Revised fourth‑quarter GDP figures in the United States pointed to a softer growth backdrop than initially reported, with a slowdown in both consumer and government spending weighing on the overall pace of expansion. The economy is now estimated to have grown at an annualised rate of +1.4% in the final three months of 2025(1) which was well below economists’ expectations of +3.0%. The latest release also attributes roughly 1.5 percentage points of lost output to the most recent government shutdown, which curtailed the availability of public services and reduced spending by federal employees. Despite the weaker economic print, equity markets showed little concern. Risk appetite held up through the week, supported in part by Friday’s news that the Supreme Court had overturned President Trump’s global tariff policy. That decision initially eased some of the trade‑related uncertainty hanging over markets, although the subsequent move by the administration to pursue additional tariffs under alternative statutes has reintroduced an element of policy volatility. The S&P500 added +1.1% in dollar terms with the NASDAQ posting a +1.5% gain.

Elsewhere, European equities continued to push into record territory, supported by a combination of steady macro data and gradually improving earnings expectations across several key sectors. The MSCI Europe ex UK index gained +2.2% in euro terms, reflecting broad participation across core markets. Across the Channel, the FTSE 100 also reached a fresh all‑time high following a +2.3% rise over the week. An easing inflation backdrop provided an additional tailwind for domestic equities, helping to lift sentiment after several months of mixed data. At the same time, a softer labour market, evident in weaker hiring trends and a slowdown in wage growth, added weight to calls for future interest‑rate cuts from the Bank of England. Markets increasingly view policy easing as a realistic prospect later in the year, offering further support to rate‑sensitive sectors. In Asia, Chinese equity markets were closed for the Lunar New Year festivities, limiting activity across the region whilst in Japan, the Nikkei 225 posted a modest decline of -0.2% in yen terms. Weaker economic growth indicators likely acted as a headwind.

Commodity markets were also in focus last week, with energy and precious metals both posting notable moves. Brent crude jumped by +6.0% to $71.81 a barrel, with prices driven higher by renewed geopolitical tension involving the US and Iran. Reports highlighted growing concern over the potential for US military action, with negotiations on Iran’s nuclear programme showing little progress and Washington deploying additional military assets near the Persian Gulf. Gold also advanced as investors sought out defensive assets, with the metal rising +1.2% to $5,055 an ounce.

Sources: (1) Bureau of Economic Analysis – GDP (Advance Estimate), Q4’2025

SJP Approved: 23/02/2026

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