Spring Statement fiscal credibility and US-Iran geopolitical headlines.
• Portfolio angle: GBP strength is a headwind for FTSE 100 multinationals but a tailwind for domestic mid-caps.

---

7) 🧠 Sentiment Check

• Market gauges:
  • VIX: 18.2 (Elevated, but not panicking).
  • Rates: Real yields rising in the US, falling in the UK.
  • Credit spreads: Stable; no signs of systemic stress in corporate debt yet.
  • CNN FEAR & GREED INDEX: 43 (Fear) — Dropped from “Neutral” last week.
• Positioning / flows:
  • Continued outflows from US Tech into European and Emerging Market “Value” funds.
• Implication:
  • Sentiment is fragile; a positive Spring Statement or a “Goldilocks” US jobs report could trigger a sharp “short-covering” rally.

---

8) 📈 Valuations & Expectations

• Valuation snapshot:
  • S&P 500 fwd P/E: 22.4x (Rich vs 10-year average of 18.1x).
  • FTSE 100 fwd P/E: 11.2x (Substantial discount to US peers).
  • Implication: The UK remains one of the few “cheap” developed markets, priced for a recession that hasn’t arrived.
• Earnings expectations:
  • Next-year EPS growth: US 11.5% | UK 6.2%
  • Revisions trend: Deteriorating in US Tech; Improving in UK Financials/Miners.

---

9) 🗳️ Geopolitics & Wildcards

• Event: Middle East escalation risk (ongoing; new headlines can hit at any time).
  • Impact: oil / inflation expectations / shipping disruption
  • What to watch: Any confirmation of sustained disruption around the Strait of Hormuz and the scale/duration of retaliation.
  • Most sensitive assets: Brent, energy equities, EM FX, global cyclicals
• Event: UK Spring Forecast political/fiscal signalling (Tue).
  • Impact: gilts / GBP / UK risk premium
  • What to watch: Any surprise shift in medium-term borrowing assumptions or “headroom” narrative.
  • Most sensitive assets: Gilts, GBP, UK domestics

---

10) ⚡ The Bottom Line

• If the Spring Statement shows fiscal restraint → then Gilts will rally (yields fall) → watch UK housebuilder stocks (e.g., Persimmon, Taylor Wimpey).
• If China announces a massive 2026 stimulus package → then the FTSE 100 will break 11,000 → watch Mining and Banking sectors.
• If US Payrolls come in below 100k → then the USD will weaken sharply → watch GBP/USD heading toward 1.36.
• If Broadcom’s AI revenue guide disappoints or margin pressures deepen → then the AI capex trade faces a second leg down post-NVIDIA, pulling US tech lower and reinforcing the rotation into UK/European value → watch sector divergence widen: FTSE defensive and commodity names vs. Nasdaq

---

© Clearly Investments Ltd. Educational information only. This is not investment advice.